Are We the Most Heavily Taxed People in the World?

A few weeks ago, the director of our local economic development corporation sent out an e-mail from a private “think tank” alleging that U.S. corporations pay the highest taxes in the world.  I had recently seen an article with data from the Congressional Budget Office and the Organisation for Economic Co-operation and Development (OECD) disputing this claim and asserting that the effective U.S. corporate tax rate was substantially lower than that of most developed nations.  I promptly sent that information to our development corporation’s e-mail list, only to become engaged in a debate which, from my perspective, has a small chance of a satisfactory conclusion.

People, like me, who believe that U.S. businesses and citizens pay total tax bills comparable to or less than those of our counterparts around the developed world are persuaded by a range of data and studies that support this point of view.  The business person who makes the tax payment every year and believes it to be unreasonable is informed by his/her own experience and a different set of studies reinforcing this belief.  The Internet makes it very easy to find information to support either point of view.

Unfortunately, there is no grand arbiter of international tax burdens; so I’m not likely to change my mind any time soon, and I’m reasonably certain the other parties to the debate will not change theirs. The usual result of these disputes is that both sides decide the other side is deluded by their own self-interest and is therefore wrong.  A good debate, however, should cause those who hold different beliefs to consider the possibility that the opposing point of view may have merit.

I have seen substantial evidence from sources I trust that U.S. businesses and citizens are not the most heavily taxed people in the world and are probably not even in the top ten.  I am willing to concede I really don’t know with absolute certainty that this information is correct, but I’m unwilling to accept at this point that it’s wrong.  The brief e-mail debate of the past few days has convinced me to look at the issue more closely.

The question of relative tax burdens may not seem to be of critical importance, given that most of us won’t be having much individual influence on the issue in the near future.  Our collective judgment is important, however, because if we choose to tax ourselves too heavily we will stifle investment, while if we tax too lightly we will not be able to afford the services and infrastructure necessary to support the world’s largest economy.  Additionally, we run the risk of driving business away if owners believe they are too heavily taxed, whether they really are or not.

I know I won’t settle the issue by acknowledging the need for more information, but I do know I’ve learned from the recent exchange and will continue to provide the counterpoint when I believe there is benefit to seeing an issue from a different perspective.