Perhaps the President, Paul Ryan, and Mitch McConnell, as well as Steve Mnuchin and Gary Cohn, ought to read a piece that went up this morning titled As Global Governments Raise Taxes, U.S. Revenues Are Already Falling. The subheading is “Ahead of Senate vote on bill to reduce taxes, OECD says U.S. revenues as a share of GDP already fell in 2016.”
Of course, that undercuts the arguments they are trying to making to convince people to shift the tax burden even further from the wealthy and corporations onto ordinary folks.
According to the Organization for Economic Cooperation and Development (OECD), US taxes
as a share of gross domestic product fell in 2016 to below the level recorded in 2007, the year before the financial crisis hit and briefly reduced tax revenues for governments around the world.
Further, according to OECD,
the U.S. government—at national, state and local levels—raised the equivalent of 26.2% of GDP in taxes last year, placing it 31st out of the research body’s 35 members. Only Turkey, Ireland, Chile and Mexico taxed less.
The highest taxed nation was Denmark, at 45.9% of GDP. I might note that concurrently Denmark is considered to be the 2nd happiest country in the world, after Norway, according to The World Happiness Report (the US was ranked 19th).
Worldwide, OECD reports that countries increased their reliance upon taxes on individual incomes to 24.4% of incomes, up from 24.1% the previous year and 23.7% in 2007. At the same time the effective rate on corporate incomes was only 8.9%, down from 11.2% of corporate profits in 2007.
As far as US taxes, this GAO report released in 2016 begins with the following statement:
In each year from 2006 to 2012, at least two-thirds of all active corporations had no federal income tax liability. Larger corporations were more likely to owe tax. Among large corporations (generally those with at least $10 million in assets) less than half—42.3 percent—paid no federal income tax in 2012. Of those large corporations whose financial statements reported a profit, 19.5 percent paid no federal income tax that year. Reasons why even profitable corporations may have paid no federal tax in a given year include the use of tax deductions for losses carried forward from prior years and tax incentives, such as depreciation allowances that are more generous in the federal tax code than those allowed for financial accounting purposes. Corporations that did have a federal corporate income tax liability for tax year 2012 owed $267.5 billion.
According to data from the Tax Institute,
- In 2013, 138.3 million taxpayers reported earning $9.03 trillion in adjusted gross income and paid $1.23 trillion in income taxes.
That is Federal income taxes, on income of ALL kinds (not all of which is taxed at the same rate). That is a tax rate as a percentage of income of 11.1%. Overall Americans pay about 1/3 of total income in all forms of taxation. We are far from the most heavily taxed people.
Let me return to the final paragraph of the article, which notes
The U.S. government relies more heavily on taxes on individual incomes than most of its counterparts, and is roughly in line with the OECD average in terms of the proportion of revenues that come from businesses. That reliance on income taxes is partly explained by the absence of a national sales tax, which provides one fifth of revenues on average for OECD governments.
That of course is the US Government. Increasingly states and local governments rely heavily upon sales taxes of one sort or another. Heck, even just refinancing a mortgage can cost a homeowner over $1,000 in special taxes to file the new mortgage, as I encountered in our recent refi.
But let’s return to the key point. The data does not support key parts of the Republican argument for their tax “reform” bill. OECD provides the international comparisons. And the newspaper of the marketplace, Rupert Murdoch’s Wall Street Journal, reports what the data actually says.
Will Trump and Ryan and McConnell and Mnuchin and Cohen listen? Probably not a chance.
But at least we will know.