U.S. Ranks 3rd Worst for International Tax Competitiveness among Developed Nations
In today’s global economy, North Carolina employers, like you, are competing both nationally and internally for continued growth and success. Unfortunately, Washington has handicapped your ability to compete at the global level with its outdated and burdensome tax policy. In fact, the United State ranks the 3rd worst for international tax competitiveness among developed nations, according to the 2014 International Tax Competitiveness Index (ITCI) released by the Tax Foundation. Out of the Organization for Economic Co-operation and Development’s (OECD) 34 countries, the U.S. is trailed only by Portugal and France. According to the report there are three main drivers behind the U.S.’s low score:
- First, it has the highest corporate income tax rate in the OECD at 39.1 percent.
- Second, it is one of the only countries in the OECD that does not have a territorial tax system, which would exempt foreign profits earned by domestic corporations from domestic taxation.
- Finally, the United States loses points for having a relatively high, progressive individual income tax (combined top rate of 46.3 percent) that taxes both dividends and capital gains, albeit at a reduced rate.
In a world where businesses, people, and money can move with relative ease, having a competitive tax code has become even more important to economic success. The last major change to the U.S. tax code occurred 28 years ago as part of the Tax Reform Act of 1986. Since then, other developed countries have followed suit, reforming their tax codes and leaving the United States with one of the least competitive tax codes in the world. Read the full report.
While federal tax reform remains a distant hope in Washington, North Carolina is moving forward to make its tax policy more competitive for business growth and investments at the regional and national level. The North Carolina Chamber fought for the comprehensive reforms made in 2013 to lower taxes for businesses and families, and we continue to target additional tax reforms to bolster your competitive position.