Taxes Around The World

By Daniel Indiviglio

The Economist has a fun daily chart today. It lists personal income tax rates for various countries. As you might guess, the U.S. is towards the bottom of the list. Of course, this chart does not show the entire picture.

First, here's the chart, from the Economist:

economist personal income taxes.jpg

From this, you might conclude that it's pretty good to live in the U.S. -- that is, if you don't like paying taxes. If you do, then you've probably already bought a one-way ticket to Slovenia. Yet, this chart only tells part of the story.

It fails to include other kinds of taxes, like excise taxes, value-added (sales) taxes and corporate taxes. The first of these is hopelessly complicated to compare among nations. They've all got different products that are taxed at different rates and in varied ways. In the U.S. states even differ in excise tax schemes.

But I managed to find some data for the other two types. It's from the Organization for Economic Co-operation and Development's Center for Tax Policy and Administration. Unfortunately, their data does not exactly overlap the countries that the Economist looked at, but many of the same countries were still listed. So you'll have to forgive me for not being able to do better. I feel like this still helps make some interesting comparisons. I left the order similar to that in the Economist chart, but with some missing.

First, here's the value-added tax chart I created from OECD data:

VAT OECD2.PNG

That zero for the U.S. may be misleading. The OECD did not list the U.S., since there is no national value-added tax. Of course, states have value-added taxes, which vary. But even when you think about what you pay for your state sales tax, the U.S. rates look pretty low in comparison. Especially versus, say, Sweden.

Then there are corporate taxes:

corporate taxes OECD2.PNG

Here, the U.S. is shockingly high -- even compared to Sweden and Italy. Although it's not a totally clear rule, it looks like most countries that have lower personal income and value-added taxes make up for it in corporate taxes. And then there's Switzerland, the outlier and ideal place for true tax haters.

This article available online at:

http://www.theatlantic.com/business/archive/2009/08/taxes-around-the-world/24071/