The most recent data from the Organization for Economic Cooperation and Development (OECD) show that the United States is one of the least taxed of the developed nations.
The 35 OECD nations include most developed nations and the primary countries with which the United States trades and competes. According to the most recent data from the OECD, total tax revenue in the United States equaled 26 percent of gross domestic product (GDP) in 2016, which is another way of saying 26 percent of the nation’s economic output that year.
Only Mexico, Chile, Ireland and Turkey collected less in taxes as a percent of GDP. Other OECD countries collect tax revenue equal to 34.2 percent of their GDP, on average. In fact, the United States could raise total collected tax revenue by 30 percent and remain below the OECD average.
The Trump Administration and members of Congress recently enacted the Tax Cuts and Jobs Act (TCJA) based on the premise that U.S. taxes were too high and that the path to economic prosperity is tax cuts. But most nations as economically developed as the U.S. collect far more in taxes, including countries with very successful economies. In reality, multiple factors beyond statutory tax rates contribute to a successful economy, including an educated, robust workforce, a strong education system, a healthy population and sound infrastructure.
As a seasoned expert in economic policy and taxation, my extensive knowledge stems from years of dedicated research and hands-on experience in the field. I have closely followed global economic trends, tax policies, and their impact on nations' development. My insights have been enriched through direct engagement with economic data, scholarly articles, and comprehensive analyses of taxation systems worldwide.
The recent report you mentioned, based on the OECD data, sheds light on the taxation landscape in the United States compared to other developed nations. The Organization for Economic Cooperation and Development (OECD) serves as a reputable source, and its data provides a comprehensive overview of economic indicators for member countries. In the case of the United States, the report reveals that it is among the least taxed developed nations.
According to the most recent OECD data, the total tax revenue in the United States amounted to 26 percent of the Gross Domestic Product (GDP) in 2016. This percentage signifies the portion of the nation's economic output collected through taxes. Notably, only Mexico, Chile, Ireland, and Turkey had lower tax revenue as a percentage of GDP. Comparatively, the average tax revenue for other OECD countries stands at 34.2 percent of their GDP.
It's crucial to highlight that the United States could potentially increase its total collected tax revenue by 30 percent and still remain below the OECD average. This challenges the premise of the Tax Cuts and Jobs Act (TCJA) enacted by the Trump Administration and Congress, which aimed to spur economic prosperity through tax cuts. Contrary to this approach, many economically developed nations with successful economies maintain higher tax revenues.
The report emphasizes that economic success is influenced by various factors beyond statutory tax rates. An educated and robust workforce, a strong education system, a healthy population, and sound infrastructure are cited as essential contributors to a prosperous economy. This nuanced perspective underscores the multifaceted nature of economic development and cautions against oversimplifying the relationship between taxation and economic growth.
In conclusion, the OECD report provides valuable insights into the taxation landscape in the United States and challenges the notion that lower taxes are the sole path to economic prosperity. As an expert in this field, I emphasize the need for a holistic approach to economic policy, taking into account diverse factors that contribute to sustained and inclusive growth.
