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October 10, 2016

Study: U.S., Canadian Tax Systems Are Globally Uncompetitive

Last week the Tax Foundation, one of the nation’s leading independent tax policy research organizations, released its International Tax Competitiveness Index, which ranks nations based on how conducive their tax systems are to economic growth. 

The United States ranked 31st in the index while Canada ranked 19th. Sweden, Australia, Norway, and Ireland were among the countries that now have more competitive systems than the United States and Canada. 

According to the study, in the United States the “combined federal, state, and local corporate tax rate of 39 percent is significantly higher than the average rate of 25 percent among OECD nations.” The Foundation noted that, while it has been three decades since the United States has reformed its tax code, “over the past few decades, marginal tax rates on corporate and individual income have declined significantly across the Organization for Economic Co-operation and Development (OECD).” 

The Metals Service Center Institute (MSCI) supports comprehensive tax reform in the United States. As MSCI has argued in its policy agenda, the U.S. tax code is confusing and complex and, not only does the United States have one of the highest corporate tax rates in the world, U.S. job creators also face high tax compliance burdens. In 2012, (the latest year data is available), it took Americans more than three billion hours to prepare and file their tax returns, a figure equal to a $37 billion federal tax compliance burden. 

MSCI believes that leaders in Washington must reduce the overall tax and compliance burden and establish a simpler, flatter and fairer system that will encourage investment and innovation. Additionally, they must also avoid passing piecemeal, temporary tax plans that breed uncertainty and cause employers to put off decisions about expanding their business or hiring more workers.

Click here to read more about MSCI’s position on this issue.