Wednesday, September 9, 2009

Do Tax Rates Matter? The Highest Corporate Tax Rates in the World

While corporations struggle with earnings and growth, are corporate tax rates around the world coming under increased scrutiny?  Given the global nature of capital these days, will corporations increasingly make domicile decisions based on the relative tax friendliness of countries?

According the Organization for Economic Cooperation and Development (OECD), the highest tax rates for its 30 members countries that include both national and local taxes are:

1. Japan     39.54%
2. US     39.25%
3. France     34.42%
4. Belguim     33.99%
5. Canada      33.50%
6. Luxembourg     30.38%
7. Germany     30.18%
8. (tie) Australia     30%
8. (tie) Spain     30%
8. (tie) New Zealand     30%

The lowest rates for OECD member countries are Ireland at 12.5% and Iceland at 15%.  Granted, there are many factors that go into these decisions, such as regulation and government stability, but it is not much of a stretch to predict that capital, and thereby hiring, will flow to where it is treated the best.

For examples of competition for business between states within the US, look no further than California and Nevada.

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