By Steve Jagler Special to OnMilwaukee.com Published Jul 29, 2008 at 7:43 AM Photography: Allen Fredrickson
Steve Jagler is executive editor of BizTimes.

Over the years, the message that Milwaukee is some sort of terrible business tax hell hole has been perpetually hammered upon us by the Wisconsin Manufacturers & Commerce.

Their drumbeat is omnipresent and incessant to the point that many of us just take it as a given, without even considering that it might not be true.

Well, here's some new data to provide some perspective, and it's probably going to seem counterintuitive.

KPMG International, a major audit, tax and business advisory firm, released a new study this week, the "2008 Competitive Alternatives: Focus on Tax," a global analysis of the total tax burdens facing companies in 102 cities throughout 10 countries.

The study accounted for factors such as 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 relative tax burdens they may incur in different cities around the world.

According to the new report, Milwaukee has the 15th-lowest tax corporate burden out of 59 U.S. cities and has the 41st-lowest burden out of the 102 cities internationally.

Among 23 "mid-size" American cities with populations of 500,000 to 2 million, Milwaukee has the fourth-lowest tax burden in the report.

The study also ranked the cities by their relative tax burdens for a handful of specific industries. From a tax burden perspective, of the 59 American cities in the report, Milwaukee ranks 14th-best for manufacturing, 22nd for research and development and 25th for the service industry.

Among mid-size American cities, Milwaukee has the third-lowest tax burden for manufacturers.

San Juan (Puerto Rico), Baltimore and Atlanta have the lowest tax burdens for businesses among U.S. cities with populations of more than 2 million. Others on that list of large tax havens include Tampa, Detroit and Phoenix.

Among the 23 mid-size American cities, the only three markets with lower tax burdens than Milwaukee were Omaha, Neb., Greenville-Spartanburg, S.C., and Little Rock, Ark.

"Mid-sized cities often offer tax incentives to attract businesses to their locations, and tax costs are clearly a key consideration in the site selection process," said Hartley Powell, national leader of the Strategic Relocation and Expansion Services practice at KPMG LLP, the U.S. member firm of KPMG International.

"In addition to these incentives, mid-sized cities tend to have lower labor and real estate costs, making them an attractive option for businesses to consider."

Internationally, of the 10 countries evaluated in the report, Mexico had the lowest corporate tax burden, followed (in order) by Netherlands, Canada, Australia, United States, United Kingdom, Japan, German, Italy and France.

"Cities across the United States recognize that attracting and retaining businesses of all sizes is important for a vibrant local economy," Powell said. "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."

This is by no means to imply that Milwaukee and Wisconsin should stand pat on the issue of taxes. Indeed, we must remain vigilant.

However, we are seeing a growing body of evidence that the WMC's priorities are, at best, misguided.

Check out Forward Wisconsin, a public-private organization that works to recruit businesses to the state. The agency cites a study by the Tax Foundation, which claims that Wisconsin's business taxes are lower than those in 37 other states.

Forward Wisconsin cites "Wisconsin's business-friendly attitude." The state's flat corporate tax rate of 7.9 percent has been changed in 20 years, the agency reports when it is attempting to woo businesses from out of state to come here.

Perhaps the WMC would be better off advocating for reforms in health care, the true menace that is hammering Wisconsin's businesses, their employees and their families.
Let's stop for a moment and consider the implications of the new KPMG report.

Imagine. Milwaukee is being cited internationally among "certain cities" that are "leaders" in developing healthy tax climates for businesses.

Who knew?

 

Steve Jagler Special to OnMilwaukee.com

Steve Jagler is executive editor of BizTimes in Milwaukee and is past president of the Milwaukee Press Club. BizTimes provides news and operational insight for the owners and managers of privately held companies throughout southeastern Wisconsin.

Steve has won several journalism awards as a reporter, a columnist and an editor. He is a graduate of the University of Wisconsin-Milwaukee.

When he is not pursuing the news, Steve enjoys spending time with his wife, Kristi, and their two sons, Justin and James. Steve can be reached at steve.jagler@biztimes.com.