Do you like to pay taxes? I’m not sure many of us do. Nevertheless, most of us realize that taxes are a part of life in any country with public services.
That said, complaining that taxes are too high is almost “de rigueur” in many circles. There are myriad examples of ways people demonstrate how burdened they are with taxes:
- “I could have gone on a fabulous two week vacation if I didn’t spend so much on those taxes”
- “I worked until April 10 just to pay off my taxes”
- “Once they take out taxes, there’s not that much left!”
Admittedly, I too have had similar thoughts at different times.
However, when you take a comparative look at taxation around the globe, it becomes clear that some are taxed more than others. For those of us here in the United States, as well our Canadian neighbors, the results may be enlightening.
Here is a look at the Total Tax Revenue by country, as a percentage of Gross Domestic Product:
| Country | Tax % |
| Austrailia | 30.8 |
| Austria | 42.3 |
| Canada | 33.3 |
| Finland | 43.0 |
| France | 43.5 |
| Germany | 36.2 |
| Italy | 43.5 |
| Japan | 28.3 |
| Korea | 26.5 |
| Netherlands | 37.5 |
| Norway | 43.6 |
| Sweden | 48.3 |
| Switzerland | 28.9 |
| United States | 28.3 |
Source: OECD Tax Database
As can be seen, the tax revenue as a percentage of GDP is actually relatively low for the U.S. and Canada. Compare these figures with that of France and Italy, for example. It would appear that we have it better here.
Now, let’s layer in savings rates for the same set of countries:
| Country | Tax % | Savings % |
| Austrailia | 30.8 | 2.5 |
| Austria | 42.3 | 9.8 |
| Canada | 33.3 | 1.1 |
| Finland | 43.0 | -2.2 |
| France | 43.5 | 12.3 |
| Germany | 36.2 | 10.6 |
| Italy | 43.5 | 6.8 |
| Japan | 28.3 | 2.6 |
| Korea | 26.5 | 2.5 |
| Netherlands | 37.5 | 6.4 |
| Norway | 43.6 | 1.4 |
| Sweden | 48.3 | 7.8 |
| Switzerland | 28.9 | 9.5 |
| United States | 28.3 | 1.2 |
Sources: OECD Tax Database and OECD Economic Outlook Database
The tax data was from 2007 and savings rates from 2009, close enough for a near apples-to-apples comparison. Overall, it appears that the U.S. and Canada are not only taxed on the lower end of this set of countries, but also save very little as well.
What’s the lesson from this excercise?
My take is that though we don’t want our taxes to go higher, they could be worse - and shouldn’t be preventing us from saving more than we are at this time.
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Yes we could save more, and taxes shouldn’t be the major limitation, provided that your income covers our true necessities. However, I will point out that as many problems as people ascribe to the US economy, the US still has the most versatile economic climate in the world. IMO, part of this is due to the lower taxes. Increasing taxes for small business owners removes the entrepreneurial incentive that was responsible for our previous prosperity in the first place.
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[...] This post was mentioned on Twitter by Roshawn Watson and Sam, squirrelers. squirrelers said: Tax Rates By Country http://bit.ly/b2qaPj [...]
Wow, that is fascinating, and kind of depressing!
I was just discussing taxes in Europe and Canada vs. the US, and I was surprised that our tax rate is not that much different from Canada, considering they get free health care, and I don’t think their higher education is nearly as expensive as ours.
Thanks for sharing, that was eye-opening!
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Everyday Tips – glad you found it informative – even if it wasn’t super uplifting how we don’t capitalize on our situaton here. Perhaps there will be some behavior changes with saving – even if limited – to take shape as a result of our recent financial situation.
Even knowing that our taxes are lower than most, it still hurts if you really think about it. 28% – 40% just seems like a lot of money for each individual to contribute to new roads and whatnot. I don’t think governments would need as much if they were more efficient with what they get…
BFS – I can certainly agree that things could be run more efficiently, in terms of usage of tax dollars. Perhaps that would make a dent into those tax rates.
That’s pretty interesting, but I’m not that surprised by the US tax vs. savings rate. However, what’s up with Finland? Why is their savings rate in the negative? Are they following in the footsteps of the US and spending more than they earn?
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Little House – I have to say, I like the low taxes but certainly wish we could capitalize by saving more!
Does this include taxes at all level of government? Does it also include sales taxes and registration fees and things like that?
I don’t know that revenue as a portion of GDP is really an accurate figure that is relevant to a personal situation. First, if you are paying 50% of your total income in taxes, you don’t care if the GDP figure is lower. Second, redistribution, subsidies, etc… all have effects that are distortionary and whose impacts cannot easily be seen. Finally, GDP is not the most reliable figure to go by.
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Kevin – the database lists it as “Total” taxes in the table. While not perfect, it tells an interesting story when juxtaposed against GDP – as GDP in effect can be thought of as a “proxy” for the upper limit of taxes collectible
Interesting stats that I had never seen before. Yes, it does put some perspective on taxes when compared to other nations. I would guess the reason US is comparable to Canada even though Canadians get free health care is because US has much greater military budget.
I would be curious as to how different nations compare in per capita national debt.
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My little town has a lot of construction going on right now and the roads they are repaving don’t even seem so bad. I was thinking…aren’t there worse roads that should get done first? Some of this stimulus money seems to be getting used in a wasteful way.
Any idea what our tax rate is projected to be?
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So I definitely agree with you that the US isn’t saving nearly as much as it should be. However, I’d be curious what percentage of employee income on average is being paid in tax. Using GDP might make the tax level look lower since it includes everything, right? Maybe I am confused…
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The GDP is not a good measure to compare to because the GDP also includes Services and Goods the government has bought itself. The Government itself is a component of the GDP.
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Taxes are normal, it is our responsibility to pay taxes for public service because in the end we the people will benefit it.
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