TAXES! How does the U.S. measure up?


Tax returnsTaxes are always a political hot potato but over the last few years they have been the searing topic of choice as the Bush Tax Cuts’ expiration was debated by many a political pundit, each and every one of them apparent “experts”. Screams and wails about how much individual or “job creator” taxes will rise or fall should one or the other candidate wins. Constant complaints emanate from the Republican Party and the likes of Grover Norquist that taxes are too high, how any increase will destroy the economy and only lower taxes will save us all despite the large temporary cuts which have been in effect for more than a decade. Let’s remember those tax cuts, those saviors of the universe, were in place throughout the beginnings of the economic crisis, failed to thwart what became the Great Recession and have done precisely what during its slow recovery?

So amidst all these thunderstorms of charged rhetoric, where does the United States sit among the other nations of the world? How do our “unjustifiably” high, burdensome tax rates compare to the countries we share this little blue globe with?

Let’s have a look…

world tax rates ranking

Among those earning the equivalent of $100,000 per year the U.S. ranks 55th out of 114 countries. For the richest 1-2%’ers, those “job creators” heard so much about over the last 4 years, we rank 53%.

Another measure of comparison is to look at taxes as a share of Gross Domestic Product (GDP). Compared to the Organisation for Economic Co-operation and Development (OECD) country average of 36.2%, out of 33 members countries, the United States is located near the bottom at 27.3%.

Tax-Numbers-Jan-2012-International_

When additional taxes such as sales taxes, capital gains and property taxes, and corporate taxes are added in, about 28 cents of every dollar earned nationally goes to the government (local, state & federal) in the form of revenue, ranking it near the bottom of the G7 nations. This, essentially makes the claims of an “over-taxed” U.S. fairly moot. Compared to the rest of the world, and especially other developed countries, this country is not as burdened with taxation as many would make it appear.

What this whole issue essentially comes down to is how much are we getting for the tax dollars sent to the government and what it is the public thinks the government should spend those dollars on. Do we want social safety nets, infrastructure, investments in education, healthcare, science and new technologies? Or should we leave those needs solely up to the private sector and charitable organizations ensuring the government, especially the federal government, acts in nothing more than a very limited role?

At its heart, this comes down to a difference of philosophies but unfortunately given the extreme partisan environment in which our country’s politics currently resides, a debate such as this is now virtually insurmountable.

Reference Articles:

US tax bite smaller than other nations’

Individual Income Tax and Social Security Rate Survey

The Numbers: How do U.S. taxes compare internationally?

How Low Are U.S. Taxes Compared to Other Countries?
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6 Comments to “TAXES! How does the U.S. measure up?”

  1. Considering that we have the World’s largest (and most money spent on) military, our tax rates should be higher.
    That translates into we are spending more on our military and less on our roads, schools, health care………

  2. Have you seen this with state and local income taxes also factored in? I suspect it would move us up, but I’m pretty sure we’d still be in the middle of pack at worst.

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