The Tax Burden in the United States and Other Countries

Abstract

The ratio of taxes to gross national product (GNP) is lower in the United States than in most western European countries but considerably higher than in Switzer land and Japan. Social security taxes are much higher in relation to income in most of the European countries than in the United States; if these taxes are excluded, the rankings are somewhat altered. Federal, state, and local governments in the United States obtain a comparatively large proportion of their revenue from income taxes, property taxes, and other direct taxes, and a comparatively small proportion from sales taxes and other indirect taxes. Taxes have been increasing faster than income in all of the countries studied. Among seventeen Organisation for Economic Co-operation and Devel opment (OECD) countries, there is some tendency for tax ratios to be higher on the average where per capita income is high than where per capita income is low and a clearer tend ency for ratios of direct taxes to income to rise with per capita income. An examination of tax ratios, national income, and price levels over the period 1955-1965 raises some questions about interactions between taxation and economic behavior that merit further study.