Memo to Mitt: American taxes already low
The tax burden on American workers is one of the lowest on Earth.
By Rick Newman, US News & World Report
With all the talk among the presidential candidates about cutting taxes and giving the middle class a break, you'd think American taxpayers were the most overburdened in the world.
Far from it. In fact, the tax burden on American workers is one of the lowest on Earth.
Still, Republican presidential candidate Mitt Romney wants to cut tax rates by 20 percent for workers in every income bracket, and kill or reduce a bunch of other taxes. President Obama wants to raise taxes on the wealthy to help pay down the $16 trillion national debt, while keeping middle-class taxes where they are and lowering the corporate tax rate. While their proposals differ, both candidates emphasize the need to give more help to the middle class, rather than calling on ordinary families to help reduce Uncle Sam's mountain of debt.
But the bulk of American taxpayers are already getting a break compared to other advanced nations.
Overall, Washington's tax revenues are just 24.8 percent of GDP, according to data gathered by the Organization for Economic Cooperation and Development. That's the lowest level of taxation for any developed nation, and the third lowest among 34 nations tracked by the OECD, with only Mexico and Chile having lower levels. In most of Europe, taxes are at least 35 percent of GDP. In Canada, they're 31 percent; in Australia, 26 percent.
Here's how the tax burden breaks down by different categories, as a percentage of GDP:
Income tax payments: U.S.: 9.8 percent; OECD average: 11.4 percent
Taxes on goods and services: U.S.: 4.5 percent; OECD average: 10.7 percent (The higher OECD number is due to a value-added tax, or national sales tax, in many countries.)
Social Security taxes: U.S.: 6.6 percent; OECD average: 9.2 percent
Taxes on property: U.S.: 3.3 percent; OECD average: 1.8 percent
So in only one category—property—are Americans taxed higher than citizens elsewhere. And since those are mostly levied at the local level, Washington has little to do with them.
In most of the other OECD nations, higher taxes help pay for one important thing many Americans must pay for separately: health care. On the other hand, taxes in America finance the world's most expensive military, which in turn helps protect many other nations.
The real reason the burden on U.S. taxpayers is so low is that Washington has had the unique ability to borrow money, to help pay for as much as half of the government's annual spending. That's why the effective federal income tax rate has fallen from an average of about 22 percent in 1979 to 17.4 percent today, according to the Congressional Budget Office. It also helps explain why nearly half of all taxpayers end up with no income-tax payments at all, as Romney notoriously pointed out to a group of donors earlier this year.
But that can't go on forever, which is why Washington now faces the prospect of sharp tax hikes—part of the so-called fiscal cliff—if Congress doesn't come up with other ways of starting to pay down the debt by the end of the year.
Instead of addressing that, however, Romney and Obama are dickering over tax cuts for a nation that already has one of the lowest tax burdens in the world—and by some measures, the most unmanageable debt. The United States shouldn't try to out-tax other nations, but it could certainly look around and see how it measures up in terms of what taxpayers give, and what they get.
The most likely answer is too little, on either end.
More from U.S.News & World Report
What is the overall tax burden on the American citizen when all the State and Local level taxes are added? Income tax, sales and use tax, fees for everything that requires a license or registration of one kind or another - which are most certainly taxes. Many taxes are well hidden and are not thought of much such as the taxes on gasoline, utilities and phone bills. There is practically nothing for which you can spend money that government at some level does not get their grubby hands on. It boggles my mind to think that the federal goverment alone cannot manage to do the things it thinks it needs to do for less than 5 trillion dollars a year. A person cannot even conceive of how much money that is. Why compare America with the failed economies of countries around the world? If you want all of your decisions to be made for you by your government and everything it thinks you need provided to you (by taking it from others of course) just pick up your belongings and move to any other country in the world and take advantage of that wonderful system. Why do you bother with the hassle of trying to transform this once great and free republic into the same miserable state as every other country in the world who has already taken the path of socialism? Would it not be much easier to simply go where that type of system already exists? I, for one, do not want everything handed to me. I want freedom above all else. Nothing more, nothing less.
As usual, an equally important component of the tax issue is absent. WHAT DO THEY DO WITH THE MONEY? I know very few people that resent paying their taxes but when they see their money wasted and squandered on worthless programs, given to foreign governments, some of which are openly hostile to the U. S. and often used as reeletion slush funds by politicians through give aways to their friends, resisting ANY tax increases locally, state, or federal level is a noble pursuit.
to know that 40%+ of what the feds spend is borrowed is disgusting.
No additional tax/fees should be able to be collected until a $2-$3 reduction on the spending side is in effect.
The fact that other people/countries are overtaxed more, does not mean we are not overtaxed. We are just overtaxed less.
We had a revolution and threw off the yoke of King George III because he was taking 25%, and our forefathers thought that was too much, and choking the economy. So now Uncle Sam is taking 25%? Where is the new revolution? We need a new George Washington. We need to replace Uncle Sam, the same as we replaced King George III, for the same reasons. As The Who wrote, "Meet the new boss, same as the old boss."
The article talks about state property taxes but no other local taxes.
Also please explain the difference in paying higher taxes for health care and paying for it yourself? It seems one way or another you are paying for it. The problem we have is not all people are paying for things either directly or in taxes. I am all for helping people get back on their feet when they are down. I do have a problem when we have second and third generations living on the doal without any thoughts of getting off. Yes I also agree that their are rich people who are taking advantage of our current tax laws.
Raising taxes is not going to end our budget problems. We need more people working and making enough to pay taxes. There is no easy way to do that. We as individuals need to do more as well.
Un skilled workers here in the US are competing against un skilled workers from around the world. Of course they are going to be paid less.
Right - so nothing in this articles talks about the unbelievable unemployment and social programs in most of these countries that are in the article - So I think the take-home message is that we should be paying as much taxes as they do WITHOUT the added social programs???? Pretty sloppy financial journalism if you ask me. People don't live in fear of paying their way if they lose their jobs, and their retirement programs are amazingly rich. Are ours? I don't think so.
Remember you get what you pay for.....
I am sorry, but this story has nothing to do with facts, I and all my friends 50 miles north of NYC have never paid less than 10-15 % in property taxes right here in NY State (8-12 K a year) , and the total SS/Medicare is 16,4 % gross first before that (no deductions at all, now up to 110 K Dollars (17K), I know severeal EU countries, that you pay 0 tax for the first 10-12 K they make individually, that is and means "nothing". Property tax including all types for that is in my old country 400-1000 Dollars a year, and that includes the septic tank cleaned twice every year, and garbage collection (far more advanced with polution)---AND Please remember that MIN WAGE is 2-3 times more than USA so those taxes relatively are very cheap compared to here.!
AND NO ONE in my old country pays for any college, including living exp, IF YOU HAVE ACTUAL BRAINS. ( so indirectly that is a lifetime of at least 100 K savings if you can go to college.
Yes, there is sales tax (or VAT) and it is high, you see they want to make sure that Mitt and others when they buy the 150,000,000 boat actually pay tax, can not get away without it, so that is the way it is, but until you spend your money, you actually have it yourself!
Also here we have something called State income tax in most states, so please add it all up, compared to what you get, and we are without a doubt the highest "tax/personal expense" country, and regular people still have to pay up to 20 K a year for medical every year unless you like old Soviet Union work for the government, and a few companies--THAT IS ALSO INCLUDED IN NORTHERN EU< NO EXTRA CHARGE----and all are covered, no matter what--except for cosmetic surgery for extra boobs or removal of belly fat--Please stop listening to the polilitical ranters will you?!
Below is a list of the 47% (actually, the number is exactly 46.6% according to the IRS. Most of them have paid taxes for 50 years and/or pay taxes now. You, or someone you love, are an American in the "47%." They are true American patriots, heroes, working people and our elders. They are Us. WE are the UNITED States of America.. I am proud to pay my taxes and so are THEY.
70.2% are people 65 or older who paid into Social Security and the Medicare tax and are now retired. They receive an average of 1100.00 per month making them poor, but able to live within a tight budget. THEY are My Fellow Americans.
Two thirds of these people, including the retirees listed above as well as working people, are people who earn under 20,000.00 per year. This would include every single person earning minimum wage. Now, these working people DO pay payday taxes out of their checks. They just get some deductions depending upon the size of their family when they fill out their income taxes. They sometimes get Earned Income Credit or Daycare Rebates. President Obama lowered these payday taxes and we now know that his plan is to raise taxes for people making 250,000 or more per year. They are My Fellow Americans.
Among the 47% are people paying sales taxes, car purchase and tag taxes, property taxes, and on and on. They are just too poor to pay any more on April 15th. But, Mitt Romney isn't. And by April 15th, 2014, he will be paying his fair share and that will be the very least he can do because he made a ton off war investments.
The stories about "freeloaders" and "lazy" people.....these are just that. Stories people have tossed out there. They are not true. Sure, there are a few people getting a little something for nothing. But, the states are poor and restrictions are tight. There just isn't as much as some politicians want you to believe. A lot of those people who never paid in and are getting something for nothing are sick and disabled children. Their parents get around 700.00 per month to help pay for their care. I doubt it's enough. I did not have a dying or disabled child. I will gladly pay my taxes for a tormented parent to help care for his and/or her disabled child. They are My Fellow Americans.
We have also seen the 47% and it is US, our parents, our grandparents, our neighbors, the disabled child in our child's school, the couple who both work for minimum wage......The people Mitt Romney is disgusted with? They are Us, our parents, our grandparents, disabled people, disabled children and sick babies receiving SSI, working poor, Active Military, Veterans, His own WIFE. Watch the motherjones speech.
We have seen Mitt Romney and his millionaires and we finally know a little about his/their policy plans. They are greedy and horrific plotters who would step on a baby to get to a dollar. And now they are planning another war for their investment portfolios to get fatter while more of our poor people die.
Some millionaires have announced that they want to pay their fair share. This is called gratitude and patriotism. It is also listed in the Bible as a requirement to be a good Christian. It is also required to be a good Humanist and important to every ethical and moral philosophy throughout the history of human kind. And THEY are My Fellow Americans.
Our taxes are nothing. Other countries support all of the above people and their millionaires and billionaires pay their fair share.
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