The American tax system is antiquated and broken. You know that, and you’ve heard that cry from business leaders and politicians on both sides of the ideological divide, but a new global benchmarking study from the Right-leaning Tax Foundation gets at just how desperately the tax code needs to be fixed. The study finds that the U.S. system is the third least competitive among the world’s advanced economies, right behind Spain and Italy and ahead of only Portugal and France.
The Tax Foundation researchers looked at the tax systems of the 34 countries in the Organization for Economic Cooperation and Development, the Paris-based research forum for the world’s leading economies. They examined individual taxes, consumption taxes, property taxes, corporate taxes and how foreign earnings are treated across the 34 countries.
Their report says that the tax codes of Estonia, New Zealand and Switzerland are now the most competitive. The U.S. suffers because of its high nominal corporate tax rate of 35 percent and because it is one of six countries in the OECD that doesn’t have a territorial tax system, which would exempt companies from paying taxes on profits earned outside the U.S.
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