View Complete 2011 Structural Cost Report 
Summary
Foreword
Chapter 1 - Raw Cost Index
Chapter 2 - Corporate Tax Rates
Chapter 3 - Employee Benefits
Chapter 4 - Tort Costs
Chapter 5 - Energy Costs
Chapter 6 - Pollution Abatement Costs



The trade-weighted foreign corporate tax advantage reached 8.6 percentage points in the 2011 cost study (52 percent of the entire structural cost gap).  The foreign advantage has increased steadily since the first cost study in 2003, when the gap was 5.6 percentage points.

  • The U.S. is falling behind by standing still. While the federal and state combined rate has been unchanged, every other country in the study has lowered corporate tax rates at least once since 1997, and most countries have done so several times.  The result is that the U.S. rate is now second-highest in the OECD to Japan.


  • The increase in the foreign advantage since the 2008 tax study is due to rate reductions in Canada (36 percent to 31 percent), Germany (38.4 percent to 29.4 percent) and Taiwan (25 percent to 17 percent).


  • While some contend that a high U.S. statutory rate masks a lower effective tax rate (due to advantageous depreciation schedules and deductions), careful work by Jack Mintz and Duanjie Chen shows that, even when these factors are taken into account, the effective tax rate on new business investment remains among the highest in the world.



Corporate Tax Rates (Foreign Advantage)

Canada
Mexico
Japan
China
Germany
United Kingdom
Korea
Taiwan
France
Average of 9 partners
2003
3.4
6.0
-2.0
15.0
0.4
10.0
10.3
15.0
5.7
5.6
2006
3.9
11.0
-0.7
15.0
1.7
10.0
12.5
15.0
6.7
7.6
2008
3.9
12.0
-0.7
15.0
1.6
10.0
12.6
15.0
6.7
7.8
2011
9.0
10.0
-0.7
15.0
10.6
12.0
15.8
23.0
6.7
8.6
Increased Foreign Advantage
2003-2011
5.6
4.0
1.3
0.0
10.2
2.0
5.5
8.0
1.0
3.0



Statutory corporate tax rates
Source: KPMG
Note:  For China, a hybrid rate for domestic firms and companies in special economic zones is used

U.S.
Canada
Mexico
Japan
China
Germany
U.K.
Korea
Taiwan
France
1997
40%
44.6%
34%
51.6%
33%
57.4%
31%
30.8%
25%
36.6%
2010
40%
31%
30%
40.7%
25%
29.41%
28%
24.2%
17%
33.3%

© 2014 Manufacturing Institute
733 10th St. NW, Washington, DC 20001