U.S. Taxes Income, Europeans Tax Consumption

Source: Tax Foundation based on OECD data.

A reminder to all you Bernie Bros out there who think that the U.S. federal/state/local tax system is stacked far more in favor of the rich than in the social democracies in Europe. This graphic based on data from the Organization of Economic Cooperation and Development (OECD), which, incidentally, is not funded by the Koch Brothers, shows that the U.S. relies much more upon individual income taxes and property taxes (thus taxing income and assets) than other nations with advanced economies. Other countries rely more heavily on regressive social insurance taxes and consumption taxes. The Europeans have figured out that they can crank up the income taxes only so high on the wealthy before they pack up and move. Instead they tax consumption.

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10 responses to “U.S. Taxes Income, Europeans Tax Consumption”

  1. LarrytheG Avatar

    Here’s an interesting chart also:


    the Social Insurance taxes for OECD countries, by the way – for them – includes universal (medicare for all) health insurance. Ours includes Social Security and Medicare Part A but not Medicare Part B (which is NOT funded from FICA taxes) nor insurance for those under 65.

    And consumption taxes – if levied over and above basic needs threshold mitigates the regressivity.

  2. I certainly have the perception that EU’s tax brackets are much higher than ours. The chart is talking about source of income, not income brackets.

  3. LarrytheG Avatar

    Yep – less tax on personal income and more on consumption taxes – and been that way for almost 20 years and the tax on personal income is reducing!

    So is a tax on consumption rather than personal income – sustainable?

    Isn’t such a tax regime – NOT penalizing earning money but rather spending it?

  4. LarrytheG Avatar

    maybe this is also relevant to what TBILL was alluding to:


  5. LarrytheG Avatar

    but here is what is not included in most of the comparisons:


    so… other countries – the health care is included in the taxes but when we compare country to country – the US numbers do not usually include how much workers have to pay “voluntarily” for health insurance.

    If we did a true apples-to-apples comparison – we’d either include health insurance costs for all countries whether “voluntary” or not or we’d not count it.

    It’s deceiving to compare the US taxes to other countries when we don’t include the health insurance and they do.

    1. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      Good point.

    2. TooManyTaxes Avatar

      If we spent half of what other nations spend on health care, we would all have significant savings but we’d also reduce the size of the health care industry, probably through layoffs and reductions in compensation. No one can spend less and keep up the size of the U.S. health care industry. A fair discussion of the issue would include: Who loses jobs? Who gets pay cuts? What research is cut?

      I’m not arguing for the status quo today. But if we are talking about radical changes to the U.S. health care system, let’s talk about all of the changes.

  6. LarrytheG Avatar

    Well, first, in the context of this discussion – we’re basically pointing out that comparing taxes between the US and other countries is not a true apple-to-apple comparison if we don’t included health insurance costs for the US but we DO for the other countries.

    but on the issue of the COST of health insurance IN THIS COUNTRY –
    if we really want to objectively calculate it – we need to assess not only what folks pay for employer-provided but what we also pay for Medicare and Medicaid – as part of our taxes we pay since both of them come out of the general fund to the tune of more than a billion dollars.

    We’re really NOT talking about radical changes – only those who are demonizing it are.

    First – people KEEP their employer-provided insurance.

    second – we KEEP Medicare

    third – we continue to provide ObamaCare for those who do not have employer-provided and cannot buy/afford quality market insurance.

    Finally -that leaves us with those who are not now covered but who cost us all a lot of money when they end up sick or injured and go to the hospital to receive treatment – we pay for that.

    Do we offer them Medicare at the same rate we charge existing enrollees – i.e. $134 a month? Or do we offer them Obamacare –
    catastrophic coverage for about the same amount where they get the minimum essential benefits to screen for cancer, heart disease, and diabetes and have those conditions managed to prevent catastrophic costs later?

    The reason we pay so much more than other countries is that we have folks who are not insured and don’t see a doctor regularly to screen and detect disease and treat it BEFORE it turn into a very expensive condition that “we” (taxpayers) then pay for.

    This kind of insurance for these folks is NOT “all-you-can-eat” insurance. It’s minimal insurance that covers health care to keep people healthy and manage conditions before they turn catastrophic and costly.

    As with ALL insurance, whether Employer-Provided , or even Medicare – if you want MORE/BETTER – you can buy it if you can afford it – but it’s not provided to you gratis from the government. All you get from the govt is basic health care which does not cover a LOT of things that are not live-threatening – like bad teeth or plastic surgery or other elective procedures.

    We cut off our nose to spite our face in this country for health care.

    We seem to PREFER to pay twice and much as other countries and PRETEND that our “market” will fix it if only we could make it more “transparent” and other foolishness.

    No industrialized country on the face of the earth has a “free market” in health care because in a real free market, insurance companies jettison those who cost them money. As soon as we say we will cover all “pre-existing” conditions – we no longer have a true free market. That’s just the simple reality.

    So – you have a choice. Do you want to mandate that all insurance cover pre-existing conditions or not? Do you want insurance companies to be able to refuse to cover you if you have a pre-existing condition?

    What’s the difference between age 65 and age 50 if you have a “pre-existing” condition? Medicare? so why do we “cover” those who are 65 and not those that are 50 and let them essentially die but not before they go the hospital for charity care….

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