BF2S Forums Why are corporate taxes in the United States so high? 39%

Kmarion wrote:

FloppY_ wrote:

I dunno about you guys, but the danish TAX is dynamic, as in.. 41% is only the MINIMUM tax, if you earn a "decent" amount you pay 61%

Most of the US also has a state income tax, sales tax, and property taxes. They aren't going to show up on colorful graphs. Those are local revenue streams, and the Fed does not see any of it.

How much VAT do you add to goods in the US ?  Here it is 25% of a products base value

Kmarion wrote:

FloppY_ wrote:

Kmarion wrote:

Most of the US also has a state income tax, sales tax, and property taxes. They aren't going to show up on colorful graphs. Those are local revenue streams, and the Fed does not see any of it.

How much VAT do you add to goods in the US ?  Here it is 25% of a products base value

We have a sales tax and it varies by state and county. It is based on the retail price.

The worst thing in denmark when it comes to "VAT" and the likes, is the tax on cars... we pay for 180% the price of the cars... which means, in the UK you can get something like a Golf GTI top spec model for somewhere around £30000, where it will in denmark cost you £50000 with little or no extra equipment..

I can speak for experience Ken that you can only claim a loss for a certain number of years, 3 or 5, and then the IRS will insist that you shut down. It's one of those things you learn about business; loopholes. When you start a new business you are expected to outlay most of the profit on establishment and expansion.


The problem is, like so much of our society, it became " how much can you game the system. "

Instead of learning that if you want financing such as SBA or venture capital you HAVE to run a profit, people revert to the natural current tendency, which is the scam. If you are just another non-ambitious smuck you ride the loss allowance years for all its worth. If you know what you are doing and have a good product and business model, you show maximum growth potential and profit, so you can attract investors.

Which leads us back to taxes; knowing there are so many ways to game the system, I support a flat tax on corporate gross receipts, and a 5-8% flat tax on all other transactions.


That makes too much sense, so nevermind. btw, did your parents have a hippy name for you, like moonbeam, or Lightning?

That's what I imagine.

Kmarion wrote:

FloppY_ wrote:

I dunno about you guys, but the danish TAX is dynamic, as in.. 41% is only the MINIMUM tax, if you earn a "decent" amount you pay 61%

Most of the US also has a state income tax, sales tax, and property taxes. They aren't going to show up on colorful graphs. Those are local revenue streams, and the Fed does not see any of it.

The colourful charts represent total US tax burden. Leading economists around the world are aware that there are state and federal taxes in the US.

Kmarion wrote:

The colorful chart was not very specific in detailing how it calculated revenue. Since it used the national GDP I can only assume that it only calculated what the IRS brings in.

You should send the expert economists at the OECD an email and explain to them how you think the US tax system works.

You may find that they know a hell of a lot more about it than you.

Kmarion wrote:

PureFodder wrote:

Kmarion wrote:

The colorful chart was not very specific in detailing how it calculated revenue. Since it used the national GDP I can only assume that it only calculated what the IRS brings in.

You should send the expert economists at the OECD an email and explain to them how you think the US tax system works.

You may find that they know a hell of a lot more about it than you.

I'm sure they do but this does not answer how they calculated revenue. An intelligent person would investigate the numbers behind the jpg in order to see the whole picture. This makes more sense than just accepting things at face value and belittling people who suggest there may be more to what is being shown.

The data are collected in a way that makes them as internationally comparable as possible. Country representatives have agreed on the definitions of each type of tax and how they should be measured in all OECD countries, and they are then responsible for submitting data that conform to these rules.

http://lysander.sourceoecd.org/vl=87906 … /index.htm
happy?

Incidentally you assumed that the 'colourful chart' made by the OECD was wrong, belittled it, and believed that you knew better than them, despite not knowing whether they were or not.

They turned out to be right.

Kmarion wrote:

That is still very open ended. I want to know exactly how they got their numbers. I have yet to see "we got these numbers by ___". If it is to be all inclusive it should say that these numbers include state, local, and county taxes as well.

I've admitted that they know more than I do. You probably do as well, considering your apparent obsession with discussing the US's domestic policy. That does not mean that a person shouldnt ask for more information and the details behind the numbers.

I was talking about belittling a person who contends that there may be more behind a posted image. There is a big difference between personally calling out someones knowledge amongst "experts", and suggesting that although "colorful", the image is overtly simple. Things, especially in economics, are rarely that basic. This is especially true when dealing with multiple levels of government.

I'm learning that now, I decided to crash self-learn economics...

One of the big things I'm learning is big picture vs. what sounds nice.

Turquoise wrote:

Corporate taxes are high here as compared to many other countries because of our relatively low personal taxes.

Most of the other countries on that graph have considerably higher personal income taxes than we do -- especially for their wealthiest people.

To make up for this, we tax corporations more than they do.  It's a balance of taxing the corporations vs. taxing individuals.

Funny...when you look at the numbers for the source link, it shows the US income tax rate is roughly the same range as just about every other country. With the highest tax rates being levied on the richest Americans.

Those pesky facts kind of shoot your thesis right in the ass, Turq.

PureFodder wrote:

The total tax burden in the US appears to be relatively low in comparison to most rich countries.

Based on what, exactly?

When state, local, sales, fuel, and other taxes are added in, the tax rate on the average American is comparable to most other "rich" countries.

Kmarion wrote:

PureFodder wrote:

Kmarion wrote:

I'm pretty sure the UK is estremly low as well.  Actually, it is at the bottom.
More recent information:
http://i38.tinypic.com/34eycxx.jpg
http://news.bbc.co.uk/2/hi/americas/8162616.stm

Yep, we have the most similar policies to the US and the expected results.

Kmarion wrote:

Maybe showing you the relative size of each governed population can help you understand why I think size matters when governing large populations of people. The smaller the better chance of success.
Denmark-5,511,451
Norway-4,812,200
Finland-5,340,093
Canada-33,726,000

France-65,073,482
US-307,002,000
Italy- 60,045,068
UK-61,612,300

By what mechanism can population size make a difference? For example Germany has the second highest populations of the rich western countries and one of the best social mobilities, higher than that of Norway.

Look at the report that it's based on and it goes into lots of detail about how much government policies influence this. From helathcare to education these policies can be geared to giving everyone as equal a chance as possible or not. The US and UK typically don't go overly after equality regardless of parental income whereas other countries enact policies with that aim in mind.

Germany is not a typical case. Perhaps rebuilding the country over the last few generations (the postwar era) has helped present more opportunity? Or maybe it's the fact that their military spending is nearly nil, and they can afford to tax and donate to the downtrodden?

It sounds like we need to cut military spending some.

PureFodder wrote:

It's tax income raised for general government (not just federal) and includes sales, fuel etc. taxes

What are you basing your assertion that the US pays a comparable amount, got a source?

http://www.concurrencefiscale.ch/papers … -Index.pdf

http://www.taxpolicycenter.org/publicat … ID=1000976

OECD Report wrote:

Compared with other OECD countries, the United States relies more heavily on income taxes as a source of revenue and less on taxes on goods and services. In 2003 the United States raised 43.3 percent of its revenue from corporate and personal income taxes, compared with 30.5 percent for the rest of the G7 and 34.3 percent for non-G7 OECD countries. But unlike other OECD countries, the United States does not impose a value-added or other form of national sales tax. Consequently, the U.S. share of revenue raised from taxes on goods and services (state sales taxes and state and federal excise taxes on selected commodities) was only 18.2 percent, compared with 26 percent in other G7 countries and 32.6 percent in non-G7 OECD countries.

Here is a listing of all taxes in the US. Unfortunately, state and local taxes vary so much that there is no data I can find that consolidates it all in one place. Some sources (news and radio primarily, so no sourcing I can find online) have pegged the overall tax rates, when marginal taxes are taken into account (sales, fuel, property, etc) of upwards of 70% for the highest income levels when one combines all federal, state, and local taxes paid each year.

If you look at it from the perspective of how long the average US worker has to work each year just to pay his or her Federal taxes alone (Apr 13th for 2009), that is roughly 25% of the year spent just to pay Federal taxes. Add state and local on top of that (again, they vary greatly, with some states taxing on par with the feds and some states having zero income but higher consumption and property taxes), and you quickly approach 50% on average.

As for corporate rates, here's a study from the CBO that is quite enlightening (see pages 18-24...roughly).

PF wrote:

Just to make it more clear the US federal tax revenue for 2007 was about $2.7 trillion and the total GDP was $14.2 trillion (2008) so the Faderal tax revenue is less than 20% GDP. The figures from the OECD therefore can't be jsut federal taxes and must include state and local taxes too.

So explain again how "Federal tax revenue" is more than just federal taxes? Federal tax revenue is revenue generated from federal taxes alone and does not include state or local taxes.

FEOS wrote:

PureFodder wrote:

It's tax income raised for general government (not just federal) and includes sales, fuel etc. taxes

What are you basing your assertion that the US pays a comparable amount, got a source?

http://www.concurrencefiscale.ch/papers … -Index.pdf

http://www.taxpolicycenter.org/publicat … ID=1000976

OECD Report wrote:

Compared with other OECD countries, the United States relies more heavily on income taxes as a source of revenue and less on taxes on goods and services. In 2003 the United States raised 43.3 percent of its revenue from corporate and personal income taxes, compared with 30.5 percent for the rest of the G7 and 34.3 percent for non-G7 OECD countries. But unlike other OECD countries, the United States does not impose a value-added or other form of national sales tax. Consequently, the U.S. share of revenue raised from taxes on goods and services (state sales taxes and state and federal excise taxes on selected commodities) was only 18.2 percent, compared with 26 percent in other G7 countries and 32.6 percent in non-G7 OECD countries.

Here is a listing of all taxes in the US. Unfortunately, state and local taxes vary so much that there is no data I can find that consolidates it all in one place. Some sources (news and radio primarily, so no sourcing I can find online) have pegged the overall tax rates, when marginal taxes are taken into account (sales, fuel, property, etc) of upwards of 70% for the highest income levels when one combines all federal, state, and local taxes paid each year.

If you look at it from the perspective of how long the average US worker has to work each year just to pay his or her Federal taxes alone (Apr 13th for 2009), that is roughly 25% of the year spent just to pay Federal taxes. Add state and local on top of that (again, they vary greatly, with some states taxing on par with the feds and some states having zero income but higher consumption and property taxes), and you quickly approach 50% on average.

As for corporate rates, here's a study from the CBO that is quite enlightening (see pages 18-24...roughly).

PF wrote:

Just to make it more clear the US federal tax revenue for 2007 was about $2.7 trillion and the total GDP was $14.2 trillion (2008) so the Faderal tax revenue is less than 20% GDP. The figures from the OECD therefore can't be jsut federal taxes and must include state and local taxes too.

So explain again how "Federal tax revenue" is more than just federal taxes? Federal tax revenue is revenue generated from federal taxes alone and does not include state or local taxes.

It's very simply. The OECD gives the tax burden on US citizens at around 30% GDP. The argument against this was that this figure neglects state and local taxes, sales taxes etc and only represents federal taxes. The figures I gave clearly show that the Federal tax burden is less than 20% GDP therefore the OECD figure of around 30% must include other taxes. If you look at the source they explicitly state that they include sales taxes and give their values. If you look at state tax revenues as well, the amounts vary from state to state but typicaly average below 10% GDP.
http://en.wikipedia.org/wiki/State_tax_ … ted_States

Overall you can see that combined state,sales and federal taxes are still below the OECD figure of about 30% GDP.

All the data of actual tax burden (as opposed to the meaningless figure of tax rate) point to the OECD data being right. The tax burden on Americans is lower than most rich western countries.