In 2017, France, Denmark, Belgium, Sweden, and Finland all enjoyed tax revenue as a percentage of GDP at 43 to 46 percent.
The US, with a 27% tax burden (including state and local taxes) is just past the median, and in spot 31 out of 36 for OECD countries. Trump’s claim that taxes in the US are very high (as compared to its peers) is thus little more than fake news.
The US does get a much higher share of revenue from personal income taxes than do its OECD brethren, although the Nordic countries on the list bring in even more as a share of GDP by applying their top rates on a much broader swath of taxpayers than does the US. In Denmark, the top income tax bracket – 55.8% – applies starting at just $77,730. The top federal rate in the US –37% – kicks in at a whopping $510,300.
All the OECD countries except the US apply a value-added tax to goods and services at every stage of production. The modest consumption tax revenues in the US come from state and local sales taxes as well as federal excise taxes on fuel, plane tickets, tobacco, and alcohol. Economists tend to like consumption taxes, as they don’t discourage work or investment. Still, these taxes tend to be regressive, since the less rich a person, the larger share of her income is spent on goods or services.
US property taxes – essentially wealth taxes that, at 4% of GDP, weigh more heavily on the middle class (since the rich hold most of their wealth in stocks instead of real estate) are higher in the US than in most high-tax Nordic countries.
Overall, the countries that raise significantly more tax revenue than the US tend to have higher top income tax rates but less progressive taxation. Still, if raising the most money is the goal, the tax approach that’s worked best in other places is having the greatest number of people pay up.
For more information, please read:
This Is How the World’s High-Tax Countries Do It | ThinkAdvisor