page_title: Political debates about the United States federal budget
section_title: U.S. taxes relative to foreign countries
hierarchical_section_title: Political debates about the United States federal budget / Debates about tax policy / Can the U.S. outgrow the problem? / U.S. taxes relative to foreign countries
caption_attribution_description: English: This image portrays total Federal income tax revenue as a percentage of GDP for the United States in comparison to both the unweighted average for the OECD as well as for the EU 15. Note that the EU 15 area countries are: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden and United Kingdom. Further information is available here at oecd.org
context_page_description: Political debates about the United States federal budget discusses some of the more significant U.S. budgetary debates of the 21st century. These include the causes of debt increases, the impact of tax cuts, specific events such as the United States fiscal cliff, the effectiveness of stimulus, and the impact of the Great Recession, among others. The article explains how to analyze the U.S. budget as well as the competing economic schools of thought that support the budgetary positions of the major parties.
context_section_description: Comparison of tax rates around the world is difficult and somewhat subjective. Tax laws in most countries are extremely complex, and tax burden falls differently on different groups in each country and sub-national units (states, counties and municipalities) and the types of services rendered through those taxes are also different.
  One way to measure the overall tax burden is by looking at it as a percentage of the overall economy in terms of GDP. The Tax Policy Center wrote: "U.S. taxes are low relative to those in other developed countries. In 2006 U.S. taxes at all levels of government claimed 28 percent of GDP, compared with an average of 36 percent of GDP for the 30 member countries of the Organization for Economic Co-operation and Development (OECD)." Economist Simon Johnson wrote in 2010: "The U.S. government doesn't take in much tax revenue – at least 10 percentage points of GDP less than comparable developed economies – and it also doesn't spend much except on the military, Social Security and Medicare." A comparison of taxation on individuals amongst OECD countries shows that the U.S. tax burden is just slightly below the average tax for middle income earners.
   
  Deficit spending can distort the true total effective taxation. One way to mitigate this distortion is to evaluate spending levels. This approach shows the level of services a country is willing to accept versus what they are willing to pay. In 2010, the Federal government of the US spent an average of $11,041 per citizen (per capita). This compares to the 2010 World average spending of $2376 per citizen and an average of $16,110 per citizen for the World's 20 largest economies (in terms of GDP). Of the 20 largest economies, only six spent less per citizen: South Korea ($4557), Brazil ($2813), Russia ($2458), China ($1010), and India ($226). Of the 13 that spent more, Norway and Sweden top the list with per citizen spending of $40908 and $26760 respectively.
  In comparing corporate taxes, the Congressional Budget Office found in 2005 that the top statutory tax rate was the third highest among OECD countries behind Japan and Germany. However, the U.S. ranked 27th lowest of 30 OECD countries in its collection of corporate taxes relative to GDP, at 1.8% vs. the average 2.5%. Bruce Bartlett wrote in May 2011: "...one almost never hears that total revenues are at their lowest level in two or three generations as a share of G.D.P. or that corporate tax revenues as a share of G.D.P. are the lowest among all major countries. One hears only that the statutory corporate tax rate in the United States is high compared with other countries, which is true but not necessarily relevant. The economic importance of statutory tax rates is blown far out of proportion by Republicans looking for ways to make taxes look high when they are quite low."
caption: Total tax revenues as a percentage of GDP for the U.S. in comparison to the OECD and the EU 15.
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