Sound and Fury: Americans Actually Lightly Taxed

The following chart is a slightly shortened version of the one at The Globe and Mail, which demonstrates that US tax rates are among the lowest in the industrialized world.

Tax Revenue as a Percentage of GDP, 2009

world taxes

World Taxes

There is another chart at the Globe and Mail showing how US taxes have fallen since 1965.

There is obviously no direct connection between low tax rates and a high rate of economic growth in various countries in 2011. Germany is doing well (maybe 3%), the US is doing poorly. Germany’s unemployment is 7%, lower than the US. The argument that raising taxes on the wealthy would hurt growth or employment holds no water.

Moreover, not all eras are the same. With the challenge of global climate change, we are entering an era where government investment in green energy may have a huge downstream impact on future economic growth and well-being. Germany is making that investment. The US mostly is not.

What you may be able to link low rates of taxation (and regressive taxation policy, which is what the US has) to is levels of social violence. Thus, Mexico and the United States are both extremely violent societies compared to those at the top of this list, in part because the government is starved by its stingy wealthy elites of funds to deal with violence, especially in poorer communities.

16 Responses

  1. Some of the countries in the top tax brackets shown on the chart offer greater benifits to their citizens than America does.

    • All of the top band of countries offer superior social benefit programmes than the US. You would be hard pressed to find a Western country that doesn’t.

  2. Meh. The US and Mexico have high levels of violence and low taxes, but South Korea and other developed Asian countries not on the list (Hong Kong, Singapore, Japan) have low levels of violence and low taxes.

    As for economic growth, yeah, there’s no correlation. It’s not just Germany, whose economic growth at any rate is moderate. Sweden and Finland have high taxes and economic growth; Italy has high taxes and negative economic growth; the US and Mexico have low taxes and growth; South Korea has low taxes and very high growth.

  3. This chart shows the fraud of the right wing politics in the USA. For at least 3 decades their main policy is to lower taxes and reduce government.

    We have a recent 10 year experiment of lowering taxes on the rich to generate jobs and improve the economy. It failed.

    What has succeeded is the propaganda to frame the debate favorable to the oligarchy and corporations in the USA.

    Now the right wing and Obama want to do more of the same when we have not recovered from the recession.

    Paul Krugman in the New York Times today calls Obama’s deal a surrender and predicts the economy and jobs will get worse.

    link to nytimes.com

    The polls show Obama’s rating in the middle east lower than George W. Bush at the end of his term in office. Will Obama fall in his support in the USA after throwing away decades of Democratic party core issues?

    Since this is breaking news, here are two diaries from daily kos that further discuss the “deal.”

    link to dailykos.com

    link to dailykos.com

  4. I can only defer to Greg Mankiw on this for offering what I think would be considered a better measure: taxes per capita.

    link to gregmankiw.blogspot.com

    In this comparision, the US is middle of the pack and I’ll agree above, we see less bang for our buck so to speak (thanks to political inefficiencies I would argue). Granted, we definitely get an awesome military (how necessary that should be, I’ll leave to others to debate).

    Clearly the deficiency of this measure over taxes/GDP is that the US also has among the highest incomes per capita in the Western world. Granted, I think our average income mostly represents that we have a higher proportion of rich people.

    Whatever the case, aspiring to have the highest taxes is misguided. Even in the wake of the growing debt, aspirations should always be to get the best bang for each dollar. If only political processes allowed for us to strengthen welfare programs and reduce taxes at the same time…Something I think is very possible.

    • I aspire to have the highest taxes. I aspire to be in the middle of the pack, and not feel embarrassed whenever I drive under on overpass and think about what someone from any other developed country would think.

  5. Is that a reflection of taxes at all levels of governmemnt? Federal, state and local? Because if it is federal only, I believe it might not be painting an accurate picture, since the US is somewhat less federalized than most of the other nations listed. I’m not certain of my facts, but what is the level of taxation by “states” in Germany, and what degree of functionality does that governance have?

  6. I submit relation of taxation to levels of violence may be too simplistic. Cultural values in South Korea, for example, determine violence, which is low no matter what the economic conditions in the society. We need to search for alternatives to the current ruling duopoly serving the rich. You might want to consider this alternative:

    link to americanselect.org

  7. Mean or Median? And all taxes or income tax? Just thinking about my experience (US and The Netherlands), NL income tax covers a lot of the things US property taxes do, so although our income tax is higher, it (a) pays for things that take a lot of property tax, like schools, and (b) if you aren’t earning, you aren’t paying. I also get more for my tax euro over here.

    • But you don’t get many bangs for your euro in NL – ie low expenditure on defence – US 4.7%, NL 1.5% of GDP. Put another way US is $2141/person, NL is $759/person.

  8. Is it time for the USA to start thinking about a completely new style of governance? What about having lots of decisions made by carefully programmed computers? Isn’t one of the major chores of our elected congress to spend, allocate our tax money? Isn’t all that money and what is done with it at the very heart of the corruption, waste and depravity that characterizes Washington now?
    How much more despairing and hopeless do we have to become before some really good minds get together and start thinking of non-violent remedies? cheers, rmdw

  9. link to economyinperspective.com

    (The graphs did not show up here, but can be found at the above address.)

    • Observe that despite massive tax cuts under Bush II, and a massive transfer of American wealth from the middle class to the rich, job creation was just barely positive and, in fact, negative for private sector jobs, the first such occurrence since the great depression, and the most anemic rate of job creation and GDP growth since the great depression. Those tax cuts did little other than to reduce government revenues and almost triple the national debt. The total national debt between the administrations of George Washington and Jimmy Carter was one trillion dollars. By the time Reagan left office, it was almost three trillion. Massive tax cuts do not stimulate the economy, it only increases the national deficit while transferring wealth from the middle class to the rich.

    Economy In Perspective – Jobs
    economyinperspective.com
    CommentsJobs The first chart is from the U.S. Bureau of Labor Statistics and simply compares each president from Truman to George W. Bush in terms of the total number of jobs created in each of their terms (i.e., number of jobs at the end of ea
    Also observe that the annualized job growth for private sector jobs was greatest for Carter, 3.3%, than any other president since the end of the great depression.
    Note: despiite the massive tax cuts under Bush II, the annual GDP average grew only at a rate of 1.7% during the Bush presidency compared to 3.4% under Carter and 3.7% under Clinton.

  10. Of the four big deadbeat European nations, Ireland, Greece and Spain are on the low end of the list, and Italy the exception is controlled by a far-right media baron who allied with the fascist tradition of northern Italy. They bought into the US-pimped idea of pandering to rich people and bankers, Ireland by cutting taxes to steal rich sociopaths from more advanced countries, Spain by selling vacation houses to Brits for way too much money. They were part of what Donald Rumsfeld called the “New Europe”, and two were big backers of the invasion of Iraq. So a certain American stench to their pro-business ideology is no surprise.

    As for S. Korea, it has national health insurance, more advanced Internet infrastructure and dirt-cheap broadband, but then its whole chaebol oligopoly was started with US military aid money, wasn’t it? While Chile is still recovering from the Pinochet/Milton Friedman agenda, with, I understand, its poorest kids still shut out of privatized schools handed over to right-wing Catholicism. In other words, they’re still recovering from what the US is becoming. Turkey is the champion of the low-tax group, but the AKP is populist and increasingly in opposition to US regional domination, so hardly a friend of globalization.

    Mexico and the US, all I can say is, H. Ross Perot was right about NAFTA in the absence of Canada’s standards of civilization.

    What makes America dangerously different than all these other places is that its wages have been flat or negative for the last 30 years. So we sense that we’ve been cheated in the pocketbook, and we look to slash the first thing we have the power to slash by demanding tax cuts to make up the difference, except that once the lobbyists of the rich are done we’ve been screwed again. So we run ever harder chasing that lost fortune and shooting at whomever we blame this instant for the loss. And our wages fall still further, as the rich planned from the start, as they lead lynch mobs to destroy minimum wage laws, child labor laws, progressive education, the abolition of debtors’ prisons and prison labor, and perhaps even the abolition of indentured servitude and inheritability of debts?

    And thus the entire machinery of progressive civilization, still moving forward in these other countries, lurches into reverse in America, pursuing a Frankenstein composite of an ideal past all the way into Somalia-hood.

  11. You guys just put in the 2:00 pm, Hell: The Devil’s Domain. That’s not ok! WE MUST US ALL, FOCUS ONLY ON GOD, NOT THE DEVIL.

    From,
    Brian Johnson

  12. Why the preoccupation with :”Bangs”? In reality the defence budget is just a welfare program for the defence industries.

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