Saturday, May 9, 2009

Taxes in the U.S. compared to the world and U.S. history

I drew these comments and charts from Bruce Bartlett and two columns he wrote in Forbes. I thought they give helpful comparisons and informations about our taxes. Everything from here on out is quoted from Bartlett.

U.S. Taxes is 2006 compared internationally
http://www.forbes.com/2009/04/09/tea-party-taxes-opinions-columnists-bartlett.html

As Table 1 shows, total taxation (federal, state and local) amounted to 28% of the GDP in the U.S. in 2006. Only four of the 30 OECD countries had a lower tax ratio. Taxes averaged 35.9% for the OECD as a whole and 38% in Europe. Citizens of Denmark and Sweden paid very close to 50% of their total income in taxes.

Table 1: Total Taxes as a Share of GDP, 2006

Denmark

49.1

U.K.

37.1

Ireland

31.9

Sweden

49.1

Hungary

37.1

Greece

31.3

Belgium

44.5

Czech Rep.

36.9

Australia

30.6

France

44.2

N.Z.

36.7

Slovak Rep.

29.8

Norway

43.9

Spain

36.6

Switzerland

29.6

Finland

43.5

Luxembourg

35.9

U.S.

28.0

Italy

42.1

Portugal

35.7

Japan

27.9

Austria

41.7

Germany

35.6

Korea

26.8

Iceland

41.5

Poland

33.5

Turkey

24.5

Netherlands

39.3

Canada

33.3

Mexico

20.6

Source: OECD

There's a stronger case for the U.S. being a high tax country when looking at the top statutory tax rate on labor income. The OECD calculated the U.S. rate at 41.4% in 2007. As Table 2 shows, this put America right in the middle of the distribution despite a reduction in the top rate from 46.7% in 2000. The reason is that 19 OECD countries have reduced their top rate since 2000; only 3 have increased it.

Of course, the top rate applies only to those with very high incomes. According to the OECD, one would need to make almost 9 times the average worker's wage to pay the top rate in the U.S. In most OECD countries one hits the top rate at an income barely above that of the average worker, which puts workers in other countries in much higher tax brackets than those in the U.S.


U.S. Tax Rates through over the last 50 years.
http://www.forbes.com/2009/04/16/tax-tea-party-opinions-columnists-protest.html

To answer these questions, I looked at the effective federal income tax rate--taxes paid as a share of income--for a family with the median income. The median is the exact middle of the income distribution--half of families are above and half are below. It's as close as we can get, statistically, to the typical American family.

As the table shows, in 2007, the most recent year available, the median family paid 5.91% of its income to the federal government in the form of income taxes. This is half the tax rate paid in 1981 before the Reagan tax cut took effect. Although the 2007 rate is up very slightly from its 2003 low point, it is still well below the rate that prevailed from the 1950s through the 1990s.

Effective Tax Rate on the Median Family

Year

Rate

Year

Rate

Year

Rate

Year

Rate

Year

Rate

1958

6.96

1968

9.21

1978

11.07

1988

9.30

1998

7.98

1959

7.49

1969

9.92

1979

10.84

1989

9.36

1999

7.88

1960

7.77

1970

9.35

1980

11.42

1990

9.33

2000

8.02

1961

7.94

1971

9.27

1981

11.79

1991

9.30

2001

6.71

1962

8.30

1972

9.09

1982

11.06

1992

9.18

2002

6.53

1963

8.68

1973

9.45

1983

10.38

1993

9.18

2003

5.34

1964

7.56

1974

8.99

1984

10.25

1994

9.17

2004

5.38

1965

7.09

1975

9.62

1985

10.34

1995

9.28

2005

5.69

1966

7.48

1976

9.89

1986

10.48

1996

9.33

2006

5.85

1967

8.00

1977

10.42

1987

8.90

1997

9.32

2007

5.91

Source: Tax Policy Center

I don't have data for 2009, but it's a certainty that the median family tax rate is well below that which prevailed in 2007 if only because in February, Congress enacted a new tax credit that will reduce the median family's tax bill by $800 over last year.

2 comments:

amiable amy said...

you have a good observation girl and I can't add further...

you are really a patriot for taking time to notice to all of these facts

Good job!

Jaimie said...

I think Americans have it in their head that no one else pays taxes. Don't get me wrong, I'm a libertarian at heart, but we've backed ourselves into this corner and we gotta go with it.