Bangor has one of the best business tax climates in the country, says new report

BANGOR, Maine — A new report from a global consulting firm says Bangor has one of the most favorable tax structures for businesses in the country, beating out such cities as Baltimore, Buffalo and Tampa.

Bangor placed seventh on the list of 71 U.S. metropolitan areas ranked on their business tax costs, according to a new report by KPMG, an audit and business location consulting firm. The report is a tax-focused supplement to KPMG’s annual guide to business location costs, “2012 Competitive Alternatives.”

Among small cities, defined as those with populations of fewer than 1 million people, Bangor ranked fifth, according to the report.

“This appears to be great news,” said Peter DelGreco, CEO of Maine & Co., an organization that assists businesses interested in coming to or expanding in Maine. “Any time we can use a report from a source like KPMG that highlights the positive aspects of doing business in a given region, that’s always helpful.”

To complete the report, KPMG took a hypothetical company starting a business in each city and calculated the total tax burden faced by that business, incorporating three components: corporate income taxes; other corporate taxes, which include capital taxes, sales taxes, property taxes and miscellaneous local business taxes; and statutory labor costs. KPMG’s analysis used tax data from July 2011 to January 2012, and incorporated any future tax changes in a location announced before January 2012.

Cities are then compared by total tax costs using a Total Tax Index, or TTI, which “is a measure of the total taxes paid by corporations in a particular location, expressed as a percentage of total taxes paid by corporations in the U.S.” Therefore, the United States has a TTI of 100, which is the benchmark used to score all cities.

The Bangor metro area’s TTI is 82.4, which places it in seventh place among U.S. cities. The highest-ranking city was Baton Rouge, La., with a TTI of 66.5.

Bangor benefits from low property taxes, thanks in part to the Maine Business Equipment Tax Exemption Program, and moderately low sales tax costs, according to Hartley Powell, principal in KPMG’s Global Location and Expansion Services practice. When judging just on the “other corporate taxes” category, which includes capital, property and sales taxes, Bangor ranks second among 71 U.S. cities, behind only Wilmington, Del.

The report also considered the tax climate for businesses in particular industry sectors.

In corporate services, Bangor ranked fourth among the 31 small cities, helped by low corporate income taxes in this sector and benefiting from Maine’s favorable sourcing rules regarding services income, according to Powell.

In the manufacturing sector, Bangor ranked sixth among the 31 small cities. While it ranked 24th out of 31 when it comes to corporate income tax, the importance of property taxes in this sector results in Bangor ranking first among 31 when it comes to “other corporate taxes,” according to Powell.

In the R&D sector, Bangor also ranks sixth, being helped by Maine’s High-Technology Investment Tax Credit.

Bangor fares less well in the digital sector, placing 10th, bested by locations in states that have specific incentives for the digital media industry, Powell said.

Bangor is the only Maine city to appear on the list. The next- highest New England city on the list is Providence, R.I., which comes in at 15th with a TTI of 85.8.

Bangor is a “a great region for growth, and there’s a workforce we can market to potential companies looking to grow and expand their companies,” DelGreco said. “I think that this report is going to be useful in accomplishing that goal.”