Thursday, April 24, 2014

The United States Has Very Low Taxes When Compared To Other Market-Economy Countries

The mantra of right-wing Republicans has been for decades now that taxes in the United States are too high -- especially the corporate taxes. They say this is hurting American corporations in their effort to compete with corporations based in other nations. To put it mildly, that's a lot of horse manure.

While the top corporate income tax rate is 35%, there is something the Republicans won't tell you -- that no American corporation pays that rate. In fact, the General Accounting Office (GAO) says that the effective tax rate for American corporations is a shockingly low 12.6% (lower than most middle class workers have to pay) -- and even when foreign, state, and local taxes are added in, the total effective tax rate is only 16.9% (still far lower than the Republicans would have you believe).

The truth is that because of huge subsidies, the ability to hide money overseas, and many other loopholes, the American corporations are the least-taxed corporations in the world. And most shocking of all, about 55% of American corporations pay no income tax at all! The GOP wants to lower the corporate tax rate, but this should not even be considered unless they are willing to eliminate all the loopholes and subsidies currently going to the corporations. Without that, the percentage of corporations paying no taxes will go much higher.

The chart above (made with info from the OECD-ilibrary) shows the corporate taxes received by the government in the United States (as a percentage of the national GDP) compared to corporate taxes in other OECD nations (the other nations with market economies who are our main competitors). Note that U.S. corporate taxes make up a smaller percentage of this nation's GDP than in the other OECD countries -- and that has been true for a long time.

And it is not just corporate taxes that are lower in the United States than in other OECD countries. The same goes for taxation in general. Note the two charts below (made with OECD information). Note that U.S. taxes are a huge 10 points lower (as a percentage of national GDP) than the taxes in other OECD nations. And only two countries (Mexico and Chile) have lower taxes when you look at all 34 OECD countries. The United States is actually one of the least taxed nations.

So, are taxes too high in the United States. No, and the Republican charge that they are is just an effort to bamboozle the public into voting for them. The GOP wants to lower taxes for their constituency (the rich and the corporations), and they can't do that unless they convince people that taxes are too high. The U.S. government really doesn't get enough tax revenue, especially from the rich and the corporations --  and anyone saying otherwise is either ignorant or lying.

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