Photo: BCA Research
There are plenty of different ways to look at a country’s tax rate.For instance, if you look at tax as a percentage of GDP, the U.S. has a relatively low rate.
However, BCA Research goes one step further and considers the make up of those tax revenues.
It turns out that the U.S. relies pretty heavily on incomes as a source of tax revenue.
BCA believes this should be addressed when considering tax reform.
“The U.S. tax system is desperately in need of reform. Tax revenues as a share of GDP need to rise, but this should be done by sweeping away all the loopholes and this could even allow marginal rates to come down. Ultimately, a national sales tax will probably be needed. This would broaden the tax base and reduce the heavy reliance of the U.S. on income taxes. Taxes on income, profits and capital gains account for 47% of tax revenue in the U.S. compared with a median 30% in other OECD countries.”
This is not to say that taxes on incomes should come down. Rather, the U.S. should better diversify its sources of revenue.
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