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).
