The 2023 International Tax Competitiveness Index

October 19, 2023 by Dan Mitchell @ International Liberty

As I did with the 2022 issue, the 2021 issue, the 2020 issue, etc, let’s analyze the results  of the new International Tax Competitiveness Index from the Tax Foundation.

In part, the results are boring because – once again – Estonia has the best-designed tax system of all OECD nations.

To make things even more boring, the top four nations have been the same four years in a row.

Latvia is in second place. Again. New Zealand is in third place. Again. Followed by Switzerland in fourth place. Again.

Here are the full rankings (click to enlarge).

Colombia is in last place, so we can safely assume it is not on a path to becoming a rich nation. And Chile also gets a bad score (which is only partly the fault of the nation’s moronic president since Chile routinely has been near the bottom).

Among nations from Western Europe, France, Italy, and Portugal get the worst scores. Which seems to be an annual tradition.

Since more than three-fourths of my readers are American, let’s close with some analysis of the United States.

The bad news is that the United States is in the bottom half, ranking #21 out of 38 countries.

The good news is that the United States routinely used to be one of the five worst countries.

So be thankful for the 2017 tax legislation, which substantially improved America’s score for corporate tax (the US has always had a good score for consumption taxes, presumably in large part because we haven’t made the mistake of imposing a value-added tax).

P.S. One potential shortcoming of the Index is that there is no variable for the overall tax burden. This is a deliberate choice since the Tax Foundation wants to focus on the structure of the tax system. As noted in the Frequently Asked Questions, “The Index is concerned about how a tax system is structured; not how much revenue is raised by that system. …The Index is designed to help policymakers determine better ways to levy taxes rather than encourage high or low overall levels of tax
revenue.”

Nothing wrong with that approach, of course, but people interested in the structure and the burden of taxation should look at this Tax Foundation report in conjunction with the fiscal data from either Economic Freedom of the World and/or the Index of Economic Freedom.