Cincinnati, Baltimore and Cleveland ranked highest among large cities in their tax favorability for businesses, according to a new study by KPMG, with New Orleans and Baton Rouge, La., leading the way among smaller cities.
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Of the 55 large international cities highlighted in the study, Cincinnati, Baltimore and Cleveland all ranked in the top 20 – 16th, 17th and 18th, respectively. Among the 14 countries in the study, the U.S. ranked eighth in terms of favorability of its overall tax structure for business.
The study also found that New Orleans and Baton Rouge had the most cost-competitive tax structure among locations in the mid- and small-sized city categories, respectively, while a third Louisiana location, Shreveport, ranked second among small cities.
For its 2012 Competitive Alternatives: Focus on Tax study, KPMG compared the total tax burden that may be faced by companies in 113 cities across 14 countries in terms of corporate income taxes, capital taxes, sales taxes, property taxes, miscellaneous local business taxes and statutory labor costs.
“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 KPMG principal Hartley Powell in a statement. “With three Louisiana cities faring so well and the high rankings among the large cities for Ohio’s Cincinnati and Cleveland, it’s clear that some states are working particularly hard to make their cities more competitive in terms of corporate tax.”
According to the study, Cincinnati had a total tax index of 80.8, representing tax costs 19.2 percent below the U.S. baseline of 100.0. Baltimore and Cleveland followed at 83.3 and 85.2, respectively.
Other U.S. cities that ranked in the top 20 among international cities for most cost-competitive tax structure included Atlanta (86.7) and Pittsburgh (89.1).
The study report also examined which cities offered the lowest tax burdens for business based on sectors. This year’s report reviews the digital, research and development, corporate services and manufacturing sectors.
As a location for digital operations, Atlanta (71.1), Orlando (75.2) and Tampa (75.3) topped U.S. cities in the large city category for most cost-effective tax structures. Minneapolis (85.1), Atlanta (87.3) and Cincinnati (90.0) were the top three large cities in the R&D sector for most favorable tax structures.
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 were Cincinnati (76.6), Baltimore (78.1) and Cleveland (82.2).
The large-sized cities with the most cost-effective tax structures for the corporate services sector included Atlanta (86.8), Cincinnati (88.2) and Orlando (89.3).
In the mid-sized city category (with populations between 1 million to 2 million), cities offering the most favorable tax climate for business were New Orleans, (67.7), Wilmington, Del. (85.1), and Raleigh, N.C. (85.5).
Small cities offering the most favorable tax-structure for business in the small-sized city category (with populations under 1 million) were Baton Rouge, La. (66.5), Shreveport, La. (70.7), and Omaha, Neb. (73.1).
The full study is available at www.CompetitiveAlternatives.com/reports/2012_compalt_report_tax_en.pdf.