Paul L. Caron

Thursday, March 21, 2019

Inequality And Taxes: A Global Comparison

Council on Foreign Relations (2019)Council on Foreign Relations, Inequality and Tax Rates: A Global Comparison:

As the 2020 campaign for the presidency of the United States gets underway, candidates have announced a raft of new tax proposals, including increases in the top marginal income tax rate, the creation of a broad wealth tax, and reversing recent cuts to the U.S. estate tax. All three proposals are what economists term “progressive” taxes, meaning they would fall most heavily on wealthier taxpayers, in contrast with “regressive” taxes, which more directly affect lower-income citizens.


Proponents say these measures would address economic inequality, pointing to the United States’ position as one of the most unequal countries in the Organization for Economic Cooperation and Development (OECD), a grouping of industrialized democracies. Opponents, however, say that such proposals would stifle growth and hobble economic innovation. They also argue that the experiences of other wealthy countries show a mixed record for similar policies.

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The chart in the article provides all the evidence anybody needs that America's real problem isn't federal spending, it's low federal revenues. Of all the countries in the OECD, the United States ranks near the bottom in revenues as a percentage of GDP; in fact, we're considerably below the OECD *average* in that regard.

So the next time you hear concerns about the federal deficit, think about what's really causing it. It isn't too much spending, it's too litte revenue.

Posted by: Gerald Scorse | Mar 22, 2019 6:54:48 AM