Anecdotal evidence, from the politicians they elect to the gripes at the average backyard barbecue, would seem to suggest that Americans feel overtaxed. And a 2016 Gallup poll corroborated that a majority (52 percent) say the amount they have to pay in federal income tax is "too high." But recent evidence from the Organization for Economic Cooperation and Development (OECD) says that, when you take the tax rates of the rest of the world into consideration, Americans don't have it quite so bad.
The OECD analyzed how 35 of the world's biggest economies around the globe tax their citizens, and the results might come as a surprise to many Americans who just finished squaring up last year's tax bill. At the top of the list of countries that collect the most tax from their citizens are Belgium and France, while workers in Chile and New Zealand are taxed the least. America is squarely in the bottom third.
I recently spoke to David Bradbury, Head of the Tax Policy and Statistics Division of the Centre for Tax Policy and Administration at the Organisation for Economic Co-operation and Development (OECD). He told me that part of the reason Americans might feel overtaxed is the value they perceive to be getting for that burden.
"One of the issues will always be whether or not voters and taxpayers feel they are getting good value for their contributions," he said. "I do think there are some countries outside the U.S. that are more willing to accept higher levels of contributions, such as some in Europe. And when surveyed, citizens in those European countries feel like they're getting good value for their contributions, so that's certainly a factor in how taxes are perceived."
In every scenario analyzed in the report, the U.S. tax burden was below average, from 3 points to almost 6 points, depending on the taxpayers' wages, marital status, and number of children. When the OECD analyzed married couples with children, the rankings changed slightly, with France overtaking Belgium for the highest, and New Zealand diving below Chile for the lowest. But the U.S. was still nowhere near the top.
It turns out, the results were not dependent on which party occupies the White House either. The U.S.'s ranking hasn't changed much over the past two decades, despite the tax fluctuations under Presidents George W. Bush and Barack Obama.
So while President Trump and his Treasury Secretary Steve Mnuchin take aim at a plan that would create what the President has described as, "One of the biggest tax cuts in history," how do Bradbury and his OECD colleagues advise that the sitting President should proceed?
"We all know there is a plan out there, but it's still fairly limited in detail, and we don't really have a clear sense of what the plan may look like," Bradbury said. "I know the corporate tax rate is a significant feature of the proposed reform, but the emphasis of the advice we would provide is to apply the general principles we hold in the context of the U.S., which is to assure taxpayers that you have a broad base, and the broader the base, the lower the tax rates can be."
There's still a long way to go before U.S. tax reform becomes a reality, and it remains to be seen whether or not the base will stay as broad as a body like the OECD would like it to be. But for now, the big takeaway is that Americans don't have it nearly as bad as they think they do, and that in and of itself could help shape a debate that's likely to wage on for the bulk of 2017.