TaxProf Blog: Tax Foundation: No Country Leans on Upper-Income Households as Much as U.S.

Tax Foundation: No Country Leans on Upper-Income Households as Much as U.S.
Tax Foundation logo The Tax Foundation yesterday released No Country Leans on Upper-Income Households as Much as U.S.:

[T]his table shows the share of taxes paid by the richest 10% of households, the share of all market income earned by that group, and the ratio of what that 10% percent of households pays in taxes versus what they earn as a share of the nation's income.

Progressivity of taxes in selected OECD countries, mid-2000s



1. Tax Share of Richest Decile


2. Income Share of Richest Decile


3. Ratio (1/2)

Australia


36.8


28.6


1.29

Austria


28.5


26.1


1.10

Belgium


25.4


27.1


0.94

Canada


35.8


29.3


1.22

Czech Republic


34.3


29.4


1.17

Denmark


26.2


25.7


1.02

Finland


32.3


26.9


1.20

France


28.0


25.5


1.10

Germany


31.2


29.2


1.07

Iceland


21.6


24.0


0.90

Ireland


39.1


30.9


1.26

Italy


42.2


35.8


1.18

Japan


28.5


28.1


1.01

Korea


27.4


23.4


1.17

Luxembourg


30.3


26.4


1.15

Netherlands


35.2


27.5


1.28

New Zealand


35.9


30.3


1.19

Norway


27.4


28.9


0.95

Poland


28.3


33.9


0.84

Slovak Republic


32.0


28.0


1.14

Sweden


26.7


26.6


1.00

Switzerland


20.9


23.5


0.89

United Kingdom


38.6


32.3


1.20

United States


45.1


33.5


1.35

OECD-24


31.6


28.4


1.11

The first column shows that the top 10% of households in the U.S. pays 45.1% of all income taxes (both personal income and payroll taxes combined) in the country. Italy is the only other country in which the top 10% of households pays more than 40% of the income tax burden (42.2%). Meanwhile, the average tax burden for the top decile of households in OECD countries is 31.6%.

By contrast, column #2 shows that the richest decile in America earned 33.5% percent of the market income in the country. ... But, a few other countries do have a greater or similar concentration of income as does the U.S. For example, the OECD table shows that the wealthiest decile of households in Italy and Poland earn a greater share of their country's market income than do our "rich" -- 35.8% and 33.9% respectively -- while the share of income earned by the top decile of households in the U.K. is about on par with those in the U.S. at 32.3%.

The table then adjusts for the underlying allocation of income by showing the ratio of income taxes paid to the share of income earned by the top decile in each country. The ratio for U.S. households is 1.35, far greater than the ratio of taxes to income in any other country. Even in the three countries with a comparable distribution of income, the ratio of taxes to income was less, 1.18 in Italy, 0.84 in Poland, and 1.20 in the U.K.

Update: Tax Update Blog, America's High-Income Taxpayers Lead the Way