Originally Posted by lizzie
Other countries don't offer deductions for business?
I'm not sure. But from what I've read it's difficult to make make tax rate comparisons - so saying a certain country has the highest tax doesn't necessarily translate into that country's business' having to pay the most in taxes.
International comparisons of corporate income tax rates are potentially difficult to carry out, for several reasons: effective tax rates may be measured in a variety of ways, the differences among countries’ tax rates may distort aspects of economic behavior, and the characteristics of countries’ economies may differ and interact in ways that affect how those nations’ tax systems should be compared.
Further complicating such analyses are the existence of subnational corporate income taxes, differences between the ways that returns to investments financed by debt and by equity are taxed, and the various ways in which taxable income may be defined and calculated. On the one hand, comparisons that do not fully account for such intricacies must be interpreted with care. On the other, an attempt to account for all factors would quickly become unwieldy as countries and years were added to
The report also looks at various parts of the tax code and makes comparisons, for example looking at depreciation:
Machinery. For the 19 OECD countries in 2003, the present value of depreciation deductions for an investment in machinery, measured as a percentage of the initial cost of the investment, ranged from 66.4 percent to
87.1 percent (see Figure 2-7 on page 28). For the United States, the present value under the tax code in 2003 was 78.5 percent of the asset’s initial cost, which is higher than the present value of such deductions in more than 80 percent of the other OECD countries.12 In contrast, the present value of economic depreciation for machinery, under an assumption of economic depreciation of an estimated 12.25 percent, equals 55.1 percent of the value of an investment.13 Every country that CBO examined allowed depreciation deductions for machinery that were more generous than they would have been if they had been based on the estimated value of economic
Some of the countries whose statutory tax rates were among the highest also had some of the largest tax depreciation deductions for machinery. For example, the United States and Italy, which had top statutory corporate
tax rates that were some of the highest among the 19 countries, each allowed depreciation deductions for machinery that were some of the most generous. Ireland, which had the lowest top statutory tax rate, was among the countries with the least generous depreciation deductions. Overall, according to the data, countries with higher statutory tax rates tend to have larger tax depreciation allowances (see Figure 2-8 on page 29). Notwithstanding, depreciation deductions vary widely, regardless of the level of the statutory tax rate. Such variation indicates the need, when measuring effective marginal tax rates, to combine depreciation deductions and statutory rates.14
Page 13 of the report has a table that shows corporate taxes as a percentage of GDP which seems a better comparison. U.S. is significantly lower than equivelant countries. This seems to match what I've heard - and I have no source to support it, it's just in conversation - that we have a very attractive business climate for entrepenuers. In comparison to other developed countries we have fewer stifling regulations and taxes.
I'll admit - I DID NOT read this whole thing....I could be interpreting it wrong - but I can't imagine anything more boring
-- it would be nice to find something in a more readible format