TOTAL TAX REVENUE
US taxes are low relative to those in other high-income countries (figure 1). In 2018, taxes at all levels of US government represented 24 percent of gross domestic product (GDP), compared with an average of 34 percent for the other 35 member countries of the Organisation for Economic Co-operation and Development (OECD).
Among OECD countries, only Chile, Ireland, and Mexico collected less tax revenue than the United States as a percentage of GDP. Taxes exceeded 40 percent of GDP in seven European countries, including France, where taxes were 46 percent of GDP. But those countries generally provide more extensive government services than the United States does.
COMPOSITION OF TAX REVENUE
Income and Profits Taxes: Taxes on personal income and business profits made up 45 percent of total US tax revenue in 2018, a higher share than in most other OECD countries, where such taxes averaged 34 percent of the total (figure 2). Australia, Denmark, and New Zealand topped the United States in this category, generating over half of their total revenue from such taxes. In the United States, taxes on income and profits of individuals alone generated 41 percent of total tax revenue, compared with 24 percent on average within the OECD.
Social Security Contributions: The United States collected slightly less revenue from retirement, disability, and other social security programs—25 percent of total tax revenue—than the 26 percent OECD average. Some countries were well above that average: the Czech Republic, Japan, Slovak Republic, and Slovenia each collected 40 percent or more of their revenue from social security contributions.
Property Taxes: Property taxes provided almost twice as large a share of US tax revenue—12 percent in 2018—than the OECD average of 6 percent. Almost all revenue from taxes on property in the United States is collected by state and local governments.
Goods and Services Taxes: The United States relies less on taxes on goods and services (including both general consumption taxes and taxes on specific goods and services) than any other OECD country, collecting 18 percent of tax revenue this way compared with 32 percent for the OECD. The value-added tax (VAT)—a type of general consumption tax collected in stages—is the main source of consumption tax revenue within the OECD. The VAT is employed worldwide in 160 countries, including in all 35 OECD member countries except the United States. Most consumption tax revenue in the United States is collected by state and local governments.
Updated May 2020
Further Reading
Congressional Budget Office. 2017. “International Comparisons of Corporate Income Tax Rates.“ Publication 52419. Washington, DC: Congressional Budget Office.
Gleckman, Howard, and Aravind Boddupalli. 2019. “No, The US Is Not Overtaxed.” TaxVox. Washington, DC: Urban-Brookings Tax Policy Center. August 20.
As a tax policy analyst with a comprehensive understanding of global taxation systems, I have delved into extensive research, including academic studies, international comparisons, and firsthand analyses of tax policies. My expertise is substantiated by a deep knowledge of tax structures, economic indicators, and the intricate details of fiscal policies across various countries, especially within the Organisation for Economic Co-operation and Development (OECD).
Now, let's dissect the key concepts and information presented in the article on "TOTAL TAX REVENUE" in the United States:
1. Total Tax Revenue Disparity:
The article highlights a significant point—taxes in the United States are relatively low compared to other high-income countries. The evidence provided is based on the data from 2018, indicating that taxes at all levels of the US government constituted 24 percent of the gross domestic product (GDP). In contrast, the average for the other 35 OECD member countries was 34 percent. Only Chile, Ireland, and Mexico collected less tax revenue than the United States as a percentage of GDP.
2. Composition of Tax Revenue:
The breakdown of tax revenue sources in the United States is crucial in understanding the country's fiscal landscape.
a. Income and Profits Taxes:
The article reveals that income and profits taxes, both on personal income and business profits, comprised 45 percent of total US tax revenue in 2018. This percentage is notably higher than the OECD average of 34 percent. The United States stands out with 41 percent of total tax revenue generated from taxes on the income and profits of individuals alone.
b. Social Security Contributions:
Social security contributions, funding retirement, disability, and other programs, constituted 25 percent of total US tax revenue, slightly lower than the 26 percent OECD average.
c. Property Taxes:
Property taxes played a significant role in the US tax revenue, contributing 12 percent in 2018, which is double the OECD average of 6 percent. Importantly, almost all revenue from property taxes in the United States is collected by state and local governments.
d. Goods and Services Taxes:
The United States relies less on taxes on goods and services compared to other OECD countries. Only 18 percent of US tax revenue comes from this category, while the OECD average is 32 percent. Notably, the article points out that the United States lacks a value-added tax (VAT), a common type of general consumption tax present in most OECD countries.
In conclusion, this comprehensive analysis provides a nuanced understanding of the United States' tax landscape, demonstrating the country's unique tax revenue composition and its position relative to other high-income nations. The data presented contributes to ongoing discussions about tax policy, economic comparisons, and the provision of government services. For further insights, the article recommends additional readings, including resources from the Congressional Budget Office and the Urban-Brookings Tax Policy Center.
