Of the 55 large international cities highlighted in KPMG's 2012 Competitive Alternatives: Focus on Tax report, three U.S. cities rank among the top 20: Cincinnati (16th), Baltimore (17th), and Cleveland (18th) offer the most favorable tax structures for businesses among U.S. cities/locations with populations exceeding two million. In the mid-sized city category (populations between one million to two million), New Orleans; Wilmington, Del.; and Raleigh, N.C., offer the most favorable tax climate for business; and in the small-sized city category (population fewer than one million), Baton Rouge, La.; Shreveport, La.; and Omaha, Neb. scored highest.
"While we've come to expect our large cities to compete internationally to provide competitive tax incentives for business, it's heartening to see a number of locations in the mid- and small-sized city categories ranking high in the overall U.S. study," said Hartley Powell, principal in the Global Location and Expansion Services practice at KPMG, LLP.
The report also highlights those cities that offer the lowest tax burdens for business based on the following sectors: digital, research and development, corporate services, and manufacturing. As a location for digital operations, Atlanta, Orlando, and Tampa rank highest among U.S. cities in the large city category for most cost-effective tax structures; Minneapolis, Atlanta, and Cincinnati are the top three large cities in the R&D sector; Atlanta, Cincinnati, and Orlando score highest among large U.S. cities when it comes to corporate services; and for manufacturing operations - where property taxes and taxes on equipment and capital are of greater importance - the three large U.S. cities providing the most cost-effective tax structures for business are Cincinnati, Baltimore, and Cleveland, according to the KPMG report.
The KPMG study also makes several general observations:
- Tax policy varies widely by country
- Differences in how taxes are weighted and applied create complexity.
- Tax costs vary widely by industry.
- Tax costs vary more widely than most other costs.
Among all countries included in the study, India has the lowest overall effective tax rate (50.3 percent lower than in the United States, which has a total tax index (TTI) of 100 and represents the benchmark against with other countries/cities are scored. Canada, China, Mexico, Russia, the U.K., and the Netherlands also have a TTI below the United States.