The longer-term trend, OECD data show, is that the tax-to-GDP ratio in the United States has remained quite stable over the past 23 years, never falling below 20 percent or rising above 30 percent. The ratio has been less stable over the long term in France and Germany, but what really jumps out is how light the tax burden is in the United States, still the richest country on earth, compared to its peer nations in the OECD. There’s good news in this, and also bad.
Let’s start with the bad news. What the hell, America? Your GDP, at roughly $27 trillion, is 51 percent larger than China’s. Your per capita GDP is bigger than that of any country in the nominal-GDP top 10, even though your population is significantly larger than the others save China and India. Yet your tax burden as a percentage of GDP ranks a stingy thirty-first out of 38 OECD countries: lower than Poland’s (35.2 percent), lower than Estonia’s (32.8 percent), lower than Latvia’s (30.2 percent). What does your penny-pinching get you? The ninth-highest poverty rate in the OECD, and the fourteenth-lowest life expectancy at birth. Even when Donald Trump is not president, you’re a rich country doing its damnedest to impersonate an impoverished backwater.
There’s no sign this will improve anytime soon, and certainly not in the 2024 election year. Biden’s own Democratic party spurned his efforts to increase the top marginal income-tax rate, the corporate rate, and taxation of inheritances. And even these measures were inadequate; his proposed corporate-tax increase, for instance, would have raised the current 21 percent to 28 percent, even though as recently as 2017 the top rate was 38.9 percent and the sky didn’t fall. For the foreseeable future the United States will cover increases in spending through debt, even though, as Fairless points out, debt is more expensive today than it’s been in a generation, even with Wall Street tycoons no longer shorting Treasuries.