Globally, Americans pay comparatively low taxes

Fiscal Cliff Education

Fiscal cliff ed 101: the U.S. citizens pay only a marginal rate in taxes, when compared globally. Image: BY

The fiscal cliff debates are underway on Capitol Hill. Republicans remain resistant to raising taxes, as Democrats continue to covet entitlement spending. But do Americans really pay too much in taxes? A survey or world rates says no.

Comparing global income taxes

President Obama endorses the Buffet Rule, which would raise the tax rate of Americans who earn more than $1 million a year. Republicans have called the move a “gimmick” that will hinder economic growth. But Consider the rate of personal income tax alone, as it compares to the same burden faced by citizens of other developed nations.

Ten highest marginal income tax rates

KPMG — a global network of professional firms providing Audit, Tax & Advisory services — ranked 96 developed countries by their marginal tax rate for 2010.

The marginal tax rate is the rate applied to the highest tax bracket in the nation.

The 10 nations with the highest tax rates in 2011, bottom to top, were:

10. Ireland (48 percent).

9. Finland (49.2percent).

5. (Tied) United Kingdom (50 percent)

5. (Tied) Japan (50 percent).

5. (Tied) Belgium (50 percent).

5. (Tied) Austria (50 percent).

4. Netherlands (52 percent).

2. Sweden (56.6 percent).

1. Aruba (58.95 percent).

In that ranking, the United States came in 23rd for highest median income tax rate.

United States somewhere in the middle

More recently, the website Global Finance compiled a graphic that compares the marginal 2012 tax rates of the nations of the world. The highest rate it charted was, again, Aruba, with a rate of 59 percent (rounded up). The lowest rate, of nations that impose income taxes, is 10 percent. That rate was paid by citizens of Bosnia-Herzegovina, Bulgaria, Albania and Macedonia.

But United States taxpayers, according to Global Finance, remain somewhere in the middle, paying a marginal rate of 35 percent annually. Furthermore, they have done so since 2004.

Taxes as portion of GDP

When considering all taxes, as a share of gross domestic product (GDP), the United States didn’t even rank in the upper 90 percent for 2008. The Tax policy Center looked at the tax rate of all 33 member countries in the Organization for Economic Co-operation and Development (OECD). According to that ranking, the U.S. came in at number 30, almost at the bottom of the list.

For a nation that prides itself as a world leader, the citizens of the United States pay relatively little income tax when compared to other developed nation. So perhaps raising them a bit would not be such an earth-shattering move in an effort to keep the nation from plunging into a full-fledged depression.

And spending cuts

However, most experts agree that Democrats also have to be willing to make sacrifices to entitlement spending in a bi-partisan compromise if the country is to avoid the fiscal cliff completely.


Tax Policy Center
Global Finance

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