Published for the tenth time by the Tax Foundation, the Tax Competitiveness Index 2023 provides a comparative overview of the tax systems of 38 OECD countries. Five different categories are considered: corporate taxes, individual taxes, consumption taxes, wealth taxes, and cross-border tax regimes (see overview on p. 57).
The key criteria for the quality of a tax system are, first, competitiveness: low marginal tax rates are desirable to keep companies in the country and, above all, to stimulate the investment necessary for long-term prosperity. And second, tax neutrality. This means that taxes should not distort economic activity.
The index gives a score of 100 to the country with the best tax system. The other countries are then ranked according to their distance from the best country. The country with the best tax system is currently Estonia, ahead of Latvia and New Zealand. The full ranking can be found on page 3.
The index uses the most recent data available (as of July 2023) and draws on many different sources, including the OECD, the European Commission and Bloomberg (see also p. 59).
Austria performs on average: just behind Germany
Austria ranks 20th, three places lower than last year, with an overall score of 65.3 points (-2.0 points compared to 2022).
With a high burden on labor income and a rather high corporate tax rate (24%), Austria is quite similar to its German neighbor.
It is worth noting that there is no wealth or inheritance tax in Austria. These taxes reduce incentives to save and invest, which has a negative impact on economic growth – while generating little revenue (more on this on pages 26-27).
The AEC’s fundamental goal is to promote a free, responsible and prosperous society. Through education and improving public understanding of key economic questions, the AEC promotes the idea of a free market economy and the ideal of a free society.