draining development.pdf - Khazar University

276 Draining Development?world (the United States), which has one of the highest effective taxrates on corporate profits in the world (notionally stated, as are all ratesused here) if federal and state taxes are combined, and many othermajor countries that combine high absolute GDPs and high tax rates,the average corporate tax rate weighted by GDP is much higher than theapparent simple average; in 2008, the difference was about 5 percent.This is significant. Murphy (2008) finds that the effective current ratesof corporation tax paid by the largest 50 companies in the FTSE 100 fellsteadily, from 26 percent in 2000 to about 22 percent in 2006, both comparedwith a headline rate of 30 percent. This closing rate differential of8 percent looks substantially more significant, however, if it is comparedwith the worldwide weighted average tax rating of about 34 percent in2007 calculated on the basis noted above. A 12 percent differential,assuming (as is likely) that many of these companies have significantsales in the United States, seems high indeed.Including data from the OCRA data set on some secrecy jurisdictions—only those secrecy jurisdictions on which OCRA provides data have beenused in the survey discussed hereafter, and only those on which OCRAprovides specific rate data have been included in the exercise—changes theperspective on these data once again. 10 Data are only available for 2008; so,trend analysis cannot be offered, but, even so, the position is quite different.The data are summarized in table 9A.3. 11 The summary in table 9.1 isbased on the 90 jurisdictions used for computational purposes. The equivalentdata, excluding secrecy jurisdiction locations, are shown in table 9.2.Table 9.1. Summary Data: Corporate Tax Rate, Including SecrecyJurisdiction Locations, 2008percentDescriptionRateNotional simple average of corporate tax rates 20.30Corporate tax rate weighted by GDP 32.10Corporate tax rate weighted by population 29.90Source: Author compilation based on data of Jurisdiction Centre (database), OCRA Worldwide,Isle of Man, United Kingdom, http://www.ocra.com/jurisdictions/index.asp; TaxTools and Resources (database), KPMG, Zug, Switzerland, http://www.kpmg.com/Global/en/WhatWeDo/Tax/tax-tools-and-resources/Pages/default.aspx; World DevelopmentIndicators (database), World Bank, Washington, DC, http://data.worldbank.org/data-catalog/world-development-indicators/ (for GDP).