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The U.S. the Third Lowest Taxed Country in Developed World

Michael Santo's picture

As Tea Partiers (nee Tea Baggers) and the right try to establish the U.S. as the land of the highest taxes in the world, the truth of the matter, from a disinterested third party, is that the U.S. is among the lowest taxed nations in the world.

The Globe and Mail took a recent look at the U.S. tax rates, as some in Canada looked at the U.S. with bemusement.

Here's what the Globe and Mail said:

"Contrary to what most Americans believe, the United States is one of the least-taxed countries in the developed world. They pay much lower taxes than any other G7 country. Among wealthy OECD countries, only Chile and Mexico tax their people and companies less. [...] [Remember, it's not just income taxes.]

"The total tax burden on Americans, as a percentage of gross domestic product, stood at 24 per cent in 2009 – lower than it was in 1965 and still falling. That compares to 31.1 per cent in Canada, 34.3 per cent in Britain, 42 per cent in France, 37 per cent in Germany and 43.5 per cent in Italy. The Japanese, Australians and South Koreans all pay significantly more.

"The United States is the only major country without a national value-added tax and its sales taxes are lowest in the OECD. Likewise, U.S. fuel and sin taxes are at the bottom among rich countries. And generous tax breaks mean many businesses and individuals pay few taxes, placing a heavy burden on a relatively narrow tax base."

Speaking to a person from Sweden, and visiting the U.S. on a business trip, he was shocked when told that federal gas taxes, which are used for the infrastructure of the federal highway system, have been at 18 cents per gallon, for decades, and not indexed for inflation. In his country, he said, mostly because of fuel taxes, the people pay $9 per gallon for gasoline. That said, he added, there is no worry that a bridge will fall down due to disrepair or that your suspension will snap because of potholes.

Gordon Betcherman, an economist and professor at the University of Ottawa’s school of international development and global studies said, "Historically and internationally, the U.S. can’t be categorized as anything other than a low-tax country. Either Americans don’t realize their economy is taxed less than other major economies, or they just have a different standard of what an appropriate tax level is." In terms of his qualifications, Betcherman spent a decade at the World Bank.

One Vancouver radio host scoffed at the faux crisis fostered by the GOP over the debt ceiling. “This ridiculous debt-ceiling debate going on down in the U.S. isn’t an economic debate. Everyone with brains knows taxes are necessary. This is strictly an ideological debate.”

This explains why many are still willing to buy U.S. bonds, "lending" the country more money at very low rates. Ian Lee, a Carleton University business professor said,
“The U.S. has the fiscal capacity to raise taxes, unlike southern Europe, where they can’t afford to pay more.” That is how foreign investors believe the U.S., could, if necessary, pay for addition debt.

However, that is not possible with a GOP unwilling to compromise and taxpayers who believe the Kool-aid served by Fox Boobs, as progressive radio host Norman Goldman likes to call them.

It's also a case of a voting public which wants things, but do not want to pay for it. It's the same case in states, as in the case of the Feds. Gary Hufbauer, a senior fellow at Peterson Institute for International Economics in Washington and a former top tax official at the Treasury department said that there is a huge disconnect between the government Americans say they want, and the government they’re willing to pay for.

Denmark has the highest tax burden at 48.2 percent. Despite that, Denmark is 2011's happiest place on earth, and is perennially among the top countries in the list. The U.S., on the other hand, is always missing from the top 5. Why is that? It's because there is no need to be concerned with bankruptcy due to medical reasons, or education expenses, or more.

Perhaps, also, there is less Calvinism in Europe and Canada. Calvinists believe that if ills befall you, it's because you are unworthy, a sinner, etc. That's why, despite their assertions that they are Christians, the right wing doesn't support, say Universal Health Care. Who would Jesus insure? Everyone. Would Jesus care about the cost of such health care? No.

Canadian born Peter Jennings told Marketwatch, “Americans want all these government services. They just don’t want to pay for them. Canadians are far more mature in this department. They know you get only what you pay for.”


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