Using the metric of tax revenue as a percent of GDP, America ranks 32nd out of the 38 OECD countries with a Tax/GDP ratio of 27% compared to the OECD average of 34%. That 7% difference comes out to about $1.6T of tax revenue per year, which would probably be enough to end homelessness and rebuild U.S. infrastructure.
Americans pay less taxes than average but almost certainly complain about it more.
The numbers aren’t directly comparable. In almost all those other OECD countries, the total taxes include almost all medical care. In the USA, we pay about an extra 7% in addition to our taxes for our medical care. So we are roughly equal to the rest of the OECD countries when you look at total services on an apples to apples basis.
It is not an “apples to apples” comparison because the health care benefits in the US are not available to everyone–but health care in the other OECD countries is available to everyone in those countries.
Our government provides medicare and medicaid that I am guessing is about a third of our heath care costs, and as someone else pointed out health care availability in the U.S. is less complete than most everywhere else in the OECD.
When all things are considered, I think it is pretty clear that we pay substantially less taxes than virtually all the other countries that are as industrialized and complex. Suggests that one reason we have the problems we do is because we are trying to do everything on the cheap while also insisting that we should be the predominant military power.
I think it is time we face reality and recognize that maintaining a just society with a high quality of life is an expensive endeavor, requiring a substantial governmental effort to provide the necessary physical infrastructure and services.
Raising taxes to the OECD average, presumably by targeting the top 2%, would provide enough yearly revenue to secure the southern border, end homelessness, provide treatment for all those opioid addicts, double the level of scientific research, and still have something leftover for one or two jet fighters.
First we need to expand our industrial base and begin to export our manufactured products as a global deflationary force if we expect to pay for what we need and want.
We have failed as a nation with supply side economics for the 1981 to 2020 period.
That is why we were cheap with all of our citizens.
I don’t think the numbers show that this is true. As I explained, if you add the non-government expenditures on medical care, it will show that we are pretty close. Even if you back out 2/3 of medical care expenditures in those other countries, we still are somewhat close.
In the end, it doesn’t really matter because total taxes over time has to equal total expenditures over time. It’s obviously either that or the country fails. So the $31T still counts towards taxes … eventually. On that measure, we may even be higher than many other OECD countries!
I doubt this would work well. There’s a reason why most (all?) of the other OECD countries rely on VERY wide taxation (VAT, other purchase taxes, health taxes, etc) rather than narrow taxation (mostly affect “the rich”). As usual, everyone wants what the other OECD countries have, but nobody wants to pay the price that the people in those countries pay.
But also keep in mind that US health care costs are two to three times higher than most other countries, which may have something to do with our lack of a universal governmental health system. But that’s a topic for a whole different thread.
In any case, even accepting your argument that only brings the US to the OECD average. This still puts us on the low side for social programs since we also spend so much to be the preeminent global military power. We are short-changing social needs compared to countries with similar per capita wealth.
Don’t know what you mean by this (what is the $31T?). If you look at government expenditures as a percent of GDP we are at the low end of the OECD group (I’m looking at 2019, the last year before the pandemic skewed spending).
We are well below the European average. It seems to me that the narrative that Americans are too heavily taxed is not supported by the data. It takes a certain level of government spending on social programs to maintain quality of life in an industrial nation, and US spending appears to be at the lower end of that scale.
I’ve long believed that the only system that can guarantee the wealthy pay a fair share of taxes is a VAT with graduated rebates for lower incomes. The 1% can shield themselves from most income taxes but VATs are tough to avoid.
That still has significant problems, in that it taxes spending. Yes, the wealthy spend more, but their spending is almost certainly a lower percentage of their income than the middle class - and certainly the poor, whose spending approaches (and sometimes exceeds) 100% of their income. IOW, it doesn’t tax savings - particularly savings that is transferred from generation to generation.
Then add on a rebate based on income and you still have the problems of an income-based taxation system. You have to define what is and isn’t income. You might start making exceptions for some public policy goals. You have to make sure reported income matches actual income.
A VAT with an income based rebate has the worst of both worlds.
–Peter
Why would you want to tax savings? Savings are what allows economic class mobility.
Perhaps graduated asset taxation is a solution, but definition of asset values is a complicated task.
Any system will have wealthy, middle and poor strata.
Designing a taxation system to keep the spread closer (reducing inequality) will be unfair at many points on whatever curve you choose to tax.
Savings are taxed all the time. I pay property taxes on the money I have in my condo. I pay registration taxes on the money I have in my car. If I had money in a boat or trailer, I would pay registration taxes on them too. Those are the largest stacks of value most people have. It is only the financial speculation assets that are not taxed when held.
Steve
Incorrect. Property taxes are for public services provided to the property owner that are not charged directly (fire, police, etc). Same for vehicle taxes.
Your thoughts are the heart of the supply side economic policies that denied the US even a reasonable real GDP rate of growth for the last 40 years. Policies that created $31 trillion in federal debt.
Why would I want a better tax regime? To create wealth in the US. To have a positive trade balance. To reduce the federal debt load. To put American citizens first. To educate American citizens. To see to all of our health needs.
To make a more economically efficient country. Again to create wealth. It certainly succeed for decades…demand side economics…for the Germans until more recently…and before that here at home after WW II into 1965.
