"Why You Shouldn’t Freak Out About Tax Day, In Two Charts"
Tuesday is tax day, the deadline for filing your taxes. It may feel like a drag, but tax rates are actually relatively low in the United States.
The Wall Street Journal may claim that tax increases passed at the beginning of last year are giving the country’s wealthy “sticker shock,” but nearly everyone’s federal rates are at historic lows and will stay that way for the near future, according to the Congressional Budget Office. Even for the top 1 percent of earners, whose tax rates are expected to get the closest to recent highs, they’ll still be just slightly below the 35 percent rate of the late 1970s:
And compared to the rest of the developed world, Americans are paying a lot less in taxes to both federal and state governments. As this chart shows, the United States is expected to bring in less tax revenue as a percent of GDP than any other developed country in the Organisation for Economic Co-operation and Development:
If you’re a corporation, rather than an individual, things look pretty good too. The country’s largest and most successful companies paid an average 19.4 percent effective tax rate between 2008 and 2012, even though the on-paper rate is 35 percent.
Taxes, of course, help fund government programs and priorities, and a recent increase in revenues from a slightly healthier economy is helping to narrow the budget deficit. The less we pay in taxes, the less there is to invest in things like crumbling infrastructure, scientific research, and education.