Think You’re Paying a Lot of Taxes? Here’s How the US Compares With Other Rich Countries

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Americans may be comforted to know that they pay less, on average, than people in most developed countries. Of course, they may get less, too.

Nothing is certain except death and taxes — and Americans complaining about how much they pay in taxes.

Despite Americans’ seemingly endless laundry list of criticism about the U.S. tax system and how much money they’re forced to fork over to Uncle Sam, U.S. citizens’ tax bills are, in fact, below average compared with the taxes paid by residents of other developed countries.

In a comparison of the world’s developed nations, Americans are taxed on the lower end of the scale, according to Pew Research, which analyzed data from the Organization for Economic Cooperation and Development’s database of taxes and benefits. In terms of the “tax burden” — which Pew defines as national-level income taxes plus mandatory social-insurance contributions as a percentage of gross income — the United States ranks 25 out of the 39 nations.

So, consider the tax burden for two different family types in the United States and in another developed nation:

  • A single, childless American making the average wage in 2014 ($50,099) paid 24.8 percent of gross income in federal income tax and payroll taxes. The 39-country average tax burden for a taxpayer with that profile was 27.3 percent. In Belgium, a person with that profile paid 42.3 percent.
  • A married American couple, both working — one at the average wage, one at two-thirds of it — and with two kids, paid 19.4 percent of their gross income in taxes. In Belgium, a similar family would have paid nearly double that rate — 38.3 percent.

Pew crunched the numbers for two other family structures and its conclusion remained the same.

“In all cases, the U.S. was below the 39-nation average — in some cases, well below,” Pew noted.

Pierre LeBlanc of the OECD’s Center for Tax Policy and Administration told PBS Newshour that it’s important to consider what’s included and what’s not when looking at Pew’s tax comparisons.

“Taxes and social security contributions are paying for different bundles of services in different countries. In the U.S., take health care for example. The payroll tax for Medicare would be covered,” LeBlanc said. “But any premiums that people have to pay through their workplace for health care coverage aren’t, because that’s in the private sector. In most, not all, but most other OECD countries, that’s covered through the public sector.”

“There’s those sorts of decisions, there’s positives but those taxes are buying services that people value. So it’s about trade-offs. Each country will decide how to make those trade-offs.”

For example, Belgium has the OECD’s highest average tax rate at about 56 percent. But that’s not the whole picture.

“Social security contributions, in Europe in particular, are very important,” LeBlanc explains. “In Belgium you’ll see a clear example of that. That’s how they finance all of their pensions, all of their health care, and more generous unemployment insurance, and that shows up in substantially higher tax rates.”

Perhaps E. Jones, who posted a comment on the Pew website, sums up the tax discrepancy best:

“Yes, American tax rates are below average among developed nations … but those developed nations often offer universal health care, university opportunities, paid maternity leave, child care, etc. … I guess we get what we pay for.”

Check out “One-Fifth of Profitable Large Corporations Escape Taxes.”

How do you think Americans fare in terms of what they pay in taxes, considering what they receive in services and government programs? Share your comments below or on our Facebook page.

Stacy Johnson

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