Happy Tax Day.
For those members of the Republic worrying that America is headed for socialism, here are some recent data from the Organization for Economic Cooperation and Development showing relative tax burdens among its 34 member states.
In an analysis (pdf) published by the OECD in February, the U.S. has a low overall tax burden relative to the rest of the OECD countries, with a 24% tax-to-GDP ratio in 2009, compared to 34.3% in the UK, 25.6% in Korea, 30.3% in Switzerland and 46.4% in Sweden. Only Mexico (17.5%) and Chile (18.2%) had lower ratios. The U.S. had low personal income tax rates but high dividend and corporate tax rates, compared to other OECD countries.
Interestingly, while the corporate rates were higher than average, the comparative revenues from corporate taxes were lower than most countries thanks to the loopholes in the US tax code known as tax expenditures. This explains the bipartisan calls for tax reform based on lower corporate tax rates offset by closing tax expenditure loopholes.
Also worth noting is that the U.S. is the only OECD country with no Value Added Tax. The VAT is a “consumption” tax designed to offset the negative incentives of the income tax. Increasingly, countries have opted to reduce income taxes, which disincentivize income, and to increase consumption taxes, which steer disposable income to savings and investment and away from the relatively unproductive consumption-based growth.
More tables below: