The U.S. Tax Burden Is Low
Relative to Other OECD Countries
By Sonya Hoo and Eric Toder
The United States raises significantly lower tax revenues as a percentage of gross domestic product than do
most other countries in the OECD. In 2003 taxes in the
United States, including all levels of government,
amounted to 25.6 percent of GDP, down from 29.6
percent of GDP in 2000.1 Other countries in the G7 raised
33.9 percent of GDP, while non-G7 OECD countries
raised 34.7 percent. Within the OECD, Mexico raised the
least tax revenues at 19 percent and Sweden the most at
50.6 percent. (The recovery of corporate profits and the
1
The OECD data cited are for 2003. U.S. tax data reported for
other years are computed from data in Economic Report of the
President, February 2006, Table B-83.
stock market since 2003 subsequently boosted U.S. tax
revenues to 26.8 percent of GDP in the first three quarters
of calendar year 2005.)
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.
Combining both the tax levels and tax shares (see the
chart below), the United States raises more personal
income tax and property tax as a share of GDP than other
OECD countries do, but less corporate income tax, Social
Security contributions, and taxes on goods and services,
resulting in a lower tax burden overall.
Tax Revenue by Source, 2003
United States
G7 other than U.S.
OECD other than G7
40.0%
33.9% 34.7%
35.0%
30.0%
% GDP
25.0%
25.6%
20.0%
15.0%
11.1%
9.0%
10.0%
7.7% 8.1%
8.9%
8.8%
11.3%
6.7%
4.6%
5.0%
3.1% 2.7%
1.8%
3.1%
2.1% 2.7%
0.0%
Total Tax
Revenues
Personal
Income
Corporate
Income
Social Security
Contributions
Property
Goods &
Service
Source: OECD Revenue Statistics 1965-2004. Payroll & Workforce Taxes and Other Taxes are not included in this
breakdown (both categories are < 1% for most countries). G7 countries include Canada, France, Germany, Italy,
Japan, the United Kingdom, and the United States. OECD countries include the G7 and Australia, Austria, Belgium,
the Czech Republic, Denmark, Finland, Greece, Hungary, Iceland, Ireland, Korea, Luxembourg, Mexico, the
Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, and Turkey.
TAX NOTES, May 8, 2006
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from the Tax Policy Center