US Tax Burden Compared to Other OECD Countries

To hear the right tell it, the United States is horribly overtaxed. But compared to other industrialized nations, our tax burden is among the lowest in the world. Citizens for Tax Justice looked at taxes collected as a percentage of GDP in the OECD countries and found exactly that.

oecd2013graph

Of the 34 OECD countries, the US ranks 32nd, with only Mexico and Chile having lower rates. And at 24.8% of GDP, we’re just barely over half the countries at the top (Denmark, Sweden, Belgium) and about 50% lower than the average. And yet we spend more on defense than those other 33 countries combined, and by a significant margin. That has long been our problem, of course; we want to be an empire but we don’t want to pay for it. Thus, we start wars that cost trillions of dollars while simultaneously cutting taxes, in effect writing a huge IOU to ourselves that we have to pay back with interest.

Also interesting are the trends. Since 1979, we have steadily slid down the list from the middle of the pack to one of the least-taxed countries. Also bear in mind that there has been a huge shift in where that tax burden is placed. In 1955, 27.3% of federal revenue came from corporate income taxes; today it’s 8.9%, with two-thirds of all corporations paying no income taxes at all and some of the largest and most profitable companies actually getting taxpayer money transferred to them rather than paying in. As a percentage of GDP, in 1955 corporate taxes were 4.3%; today they are 1.3%. Personal income taxes, on the other hand, have gone from 58% of federal revenue to 81.5%.

If we were to return corporate tax rates to where they should be, it would raise about half a trillion dollars a year (even now, when GDP is down; when the economy cranks up again, it would be even higher).

11 comments on this post.
  1. macallan:

    Well, let the wingnuts move to Mexico and see how they like it.

  2. unbound:

    “Of the 34 OECD countries, the US ranks 32nd, with only Mexico and Chile having lower rates.”

    Ah, but as I’ve stated in the past, Mexico (economically) is exactly where the truly wealthy in the US (top 0.001%) are trying to take this country. And they are continuing to succeed.

    The reason I’ve mentioned Mexico in the past was an interesting bit of trivia from the 90s that Mexico was actually number 4 when listed in order of the number of millionaires residing in a country. Basically, Mexico arrived at the US wealth inequality (http://www.youtube.com/watch?v=QPKKQnijnsM) well before we did.

  3. slc1:

    Of course, the richest person in the world, Carlos Slim, is Mexican. He ranks just behind Sheldon Adelson and Hiam Saben as a favorite Don Williams target.

  4. Rob F:

    “And yet we spend more on defense than those other 33 countries combined, and by a significant margin. That has long been our problem, of course; we want to be an empire but we don’t want to pay for it. Thus, we start wars that cost trillions of dollars while simultaneously cutting taxes, in effect writing a huge IOU to ourselves that we have to pay back with interest.”

    Part of the reason those other countries get away with spending so little on defense is because they take advantage of your military (indirectly) defending them (such as by keeping trade routes secure). If you cut military spending, those countries would, if they wanted the same level of security, have to spend more on guns and less on butter.

  5. Rob F:

    “Thus, we start wars that cost trillions of dollars while simultaneously cutting taxes, in effect writing a huge IOU to ourselves that we have to pay back with interest”

    To add to my comment @4, the indirect defense of other countries most certainly doesn’t justify un(der)funded military adventurism.

  6. Draken:

    Hahaha, look at Denmark. I’ve paid so much tax the past 12 year I pwn you all. Now get me a free beer.

  7. M, Supreme Anarch of the Queer Illuminati:

    For extra kicks, compare that list to the inequality-adjusted human development index. I’m just eyeballing it, but it looks like there’s a pretty significant degree of correlation; the Nordic countries take up rather significant chunks of the top portion of both lists…

  8. D. C. Sessions:

    What happens if you count US healthcare spending into the “tax” category to account for various countries’ policies (e.g. single payer in the UK and parts of Canada?)

  9. Robert B.:

    @ D.C. Sessions:

    Well, the first thing that happens is that our tax structure starts looking less regressive, because it sure ain’t the poor people who are buying all that healthcare.

    The next thing that happens is that the ghost of Noah Webster appears and explains to you the differences in function and purpose between “taxes” and “things you buy for yourself.”

  10. dingojack:

    I’m reading a interesting book called Why Nations Fail by Daron Acemoglu and James A. Robinson.
    Their thesis in a nutshell: lack of opportunity/ economic inequality creates economic basket cases (such as Mexico, exactly the kind of state that libertarians and tea-baggers want to create in the US).
    Perhaps the tax rate as a percentage of GDP is too crude a measure. Who is paying tax and how much? What level of amenity is being created with the taxes collected (Are they being used to prop-up certain industries? Used to support the life-styles of politicians or plutocrats? Squandered on military adventurism? And so on).
    For example the Human development index (2013) places:
    1. Norway (0.955)
    2. Australia (0.938)
    3. USA (0.937)
    4. The Netherlands (0.921)
    5. Germany (0.920)

    11. Canada (0.911)

    15. Denmark (0.901)

    20. France (0.893)

    26. The UK (0.875)

    But HDI / taxes (as % GDP):

    USA = 3.778226
    Australia = 3.664063
    Canada = 2.93871
    Germany = 2.548476
    The UK = 2.507163
    The Netherlands = 2.379845
    Norway = 2.098901
    France = 2.081585
    Denmark = 1.892857

    The US (and Australia) might have low taxes, but they seem to be able to transfer the little they get into high literacy, long life spans, high standards of living and quality of life. Denmark and Norway not so much.

    There are lies, damned lies …

    :) Dingo

  11. iangould:

    I’m reasonably certain this is only national level taxes. US states eaise more revenue than equivalent levels of government in other developed countries so the total tax take would be somewhat higher.

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