The U.S. Collects Less In Taxes Than All But Two Industrialized Countries

President Obama and Senate Democrats have presented deficit reduction plans that would rely on both spending cuts and increased tax revenues, but Republicans continue to insist that the U.S. has only a “spending problem” and that deficit reduction does not require new revenues.

The premise of the argument from Republicans is that Americans already face an extraordinarily heavy tax burden. Citizens for Tax Justice, however, compared levels of taxation in 2010 in the other industrialized countries that make up the Organization for Economic Cooperation and Development (OECD) and found that the U.S. not only collects far less in tax revenues than the average OECD country, but that it also collects less in taxes as a share of its economy than all but two other OECD nations, as the chart at right shows.

The U.S. share of taxes has likely increased slightly since 2010, the latest year for which OECD data is available, because of tax increases from Obamacare and from the fiscal cliff deal that restored Clinton-era tax rates on all incomes above $450,000. Those increases likely won’t push the U.S. up the chart and would leave it well short of the OECD average. Similar data for corporate taxes shows that the U.S. collects less than all but one other OECD countries.

The U.S. has historically collected less in taxes and spent less than the majority of its OECD counterparts, in part because it operates such a stingy social safety net that doesn’t assist the least fortunate in society as well as programs in other countries do. Still, the chart shows that the U.S. is far from a high-tax country, and Democratic offers to raise modest amounts of revenues in the budget process would hardly send the nation’s level of taxation through the roof.