KPMG report lists most tax-favorable cities

San Juan, Puerto Rico, Baltimore, and Atlanta have the most favorable tax structures for businesses among U.S. cities/locations with populations exceeding 2 million, according to a study released recently by KPMG International (KPMG).

Of the 35 large international cities highlighted in the study, San Juan, Baltimore and Atlanta all rank in the top ten -- first, eighth and ninth, respectively. And among the 10 countries in the study, the U.S. ranked fifth in terms of the favorability of its overall tax structure for business.

KPMG's 2008 Competitive Alternatives: Focus on Tax study is a global comparison of the total tax burden that may be faced by companies in 102 cities throughout 10 countries including corporate income taxes, capital taxes, sales taxes, property taxes, miscellaneous local business taxes and statutory labor costs. The study is intended to provide a guide for companies wanting to compare the tax burden they may incur in different cities around the world.

"Cities across the United States recognize that attracting and retaining businesses of all sizes is important for a vibrant local economy," said Hartley Powell, national leader of the Strategic Relocation and Expansion Services practice at KPMG LLP, the U.S. member firm of KPMG International. "As the survey results indicate, certain cities are leaders in developing a tax environment that encourages business development, and tax costs are a key consideration in the site selection process."

According to the study, San Juan had a total tax index of 46.6 representing tax costs 53.4 percent below the U.S. national average of 100.0. San Juan was followed by Baltimore and Atlanta at 92.1 and 95.1, respectively.

Other high-ranking large U.S. cities included Tampa, Fla. (98.1), Detroit (98.6), and Phoenix (98.8).

Industry Classifications

The results of the study also vary depending on the type of business. As a location for R&D operations, the three cities with the most cost-effective tax structure in the large-sized city category were San Juan (61.8), Baltimore (88.4), and Portland, Ore. (88.5).

For manufacturing operations, where property taxes and taxes on equipment and capital are of interest, the three, large-sized U.S. cities with the most cost effective tax structure were San Juan (42.4), Baltimore (91.3), and Atlanta (95.3).

The services industry, on the other hand, tends to be most affected by statutory labor costs. The top three, large-sized U.S. cities with the most favorable tax structure for services included San Juan (65.5), Atlanta (92.7) and Baltimore (94.2).

Mid-sized Cities

In the mid-sized city category (populations between 500,000 and 2 million), the top cities included Omaha, Neb. (94.2), Greenville-Spartanburg, S.C. (95.2), Little Rock, Ark. (95.7), Milwaukee, Wis. (96.0), Youngstown, Ohio (97.1), Raleigh, N.C. (98.1), McAllen, Texas (98.5), Buffalo, N.Y. (98.9), and Salt Lake City, Utah (99.1).

Small-Sized Cities

In the small-sized city category (populations between 100,000 and 500,000), the top cities included Saginaw, Mich. (92.0), Cheyenne, Wyo. (92.1), Cedar Rapids, Iowa (92.1), Sioux Falls, S.D. (92.8), Shreveport, La. (92.9), Lexington, Ky. (93.0), and Montgomery, Ala. (95.2).

The full text of the 2008 study by KPMG International is available online.

Total tax indexes for all large-sized U.S. and affiliated cities studied follow.

KPMG's 2008 COMPETITIVE ALTERNATIVES FOCUS ON TAX STUDY

(U.S. cities with populations of more than 2 million)


City Total Tax Index Rank
San Juan, PR 46.6 1
Baltimore, MD 92.1 2
Atlanta, GA 95.1 3
Tampa, FL 98.1 4
Detroit, MI 98.6 5
Phoenix, AZ 98.8 6
Minneapolis, MN 101.5 7
North Virginia, (Metro DC) 101.6 8
Denver, CO 101.8 9
Philadelphia, PA 101.9 10
Boston, MA 102.1 11
Dallas-Fort Worth, TX 103.2 12
Houston, TX 104.1 13
Portland, OR 104.5 14
Metro Los Angeles, CA 105.1 15
Chicago, IL 105.3 16
St. Louis, MO 106.5 17
Seattle, WA 107.1 18
San Diego, CA 107.7 19
New York, NY 109.2 20
San Jose, CA 112.2 21

The total tax index is a measure of the total taxes paid by corporations in a particular location and industry, expressed as a percentage of total taxes paid by similar corporations in the United States. Thus the United States has a total tax index of 100.0, which represents the benchmark against which the other countries and cities are scored.

You may like these other stories...

IRS audits less than 1 percent of big partnershipsAccording to an April 17 report from the Government Accountability Office (GAO), the IRS audits fewer than 1 percent of large business partnerships, Stephen Ohlemacher of the...
Legislation coming out of Washington just might reduce homeowners' burden for disaster insurance. It's a topic very much on everyone's minds since the mudslide in Oso, Washington. The loss of human life was...
Divorce is hard, and the IRS isn't going to make it any easier. The IRS generally says "no" to tax deductions that might ease the pain of divorce. In certain circumstances, however, you might be able to salvage...

Upcoming CPE Webinars

Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.