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Thursday, October 06, 2016

U.S. Tax Competitiveness is Abysmal (and Economic Freedom is Trending Downward)

Capital, and all the benefits it provides (investment, innovation, jobs, creation of wealth), flows to where it is treated best. An important element of treatment is how it is taxed. So how does U.S. tax competitiveness measure up against the other OECD countries?

Table 5

It comes in at a solid 5th worst  - way to go USA! An important contributing factor, according to Center for Federal Tax Policy that issued the rankings, is that the U.S has a " combined federal, state, and local corporate tax rate of 39 percent [that] is significantly higher than the average rate of 25 percent among OECD nations."

Another important international ranking was also recently released - the Index of Economic Freedom. Here, the U.S. ranks number 11. Not bad, but not great for a country touted as the land of the free. More bad news is that the U.S. scored declined by over 1% since 2015, while the world as a whole improved. The long term trend in the U.S. is depressing - in 2008, the U.S. was ranked 5th. You can see the full rankings here.

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