U.S. Ranks 18th on International Tax Competitiveness Index, Says Newsweek
The U.S. ranks 18th on a map compiled by Newsweek with data showing the best and worst Organization for Economic Co-operation and Development (OECD) countries for taxes.
Estonia was first, Latvia second and New Zealand came third, according to overall rankings based on the Tax Foundation's 2024 International Tax Competitiveness Index.
Why It Matters
The findings come amid growing debate over the burden of taxes globally and within the U.S., where economic experts and local officials are warning of inflation-related bracket creep and rising property taxes.
The Organization for Economic Co-operation and Development (OECD) is an intergovernmental organization that promotes policies to improve economic and social well-being across its member countries.
What to Know
Estonia was ranked the highest, scoring 100 on the index, for the 11th year in a row—a higher score indicates moderate rates, broad bases, and simple rules, while a lower score indicates higher rates, complexity, and targeted breaks.
The Tax Foundation explained that Estonia's high score "is driven by four positive features of its tax system."
- First, it has a 20 percent tax rate on corporate income that is only applied to distributed profits.
- Second, it has a flat 20 percent tax on individual income that does not apply to personal dividend income.
- Third, its property tax applies only to the value of land, rather than to the value of real property or capital.
- Finally, it has a territorial tax system that exempts 100 percent of foreign profits earned by domestic corporations from domestic taxation, with few restrictions.
It comes up with its overall ranking by looking at individual, corporate, property, consumption, and cross-border taxes.
The top 10 after Estonia are Latvia, New Zealand, Switzerland, Lithuania, Luxembourg, Hungary, Czech Republic, Slovakia, and Israel.
The United States is ranked eighteenth overall, scoring 66.5, based on a ranking of 17th for individual taxes, 20th for corporate taxes, 28th for property taxes, fourth for consumption taxes, and 35th for cross-border taxes.
Implications and Expert Warnings
It comes as two experts have warned that should E.J. Antoni, Donald Trump's new pick to lead the Bureau of Labor Statistics, employ statistical methods that downplay the real-world effects of inflation, many Americans could end up paying higher taxes.
In an article for the Wall Street Journal, Tax Foundation President Daniel Bunn and Kyle Pomerleau, a senior fellow at the American Enterprise Institute (AEI), said that "artificially low inflation numbers" could impact how the Internal Revenue Service (IRS) conducts its annual tax bracket adjustments, or "indexing."
They warned that "if nominee E.J. Antoni manipulates the statistics to make Mr. Trump look good, you could end up paying higher taxes."
White House Assistant Press Secretary told Newsweek: "President Trump selected Dr. E.J. Antoni III to restore America's trust in the jobs data that has had major issues, without any real attempt at resolution, for years. Antoni's education and vast experience as an economist has prepared him to produce accurate public data for businesses, households, and policymakers to inform their decision-making."
Public Reaction and Future Outlook
The Tax Foundation said: "The variety of approaches to taxation among OECD countries creates a need to evaluate these systems relative to each other."
It emphasized that "a competitive tax code is one that keeps marginal tax rates low. In today's globalized world, capital is highly mobile. Businesses can choose to invest in any number of countries to maximize their returns. High tax rates can drive investment away, hinder domestic growth, and lead to tax avoidance."
Next Steps
As tax burdens continue to influence household budgets and economic growth, governments are under increasing scrutiny to design fair and effective tax systems. The Tax Foundation hopes its index guides policymakers toward promoting growth and investment while maintaining fairness and transparency. With inflation, rising housing costs, and political shifts on the horizon, tax policy remains central in public debate.