Thursday, September 29, 2011

Chart of the Day: Effective Tax Rates on $100k

From The Economist.

22 Comments:

At 9/29/2011 11:30 AM, Blogger Don said...

Does the black bar (Employee Social Security) not include the employer contribution, meaning that the US black bar should be doubled in length?

Thanks, Don

 
At 9/29/2011 11:34 AM, Blogger Bret said...

Does that include State and Local taxes as well I wonder?

 
At 9/29/2011 11:44 AM, Blogger morganovich said...

it would be interesting to see just how many people that affects in each country.

in the US, making $100k puts you in the 84th percentile of households.

i'll be you'd be over 95 in many of these countries (implying that far fewer people are paying such a rate).

i think don raises a good point as well. our fica is at least half funded by the employer. i do not think that is the case in other countries. add that in, and the US moves considerably higher on the tax burden rankings.

 
At 9/29/2011 12:01 PM, Blogger Jim said...

First, I fear we are comparing apples and oranges in this chart.

Nevertheless, other than a couple outliers like Denmark (which is about the size of the Miami MSA and therefore why is it included?), the real difference is in progressive social nets.

What is ironic is that it is those programs that are driving all of Europe into inevitable bankruptcy, including France and Germany even as they attempt to bail out the first countries to collapse.

 
At 9/29/2011 12:15 PM, Blogger Cabodog said...

It's been stated that Greeece's main problem is with tax law compliance.

With such a high tax burden, the underground economy has developed to the point that the government collects fewer taxes overall (than if they had lower tax rates).

 
At 9/29/2011 12:17 PM, Blogger Walt G. said...

"our fica is at least half funded by the employer."

Isn't that money that would be available for employee compensation without changing employers' profit margin (ROI or however you want to measure that metric)? If so, I would argue the employee is essentially paying that portion of fica, too.

 
At 9/29/2011 12:44 PM, Blogger Hydra said...

I looks to me if you double the lenght of the black bar it moces us up a couple of notches: just below or equal to Japan.

But, If you start including employer paid benefits as if the employee really paid them (all come from the available pool of money to hire with), you would somehow want to include all employer paid benefits, and that might push the US far down the list.

I imagine Morganovich is right about the number of people affected: there are a lot of countries not on this list because salaries that high are rare. Funny how the people in those socialist countries fare so well, compared to all the countries that did not make the list.

I'm not sure why Jim thinks the size of the country changes the fact of what the tax burden is, other than one might expect larger and more prosperous countries to have lower tax burdens, since the government gains efficiency through economy of scale.

Walt makes a point about the underground economy, and excessive taxes. But the US has a strung underground economy with much lower tax rates. I wonder if this is as much cultural as anything else: Greece was long a center of trade, and bartering gets built in to the culture.

 
At 9/29/2011 1:00 PM, Blogger morganovich said...

walt-

sure, you can look at it that way on fica. healthcare too.

but that wasn't my point.

my point was that, per don's argument, its exclusion make the US tax burden look lower than it is.

 
At 9/29/2011 1:27 PM, Blogger Walt G. said...

morganovich,

Yes, the darker colored bar on the chart should doubled in length to be valid. I just don't like to think of employers sending my money in as their contribution.

 
At 9/29/2011 1:42 PM, Blogger Che is dead said...

Surely, collecting more in taxes must mean that these countries have lower debt burdens, right? Isn't that what the left keeps telling us? Well, this will surprise you:

The 20 countries with the most debt, Canada.com

 
At 9/29/2011 2:42 PM, Blogger Benjamin said...

We could get those marginal income tax rates down lower in the USA if we dropped military bloat to 2 percent of GDP and reduced the annual flood of federal lard to rural pink states.

 
At 9/29/2011 5:37 PM, Blogger Hydra said...

I just don't like to think of employers sending my money in as their contribution.

=================================

Employers don't see it that way. They have a pool of money with which to attract workers. Whether it pays for health benes, wages, child care or taxes is moot to them, as long as the offer gets them the employees they need.

 
At 9/29/2011 5:58 PM, Blogger rjs said...

this is a better way of comparing taxes across the board, not just for one income bracket:

http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP

 
At 9/29/2011 7:38 PM, Blogger rjs said...

from the hertitage foundation column, it looks like sudan, chad & bangladesh would be ideal places to escape taxes...

 
At 9/29/2011 8:59 PM, Blogger Benjamin said...

Since 1999, Belgium GDP per capita is up 58 percent.

http://www.indexmundi.com/g/g.aspx?c=be&v=67

But you right-wingers and left-wingers only cite politically correct stats in your respective echo chambers....

 
At 9/30/2011 1:25 AM, Blogger KPres said...

Is that supposed to be a lot?

Russia, China and UAE are up around 200%. Australia is up 85%.

 
At 9/30/2011 2:53 AM, Blogger RejpalCZ said...

This comment has been removed by the author.

 
At 9/30/2011 2:56 AM, Blogger RejpalCZ said...

I'm from Europe.

In all countries, social security payments are split, U.S. is not an exception in this.

Part (usually half) is paid by employee, half by employers.

It's a way to hide part of the tax burden from employee.

 
At 9/30/2011 2:22 PM, Blogger Jet Beagle said...

Isn't the better measure of tax burden the total tax receipts of all government - federal, state, and local? Just as payroll taxes vary from nation to nation, so to do sales taxes, property taxes, and value added taxes. Most governments find ways to hide the overall tax burden from citizens. Value-added taxes are ultimately paid by end consumers, who never actually see the amount of such taxes. The same is true for property taxes on businesses. capital gains taxes just raise the cost of capital in those nations which impose them, and those higher costs are likewise passed on to end consumers.

Here's a link to total tax burden as a % of GDP. It's based on 2007 and 2008 tax collections, so it may be out-of-date. The U.S. total burden was far lower than that of most European nations.

 
At 9/30/2011 3:21 PM, Blogger VangelV said...

Here's a link to total tax burden as a % of GDP. It's based on 2007 and 2008 tax collections, so it may be out-of-date. The U.S. total burden was far lower than that of most European nations.

I wonder how things stack up when you look at the accrued liabilities, which are not shown on this chart. SS and Medicare have liabilities that are several times the total federal debt, which would be bigger if off budget items are included. And if you look forward you find that a chunk of the defence of Europe is being paid for by American taxpayers. And what happens when bankrupt states like California, which have a lot more debt than Greece are included in the numbers?

 
At 9/30/2011 3:42 PM, Blogger Jet Beagle said...

VangeIV: "SS and Medicare have liabilities that are several times the total federal debt"

That's true. Of course, many European nations also have implied liabilities for future health care - not just for seniors but for all residents. I'm not sure how we could compare the implied liabilities of Europe with the explicit liabilities of the U.S.

What I think we can say with confidence is this: unless growth of entitlements is changed, the tax burdens of both the U.S. and Europe will increase by a large amount in another decade or so.

 
At 9/30/2011 9:21 PM, Blogger VangelV said...


What I think we can say with confidence is this: unless growth of entitlements is changed, the tax burdens of both the U.S. and Europe will increase by a large amount in another decade or so.


From the looks of what happened in Germany it looks as if the EU may be on its last legs as a monetary union. The country of Ludwig Erhard, whose book, Prosperity Through Competition, should be read by anyone interested in economics, will not allow its politicians to destroy its credit rating.

I don't know about anyone else here but I am starting to think that we could be looking at the reestablishment of the Mark within a year or so. If it is backed by its gold reserves or some other commodity, Germany will surpass the United States as an economic power.

 

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