America's Tax Morass
It's a huge pain in the neck to pay business taxes in the United States. That's one of the findings of a new study by PricewaterhousCoopers called Paying Taxes 2012.
The study ranks 183 economies on the relative ease or difficulty of paying taxes. Rankings take into account total tax payments and contributions required of a medium-size company each year, as well as the time it takes to comply with the tax code and the overall tax rate.
The Maldives takes the prize for being the easiest country in which to pay taxes, requiring only three tax payments per year and costing businesses less than an hour of their time each year to comply. On top of all this, at just 9.3%, the total tax rate in the Maldives is comparably very low.
Following the Maldives, Qatar, Hong Kong, Singapore, and Ireland round out the easiest five places to pay business taxes. America's overall ranking is 69th, but on the dimension of total tax rate which PwC calculates to be 46.7% (including Social Security and other taxes on top of the 35% corporate rate), we come in 131st.
See other key findings here, and the full list of rankings right here.
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Aug '10
Re: America's Tax Morass
My practice is a Subchapter S corporation. I pay my accountant thousands of dollars each year and yet I continue to get notices from the IRS that I haven't filed or haven't paid. Honestly, I never know where I stand and whether I have paid too much in taxes.
One thing's for sure, I know I haven't paid too little.
Feb '11
Re: America's Tax Morass
You can get the entire report here. Thanks for finding this, Diane. Most helpful.
Aug '10
Re: America's Tax Morass
Maybe your accountant is a screwup. The Internal Revenue Code probably doesn't have "screwup" anywhere in it but a taxpayer cannot farm out taxpaying responsibility. If a payment or form has failed to arrive, you the taxpayer hear about it, chiefly if not exclusively. I'd talk to your beancounter. He can't do all your work for you but, if not for the IRS then for you, he must do some. And what he doesn't do, you must find out and do yourself. Sorry to scold!
Edited on Nov 30, 2011 at 4:24pmOct '10
Re: America's Tax Morass
Diane Ellis, Ed.:
PricewaterhousCoopers
Should be “PricewaterhouseCoopers”. Yes, I'm aware that these contrived amalgamated corporate names mean nothing, but still let's cite them correctly.
As to the larger issue, the U.S. individual and corporate tax code is such an abomination that only those tethered to its domicile submit to it. It isn't the tax rate—it's the compliance costs and the worldwide scope of U.S. taxation.
People in the U.S. have fever dreams that those of us outside want to get in. Dream on! Why, exactly, should I want to have to declare my renminbi denominated bank account in Hong Kong to the IRS?
U.S. citizens are pariahs in international banking because of imperial entanglements. Even U.S. citizens working abroad find it impossible to open a local bank account because of the constraints of The Man.
Edited on Nov 30, 2011 at 4:42pmJun '11
Re: America's Tax Morass
Not that PwC is complaining about all the extra business this send their way, mind you.
Aug '10
Re: America's Tax Morass
Canuckistan is 11th!
Can I get a whoop-whoop?!
Jul '10
Re: America's Tax Morass
Paying business taxes is a pretty obnoxious endeavor in the U.S. You got yer SS/Medicare payroll nonsense which is to be remitted monthly, on pain of significant penalty. You got yer unemployment "insurance." You got yer 35% Federal rate if you make a profit. Then there's Obamacare with its new looney tunes reporting requirements ...
You also have to deal with one of the few downsides of federalism: multi-tiered taxation. Maybe your state has a gross receipts tax, maybe there's a sales tax, maybe there's a profits-based tax. Often it's two of the three, and like the feds, states change tax laws from time to time often making them more complicated.
Finally, you have income taxes (potentially multi-tiered), which if you are a small business owner you must take into account. Will a higher salary reduce or increase the tax liability? For some businesses year end profit projections are useful, others less so. In the latter case bonuses or 2-3 checks a year rather than higher bi-weekly salaries might make more sense. Or not.
I need to talk to my accountant again.
Edited on Dec 1, 2011 at 6:26pm