The U.S. Is One of the Least Taxed of the Developed Countries

[NobleSavage]

The U.S. was the third least taxed country in the Organization for Economic Cooperation and Development (OECD) in 2011, the most recent year for which OECD has complete data.

Of all the OECD countries, which are essentially the countries the U.S. trades with and competes with, only Chile and Mexico collect less taxes as a percentage of their overall economy (as a percentage of gross domestic product, or GDP).

http://ctj.org/ctjreports/2014/04/t...d_of_the_developed_countries.php#.U1RR9cfTyRu

 

[Trausti]

Somehow it is considered a bad thing for people to keep the money they earn rather than have government confiscate it?

 

[EricK]

Isn't the important figure government spending rather than government tax revenue. As money spent now, but not collected now, will just need to be collected at some point in the future via taxation.

And is percentage of GDP a useful measure anyway? Even ignoring the much publicised issues with GDP as a measure of the economy, why should a rich country necessarily need more tax revenue than a poorer country per head of population? Just as when people get richer they spend a smaller percentage of their income on essentials, so it might be that as a country gets richer it needs to spend a smaller percentage of its wealth on essentials.

 

[zorq]

Somehow it is considered a bad thing for people to keep the money they earn rather than have government confiscate it?

Somehow it's conisdered a good thing for Mr. Orvil Old Fart to drive around on roads and bridges now and insist that other people pay for them later after he's dead?

 

[lpetrich]

Somehow it is considered a bad thing for people to keep the money they earn rather than have government confiscate it?

Boo hoo hoo hoo hoo. I don't want to pay for anything. I want everything for free. (sarcasm)

If you're young and not against taxes, you have no heart.
If you're old and still against taxes, you have no brain.

 

[Juma]

If you're young and not against taxes, you have no heart.

WTF. It is the young that usually flow over with empathy so I really dont get what you mean.

 

[maxparrish]

Nothing wrong with noting that taxes are lower in the US than elsewhere. BUT there are more than a few questions and other facts that provide insight:

- What do average OECD countries get for higher taxes that we do not? Trains that run on time, universal health care, more cash transfers?

- What might US ranking be if the annual federal deficits were actually paid by taxes?

- What do Europeans not get for higher taxes? Lower food prices, lower home ownership, lower fuel costs, lower disposable income?

Finally, if someone thinks that there is 'not enough taxes' compared to OECD, then compared to OECD who and what should we tax?

U.S. has 6th Highest Capital Gains Tax Rate in OECD
Washington, D.C., February 12, 2014—The top marginal tax rate on capital gains in the United States, combined with state rates, far exceeds rates faced throughout the industrialized world, according to a new report from the nonpartisan Tax Foundation.

Key findings include:
The United States’ average top marginal capital gains tax rate ranks sixth in the OECD at a rate of 28.7 percent.
The United States’ tax rate on capital gains is over 10 percentage points higher than OECD average of 18.2 percent.
California’s top marginal tax rate of 33 percent is the third-highest tax rate on capital gains in the industrialized world, behind only Denmark and France.
The capital gains tax is a non-neutral tax that creates a bias against savings, slows economic growth, and harms U.S. competitiveness.
“Capital gains taxes represent an additional tax on a dollar of income that has already been taxed multiple times. Uncompetitive rates on capital gains can create a bias against savings and could lead to lower levels of investment and slower economic growth,” said Tax Foundation Economist Kyle Pomerleau. “Lowering taxes on capital would the reverse effect, increasing investment and leading the greater economic growth.”

U.S. has the 9th Highest Personal Dividend Tax Rate in the OECD
U.S. States have five of the top ten highest rates in the OECD
Washington, D.C., March 5, 2014— Currently, the United States has one of the highest tax burdens on personal dividend income in the OECD. According to new analysis by the nonpartisan Tax Foundation, at 28.6%, the U.S. has the 9th highest top marginal tax rate on personal dividends compared to other countries in the OECD. Additionally, California has the 6th highest rate in the industrialized world, and is followed by Hawaii (7th), New York (8th), Oregon (9th), and Minnesota (10th).
Key findings include:
The combined federal and state top marginal personal dividend tax rate in the United States is 28.6 percent.
The United States’ top marginal tax rate on personal dividend income is 9th highest in the OECD and 5 percentage points higher than average of the 34 member nations.
Taxpayers in certain states face top marginal rates far higher than the OECD average; Californian taxpayers face the 6th highest top marginal rate in the OECD at 33 percent.
This double tax on corporate profits biases corporate behavior, leads to lower levels of saving and investment, lower wages, and slower economic growth.
"The combined burden of federal, state, and local taxes on dividend income creates marginal rates that exceed dividend tax rates of most of the United States’ major trading partners," said Tax Foundation Economist Kyle Pomerleau. "Reducing this tax burden on savings and investment could lead to faster economic growth, higher wages, and better living standards for all."
Full study: The United States’ High Tax Burden on Personal Dividend Income

U.S. has Highest Marginal Effective Corporate Tax Rate in OECD
Inefficient and Complex Corporate Tax System Distorts Economy
Washington, D.C., February 6, 2014—The United States has the highest marginal effective corporate tax rate (METR) in the OECD at 35.3 percent, according to a new study published by the nonpartisan Tax Foundation. The findings dispel the misconception that while the U.S. statutory corporate tax rate is high, “loopholes” in the code make our effective tax rates competitive with those found in other developed countries.
Key findings:
The marginal effective tax rate (METR) on corporate investment (i.e., the tax impact on capital investment as a portion of the cost of capital) is 35.3 percent in the U.S.—higher than in any other developed country.
The U.S. has maintained the highest METR in the OECD since 2007, when Canada’s multiyear program of corporate tax reform brought its METR below the G-7 average.
Nonetheless, the White House and Treasury Department continue to assert that the U.S. has a lower METR than Canada by failing to properly account for sales and property taxes.
The U.S. average effective tax rate on corporations (AETR) is irregular from year to year due to the complexity and instability of the corporate tax code.
The U.S. average effective tax rate on corporations (AETR) is also high and variable from year to year.
Excessively high U.S. corporate tax rates have shrunk the U.S. corporate sector and reduced corporate tax revenues.
“A country’s competitiveness is hurt by taxation that undermines productivity through investment,” said Dr. Jack Mintz, co-author of the report, and Director and Palmer Chair in School of Public Policy, University of Calgary. “There is no doubt that the free-market system of the U.S. has been a beacon for entrepreneurs and capital investors. But it can do better with multinational companies if its corporate tax system can be reformed to combine a lower tax rate with a broader tax base that facilitates capital investment in general rather than benefiting only a few who are able to navigate through a complex tax structure.”
Unlike in Canada where income earned and taxes paid by corporations appear to correlate with each other along with explainable economic interruptions, U.S. business taxation is distorting. The excessively high corporate income tax rate has become a cause of tax inefficiency and ineffectiveness by leading businesses to excessive tax planning and tax-induced avoidance of incorporation.
Full Report: The U.S. Corporate Effective Tax Rate: Myth and the Fact

...The OECD Says the United States Has the Most Progressive Tax System
October 29, 2008
By
Scott A. Hodge
Barack Obama's admission that his policies would "spread the wealth around" has ignited a nationwide discussion of how progressive the tax system should be and how it should be used to redistribute income among Americans. Obama has been very successful in bolstering the conventional wisdom that the U.S. tax system does not place a significant enough burden on wealthier households and places too much of a burden on the "middle class."
But a new study on inequality by researchers at the Organization for Economic Cooperation and Development (OECD) in Paris reveals that when it comes to household taxes (income taxes and employee social security contributions) the U.S. "has the most progressive tax system and collects the largest share of taxes from the richest 10% of the population." As Column 1 in the table below shows, the U.S. tax system is far more progressive—meaning pro-poor—than similar systems in countries most Americans identify with high taxes, such as France and Sweden.
Even after accounting for the fact that the top 10 percent of households in the U.S. have one of the highest shares of market income among OECD nations, our tax system is second only to Ireland in terms of its progressivity for households.
The table also shows that the U.S. collects more household tax revenue from the top 10 percent of households than any other country and extracts the most from that income group relative to their share of the nation's income.

http://taxfoundation.org/search/node/OECD
http://taxfoundation.org/blog/news-obama-oecd-says-united-states-has-most-progressive-tax-system

 

[maxparrish]

So, it the Center for Tax Justice is going to use OECD as a benchmark for "Tax Justice", then I am sure they (and their supporters) would have no problem with:

- Passing major income taxes on middle and lower income groups and reducing higher taxes on upper income groups so as to decrease income tax progressivity to 17th in the OECD.
- Significantly reducing income tax rates on dividends and capital gains to reduce it to 17th among OECD.
- Dramatically lower corporate income tax rates to the level of 17th in the OECD

So if we wish to be like the average OECD "progressive" society, let's get cracking. Soak the middle and lower classes!

 

[Bomb#20]

Boo hoo hoo hoo hoo. I don't want to pay for anything. I want everything for free. (sarcasm)

If you're young and not against taxes, you have no heart.
If you're old and still against taxes, you have no brain.

This is not a thread about whether there should be taxes. It's a thread about relative tax rates. According to the OP link, the U.S. being one of the least taxed of the developed countries "sharply contradicts the widely held view among many members of Congress that taxes are already high enough in the U.S.". The authors' claim, therefore, is not that we need taxes to pay for stuff, but that we need more taxes to pay for stuff. So unless you can produce a list of services Trausti is getting from government and an explanation for why providing those services justifiably costs more than 24% of the 16.8 trillion dollar GDP of the United States, you owe him

(a) a straight answer for why it's considered a bad thing for people to keep the money they earn rather than have government confiscate it, since the OP link is plainly treating that as a bad thing per se, and

(b) a pledge to refrain from sarcastic putdowns of your opponents when you're blowing smoke out your ass.

 

[J842P]

Certainly what matters is effective tax rates rather than taxes as a percent of GDP? Not that I'm saying I don't think taxes are relatively low in the United States, I'm saying I don't have the information I would need to make that judgement.

 

[Bomb#20]

Somehow it's conisdered a good thing for Mr. Orvil Old Fart to drive around on roads and bridges now and insist that other people pay for them later after he's dead?

That would be a good argument for higher taxes, if we were to take for granted the intuitively obvious assumption that raising taxes lowers the debt burden we leave behind to future taxpayers.

 

[doubtingt]

Taxes as a % of GDP makes perfect sense and is a highly valid basis to judge whether a country is making those who profit off of public resources and infrastructure are paying their due back into those resources.

Every single dollar of GDP is dependent upon the use of public resources, and total GDP is highly correlated with population, and thus should be highly correlated to total spending since the more people, the more public resources that are needed to serve the population. GDP is highly correlated with military spending, adult literacy (providing public education), number of crimes (number of needed police, judges, court buildings, jails, etc.), number of fires (you get the idea), number of traffic accidents (is it sinking in?), miles of roads (you take it from here), and on and on and on. The higher the GDP, the more miles driven, hours worked, stop lights and police needed, the more environmental resources and public infrastructure used in production and distribution, the more military needed to protect those economic interests, etc..

IOW, taxation is merely the manner by which the public coffers are repaid for the public services and use of public resources that allowed for the generation of that GDP in the first place. Thus, it makes perfect sense that the amount of government revenues should correspond close to GDP. Thus, the lower the % of GDP in revenues, the more the producers and distributors are profiting off of externalizing their costs to society via the use of public resources that they do not repay.

 

[zorq]

That would be a good argument for higher taxes, if we were to take for granted the intuitively obvious assumption that raising taxes lowers the debt burden we leave behind to future taxpayers.

You're right, the D's and the R's are horrible at long term financial budgeting. But frankly refusing to even try to address the problem by not raising taxes is simply not productive thinking.

I'm confident the American economy can bear new taxes on the rich. The the supply side is top heavy. The chances of restraint on expenditure are slim but by increasing revenue we at least give long term budget balance a chance.

 

[boneyard bill]

So, it the Center for Tax Justice is going to use OECD as a benchmark for "Tax Justice", then I am sure they (and their supporters) would have no problem with:

- Passing major income taxes on middle and lower income groups and reducing higher taxes on upper income groups so as to decrease income tax progressivity to 17th in the OECD.
- Significantly reducing income tax rates on dividends and capital gains to reduce it to 17th among OECD.
- Dramatically lower corporate income tax rates to the level of 17th in the OECD

So if we wish to be like the average OECD "progressive" society, let's get cracking. Soak the middle and lower classes!

Excellent point and some good info in your previous post. Of course, I've been saying this all along. If you want a welfare state you're going to have to pay for it with higher taxes on the middle class and low income people. Most European welfare states have much higher taxes on consumption. Their income taxes are higher than ours, but they are less progressive; and they don't tax wealth nearly as much as we do.

 

[laughing dog]

Using the OECD as a base, we would have to drastically lower our defense spending.

 

[Ford]

This is not a thread about whether there should be taxes. It's a thread about relative tax rates. According to the OP link, the U.S. being one of the least taxed of the developed countries "sharply contradicts the widely held view among many members of Congress that taxes are already high enough in the U.S.". The authors' claim, therefore, is not that we need taxes to pay for stuff, but that we need more taxes to pay for stuff.

Or perhaps the point of the thread is that people who complain the tax rates in the US are excessively burdensome are simply wrong.

Or perhaps the point of the thread is that people who use terms like "confiscate" when referring to taxes are being overly hyperbolic?

Personally (and I can't speak for OP of course) I think it is a little bit of both. There is a narrative coming from the right which consistently and forcefully promotes the demonstrably false notion that the United States is suffering under an unprecedented tax burden, that those taxes are always going up, and that those tax revenues are providing little or no benefit and are only used to "grow government" - presumably to a size where it can start "confiscating" not just money, but "freedoms."

This false narrative has dug so deep into our national consciousness that two of the things which could justify a significant tax increase - war and dangerously high levels of deficits - were met not with tax increases but tax cuts in the last decade or so. The idea that lower taxes are always better met with the lie that we're "Taxed Enough Already", and the net result has not been an economic boon to Americans (except of course the ones who own multinational corporations).

This isn't an argument for more taxes, but rather an argument for people to stop lying about taxes.

Do we need more taxes to pay for more stuff? Can the wealthy support a higher tax burden? Should the poor have their taxes raised so they can get "skin in the game?" These questions cannot be answered correctly until we base our analysis on reality rather than trumped up hyperbole and misinformation.

 

[Underseer]

Isn't the important figure government spending rather than government tax revenue. As money spent now, but not collected now, will just need to be collected at some point in the future via taxation.

And is percentage of GDP a useful measure anyway? Even ignoring the much publicised issues with GDP as a measure of the economy, why should a rich country necessarily need more tax revenue than a poorer country per head of population? Just as when people get richer they spend a smaller percentage of their income on essentials, so it might be that as a country gets richer it needs to spend a smaller percentage of its wealth on essentials.

So let me get this straight: rightists are justified in complaining about taxes being too high despite the fact that they are very low because spending is high?

 

[Underseer]

Using the OECD as a base, we would have to drastically lower our defense spending.

Typical tax-and-spend librul! Always trying to cut the defense budget!

 

[arkirk]

The problem looks like this and it truly cannot be explained with numbers and charts. The people need to make peace with their government and the government needs to make peace with the people. There are many important functions government performs best for the governed. When these functions are underfunded, our infrastructure decays. Public safety declines. Life expectancy declines. Quality of life declines. Government is a necessity. It is not an option to anybody except the obscenely overconsumptive rich who can buy every road they drive on.

Ecoonomic activity always starts in or on the ground. Something is taken from the earth, worked to some degree then sold. If you keep taking from the earth and never allow it to recover, you begin to deplete the resources you plunder. If you must always get bigger or die, you cannot possibly find the equilibrium continuing civilization require we at least approach.

When you pay your taxes and they are properly spent, you drive on nice roads, you are adequately served by the medical community, there is an abundance of public services. When you deny government the funds it needs, only the poor suffer and they do largely out of sight...er..I just walked half a block to a local 7/11 store and passed a woman about 60 sleeping on the sidewalk on a rug. She is an all too common phenomenon.

We can choose to be a civilized country or we can continue at each other's throats, squablling over a constricted and constipated money supply. The special financial interests in this country are spoiling our environment with their greed and they don't pay enough taxes. How did that happen? They bought the government and rewrote the tax code. All the little fish don't get it. Taxes, if fair are not confiscations. They are the compensation government owes the society it governs and it must collect them in order to operate.

These foreign wars that we have been in all my life have cost us a lot of environmental and social decay. As bad as they are, as terrible as the money predation of the military industrial congressional complex has been, it still is only symptomatic of a government of politicians that do not believe in serving the entire people of the country, a class of people who look down their noses at the common man and maintain his misery for their own benefit. It is hard to say this because it is such an awful thing to think, but alas our current system portends many hard knocks in the future of this country. I had always hoped that we would get on a sustainable path somehow, but the system we have has little chance of getting there.

The government needs not only to collect taxes. It need then to spend them of projects the educate, support and ennoble the entire population. A government that collects taxes then disburses them to rent seekers and war mongers and international financial gamblers earns the very reputation the right wing wants to stamp on all government.

 

[EricK]

So let me get this straight: rightists are justified in complaining about taxes being too high despite the fact that they are very low because spending is high?

Not sure how you draw that conclusion.

If you want to get straight about the whole thing: It doesn't make sense to compare just the current tax rates in various countries if you don't also include the level of government borrowing - as that is just a tax in another form.