SPONSORED:

US taxes drop to 4th lowest following GOP tax cuts: study

US taxes drop to 4th lowest following GOP tax cuts: study
© Greg Nash

The U.S. tax burden fell to the fourth lowest among advanced economies following passage of the GOP tax law, according to data released Thursday by the Organization for Economic Cooperation and Development (OECD).

The report found that the share of the economy devoted to paying taxes in the U.S. in 2018 fell by a whopping 2.5 percentage points, by far the largest of any of the 36 countries in the group.

Only Ireland, Chile and Mexico had a lower tax burden than the United States, which came in at 24.3 percent of gross domestic product (GDP), well below the 34.3 percent average.

ADVERTISEMENT

France had the highest tax burden, amounting to 46.1 percent of GDP.

The trend in the U.S. differed from most of the countries on the list, most of which saw taxes go up in the past decade.

“Across the last decade, 26 OECD countries reported higher tax-to-GDP ratios in 2018 than in 2008, with the greatest increases in Greece and the Slovak Republic. Among the remaining 10 countries, tax levels in 2018 remained more than six percentage points lower in Ireland and more than two percentage points lower in Hungary and Norway,” the report noted.

The role of taxes is hotly debated in economic circles. In the wake of the 2009 financial crisis, many OECD countries increased their taxes and lowered spending to stave off potential debt crises. Critics, however, argued that the move toward austerity worsened the economic situation precisely at the moment countries should have moved to stimulate their economies.

In the United States, Republicans have argued that lower taxes would boost investment and help the economy boom. Unemployment has hovered near record lows, and growth got a bump for several quarters following the tax law’s passage.

But growth has moderated, and critics note that capital investment has fallen in recent months instead of booming, as Republicans predicted.

Democrats competing for their party’s presidential nomination next year have argued that there is room to increase taxes in order to fund better services, such as health care and education.

In the meantime, the United States has seen its own debt burden spike, reaching nearly $1 trillion in the 2019 fiscal year.