THE United States has become an overlooked tax haven. Many Americans may grumble about their tax burden. They may lament the likelihood that Congress will soon increase taxes somewhat.
But according to a study by Oppenheim, Appel, Dixon & Co., the average US middle-income family generally takes home more after-tax dollars than its counterpart in any other major country.
Here's this accounting firm's comparison of top marginal income tax rates for married taxpayers in leading nations. The marginal rate is the highest percentage of income taken by the government:
Years ago, the US had marginal income tax rates that went as high as 91 percent. Even before President Reagan, that rate was lowered. Of course, under Mr. Reagan, major tax reform has broadened the tax ``base'' by removing many loopholes while lowering the marginal rate dramatically further. Several other industrial countries have also been reducing their marginal rates, partly in reaction to the change in the US.
Governments are less keen to ``soak the rich,'' not so much out of sympathy for the affluent, as from the economic view that high tax rates may be counterproductive: They may discourage the formation of capital used to create more wealth.
Spicer and Oppenheim, the international arm of Oppenheim, Appel, Dixon & Co., also offers a table comparing after-tax income for a family with two children and one income of $50,000:
In this table, taxation has been calculated on income less any available personal allowances or tax credits. No account has been taken of tax-deductible expenses, social security and national insurance, or other levies such as property taxes, sales taxes, or state income taxes. This table does not show the entire tax burden.
In some nations, for example, indirect taxes such as value-added taxes may be more important than in the US. But by any measure, the US comes out as a relatively low-tax nation. Even if the tax increases included in the deficit-reduction package are approved by Congress, these tables will not be affected, and the overall tax burden of the American public will change only slightly.
One measure being considered by Congress would raise payments for medicare. But this is not considered in these tables to be income tax.
The people of the United States could, of course, decide to have the government provide more social services - say a universal government-paid medical program and special allowances for children, such as are provided in many nations. So far, the choice has been to leave more money in the pockets of taxpayers.