Who Says Taxes Are Too High?

The idea that taxes are too high has considerable appeal, both to politicians and ordinary citizens. "Individual taxes are too high. Corporate taxes are too high," Maryland state legislative candidate Mike Blasey told The Washington Post recently. This is not to pick on Mr. Blasey. His comment is just one of the most clear and succinct that has appeared in print lately as part of the debate about the tax burden placed on Americans.

This ancient debate is currently at a high pitch as a massive set of tax cuts is set to expire. Citizens -- and business owners -- of many political persuasions subscribe to sentiments similar to Mr. Blazey's. One explanation they put forth is that higher taxes will delay economic recovery. Another reason is that it is unfair to increase levies on taxpayers who have lost jobs or are earning less due to the recession. These positions are difficult to assess objectively, since one pins its validity on events that may or may not occur in the future while the other is essentially moral, or perhaps purely political.

As far as The Debunker can see, little if any effort has been expended in examining other measurements of whether or not taxes are high. For instance, are our taxes high compared to what they have been in the past? That should be easy to determine conclusively. Are they high compared to what citizens of other nations pay? Not quite so simple, but still better than trying to read the future, or decide what is fair. Here's what The Debunker found:

The top U.S. federal income tax rate generally has been falling for more than 50 years. In 1956, for example, it was 91 percent. Since then it was lower than it is now only for a few years about 20 years ago. Today, of course, the top federal income tax rate is 39.6 percent, about half what it was when Eisenhower was president. This information is widely available, but a clear expression of it can be found at the Data 360 website.

What about all taxes combined? According to the Organization for Economic Cooperation and Development, from 1975 to 2008 Americans' total tax burden, including state and local as well as federal taxes, increased from 25.6 percent of GDP to about 26.9 percent of gross domestic product.

The same source suggests that the U.S. imposes a lower tax burden on its citizens than almost any Western industrialized nation. In 2007, the latest year for which the OECD has complete data, the U.S. ranked 27th, with only Korea, Turkey and Mexico dedicating a smaller percentage of gross domestic product to taxation. With regard to corporate taxes, however, the U.S. has one of the highest rates among advanced nations, according to the OECD.

The 30 OECD nations are mostly Western democracies. So it's natural to wonder how the U.S. looks compared to a larger and more diverse group. In 2006, Forbes magazine published such a ranking that found U.S. citizens and corporations bore burdens about average among 52 locales including the likes of China, India and the United Arab Emirates as well as France, Denmark and the UK.

Comparing tax burdens is an inexact science. The OECD and, less probably, Forbes may wish to fool us into thinking we are lightly taxed. It may be that the feeling that we are paying far too much is more important than these facts, which suggest that we don't have it so bad. But it would appear that, rhetoric aside, our taxes are not much if any higher than they have been in the not too distant past, and that they are, if anything, lower than our peer nations.

Image courtesy Flickr user Dimattia, CC 2.0