Chart of the day: tax burden in the US and globally
Despite the widespread view in the US that taxes are high, taxes in the US are relatively low both in the global and historical context. These two charts from the Globe & Mail make that plain (hat tip Paul Kedrosky).
And if inflation was properly categorized as a tax, how would that affect the graph? What if other taxes were also included? Like artificially high agriculture prices? – taxes that transfer money from one group of people to another, but are not reflected in aggregate statistics.
I wonder what the graph would look like if 20%-90% income percentiles were included only.
First of all, your vocabulary is extremely misleading. By using the term “tax-burden” the author assumes that all necessary taxes were paid… What this article neglects to mention is the severity by which tax revenues in America have tapered over the decades due to corporate profits seeking tax havens.
Had corporations been paying what they were supposed to, i’m sure you would see the “total tax-burden” of America shoot right back up.
This article also neglects to mention that in Denmark, welfare IS the state. And almost a third of the entire population works in the public sector. The article neglects to point out that in Denmark tax revenues directly drive their economy, while in America it is the economy which drives tax revenues.
Denmark is also used as a conduit for tax-havens… Denmark collects taxes on funds which are not directly linked to their countries GDP. This also increases Denmark’s aparent “tax-burden.”
i guess a shorthand comment should have been:
SCREW CHARTS WITHOUT CONTEXT!
Also consider that the countries with the highest tax burdens have also the highest level of incomes and standards of living. They also have exceptional quality of life so I know where I would prefer to live.
Taxes are a political question more than an economic one. There are many ways to skin a cat as evidenced by the higher tax burdens and high quality of life in Europe. Americans have become tax fetishists. You know that I am against tax increases, David. Clearly, tax policy is a lot stickier than other fiscal policy or monetary policy so I believe attempts to tweak it are dangerous. Nevertheless, the evidence is not that America is overtaxed.
Take a look at the response to Kedrosky’s post linked here. it was a regular outpouring of politcal bias altering economic understanding:
https://pro.creditwritedowns.com/2011/05/how-political-bias-alters-economic-understanding.html
People have become so enamoured with ideology and the concept that America is overtaxed and the government is inefficient, that they fail to see the data objectively. Just because the US is taxed less is not proof we should raise taxes. But it is proof that America’s relative tax burden is lower. Full stop.
Yes I do find it strange that people vote for tax cuts that will never benefit them. In fact the vast majority of Americans have probably found that the tax burden on them has increased because the corporations and the rich have managed to create for themselves so many loopholes.
In the UK people here had the same attitudes towards local taxation. So the BBC did a program showing what they get for their local taxes. For 6 weeks people on one street had no access to local services and had to organise and pay for all their services, like street lighting and garbage collection. By the end of the six weeks they realised that they actually got very good value from their local taxes. When you see placards saying keep your government hands off my medicare you have to assume that they are either morons or do not have any idea what their taxes pay for. If they actually had those services cut and they had to pay for them they might appreciate them a lot more. Maybe the government should send everyone a leaflet with the cost of all departments and what they cost each person. For example the Royal Family here in the UK cost the average person £0.50 per year in total. For that 50p we get great value.
Taxes should be progressive about the ability to pay, and impose a equal burden on everyone. That is why I am in favour of rolling up all consumption taxes and collecting them via direct taxation. This should be done in a revenue neutral way, so it is not about raising money. Equalising the capital gains taxes with income might actually raise enough money to either have higher allowances before people pay taxes or lower rates for lower incomes.
Tax fetishism will destroy America as it will be blind to the other problems that the nation faces. Also a complete unwillingness to face tax increases means that you only create a ever larger under class that will have to be controlled with more police and military and before long the US will be doing a Syria and bombing its own people.
Does “total tax burden” include state taxes, sales taxes, etc.? Or just Federal taxes?
Is it obvious yet that tax cuts do not stimulate an economy?
The US’s tax burden is among lowest and in sharp decline as you show. Now that the right wing tea party radicals put the kibosh on the possibility of raising taxes, S&P revises our credit down, with the S&P citing the intransigence of the political system with respect to raising revenues as a key factor in the decision to revise down the US’s long term outlook.
From your chart above it appears that nearly every country with a higher credit rating has a higher tax burden. 30%-40% cuts in government revenues over 10 years will wreck any country’s credit rating just as Friday night’s S&P downgrade of the US credit outlook has demonstrated.
Yes but the right do not see that as being real. They see that they are subsidising the work-shy, and their taxes would be even lower if the poor went out and got a job. That is what they think here in the UK.
The whole US political system is completely dysfunctional. Until that problem is resolved I do not see this being the last US downgrade. What is worse it does not need to happen.