Tax Day Round Up

April 15th, 2014 at 3:27 pm

–Here’s my more detailed take on the tax fairness question, over at the NYT Economix Blog, including a graph I that I think quite gets to the nub of the matter.

–CBPP’s Chuck Marr has put together such an elucidating collection of tax charts that I cannot help but pilfer a couple.

–As I point out at the end of my NYT piece (and here too), the US is not a high-tax country.  That, according to this chart from the OECD, is an understatement.  In fact, “when measured as a share of the economy, total government receipts (a broad measure of revenue) are lower in the United States than in any other member of the Organisation for Economic Co-operation and Development (OECD), even after accounting for the modest revenue increases in the 2012 “fiscal cliff” deal and the taxes that fund health reform.”


–Shift from corporate to payroll taxes: “Individual income tax revenues have held steady for many decades at a little under half of federal revenue.  The share of federal revenue from payroll taxes (mostly Social Security and Medicare taxes) grew sharply between the 1950s and 1980s and has since remained relatively stable.  Conversely, the share of federal revenue from corporate taxes fell sharply between the 1950s and 1980s and has remained at this lower level.”

Note that the latter trend has coincided with sharp increases in profitability, both pre- and post-tax.  Given that the trend in business investment has been nothing special, implying the ratio of capital to output hasn’t increased much, these factors all imply an increase in the return to capital, amidst a flattening of the return to labor (the real wage).  Just like Piketty said would happen!


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5 comments in reply to "Tax Day Round Up"

  1. Larry Signor says:

    Looks like we don’t spend enough for good roads and bridges, among other things. Well, some really important people are pushing a scary new approach to revenue gathering that will solve none of our tax problems:

  2. Paul F. says:

    Jared, the graph showing declining payroll tax seems to represent income tax payroll deductions, but not other withholding. Some say that, while income taxes have indeed been going down in the US, the percent of other payroll deducitons has been going up, so US citizens have less overall takehome pay.

    What might a graph look like that would take this into account, as compared to other countries that might fund their social safety nets more directly? Might we then be higher on the list, as a higher-tax country?

    Or does the “projected total government receipts” graph already take into account such things as FDIC and medicare withholding (“total” including these, or not)?

  3. Joe says:

    Are state, local, property and sales taxes included in US totals? Guessing that VATs are included in totals for a lot of countries. Additionally, healthcare premiums that US taxpayers pay to get health insurance are also for a comparison part of US taxpayers “taxes” for comparisons sake.

  4. doverby says:

    I wonder if the shift from corporate to payroll taxes has more to do with changes to payroll taxes or changes to corporate taxes. Have corporations been paying a lower effective tax rate since the 50’s or have payroll taxes increased? Either way, this is a worrisome trend.