The Visual Du Jour – Taxation Across Rich Countries
December 14th, 2009 by SocProf and tagged Economy, Public Policy
Via the always excellent Visual Economics (click on the image for big version):
Note how relatively low the corporate taxation as % of GDP is, with the major exception of Norway (it probably drives up the average as in represented in the yellow pie chart). The United States is very comparable to many of its OECD counterparts. The map at the bottom of the image reveals no surprises: it is well-known that Scandinavian countries along with France and a couple of others have a higher % of thier GDP based on tax revenues (with strong redistributive mechanisms) where as the US and a few others have significantly lower percentages.
So, no real surprises for me, but a really nice visual. Maybe, someday, VE economics will get us visuals on redistribution. That would be interesting.
Posted in Economy, Public Policy | 2 Comments »
December 15th, 2009 at 10:29 pm
Interesting, but perhaps things are not as they seem. I was surprised by Australia’s ranking, because I was pretty sure that we have rather low corporate tax rates, and discovered that this seems to be a sore point for a Treasury that wants to appear to be ‘competitive’ in the race to the bottom. They point out that these comparisons are misleading because of difficulties in catagorising and comparing. They give interesting examples of this. (http://www.treasury.gov.au/documents/1304/HTML/docshell.asp?URL=01_Company_tax.asp)
But the effect is that the chart is misleading in that it gives the impression that Australian companies contribute more to tax, when in fact it could be a reflection of wealthy individuals reducing their overall contribution. The effective corporate tax rate is actually only about 20%, which means that people with option to do so can lower their tax contribution by taking income as profits and dividends rather than salary. Paying 20% company tax is cheaper than paying 45% income tax.
So the good news turned out to be bad.
I wonder what accounts for Norway though? And yes, I would be interested in seeing redistribution too.
December 16th, 2009 at 1:23 am
@Ben,
you’re right, of course, comparisons are difficult because the tax codes vary greatly. And a low tax in one place may be compensated by a higher or more regressive tax somewhere else and vice-versa. Loopholes, “here there and everywhere”, as the Beatles song said.
Regarding Norway: the only thing I can think of is that Norway has oil and these might be revenues on taxation on oil companies.