As Global Governments Raise Taxes, U.S. Revenues Are Already Falling
November 23 2017 - 5:29AM
Dow Jones News
By Paul Hannon
Taxes are going up around the world, but the U.S. is already
bucking that trend.
The Organization for Economic Cooperation and Development on
Thursday said the share of economic output taken by governments in
developed economies as taxes has risen to its highest level since
records began 50 years ago.
But in the U.S., 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.
According to the 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 report comes as senators prepare to vote on a Republican tax
bill that would further reduce the revenues raised by the U.S.
government. According to the Congressional Budget Office, the
proposed changes will amount to 0.6% of GDP over the coming
decade.
The GOP controls 52 votes in the Senate and can afford to lose
only two for the legislation to pass. The bill is slated for a vote
after Thanksgiving.
President Donald Trump often says the U.S. is the highest-taxed
country in the world, a claim contradicted by the OECD data. Other
Republicans sometimes accurately say that the U.S. has the
developed world's highest statutory corporate tax rate. The
proposed tax bills would lower that rate to 20% from 35%.
The Paris-based think tank said its member governments raised
their tax take to 34.3% of GDP in 2016 from 34% in 2015, the
seventh straight year of increase. The increase is partly driven by
a need to narrow budget deficits and reverse the rise in government
debts that followed the financial crisis.
Denmark's government was the biggest taxer, taking 45.9% of GDP,
followed by the French government with 45.3% and the Belgian
government with 44.2%.
While taxation is on the rise across the developed world, the
burden has shifted toward households and away from businesses. The
OECD said that in 2015--the most recent year for which comparable
figures are available--the share of total taxes paid by individuals
out of their incomes rose to 24.4% from 24.1%. That is well above
the 23.7% share recorded in 2007.
By contrast, taxes on company profits were just 8.9% of the
total, having fallen from 11.2% in 2007 in the aftermath of the
crisis and never rebounded.
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.
Write to Paul Hannon at paul.hannon@wsj.com
(END) Dow Jones Newswires
November 23, 2017 05:14 ET (10:14 GMT)
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