Is there a way to fairly compare tax burdens internationally?

I was talking to a bunch of people from other countries and we got to talking about tax burdens. Is there any way to fairly compare this?

I mean taxes may be much higher in Sweden or the Netherlands but they also have free (or very low cost) social services (like medical and health care) which in reality distributes the higher tax over everyone.

I mean you can’t directly compare the tax burden any more than you can compare postal rates in countries that subsidize their mail or like in Venezuala where they subsidize oil so the price is cheap/

So is their a way or a website that exists that can give a general guideline. I realize some of it might be a little subject to one’s opinion but I’d like a rough idea

If you want a serious answer, ask your question in a neutral form. Using loaded, right-wing terms like “tax burden” instead of something like “taxation rates” is not going to be conductive to getting an answer.

I do not consider tax burden to be a politically loaded term. But I guess it might be in the US. Tax rate is not the same thing to me as tax burden. The tax rate on income may be X% but that is not the total tax burden on me.

I have seen taxes as a share of GDP used as a measure of the tax burden of a country (Sweden or Denmark tend to rank highest).

I found some numbers here (Only in Swedish sorry and it is from a lobby organization so take with a grain of salt). The table on page 11 shows taxes as a share of GDP. They cite OECD as a source but I have trouble finding them on the OECD site. Maybe someone else who is more familiar with the OECD site can find them.

Tax burden isn’t a loaded term. Tax rate generally applies to how much tax is paid for a certain transaction (e.g., sales tax, annual income, capital gains, excise, etc) whereas burden can mean the total of all the taxes that someone is likely to pay. Even that pantheon of unquestionable wisdom, Wikipedia, has part of an article that uses the term, though it is really on tax incidence, which is a little different.

I’m not aware of any measure of how quantitative tax data (e.g., how much of GDP is government activity) is measured with qualitative programmatic data (e.g., the coverage of national health care plans, like indexing Medicare (only covering seniors) vs. the UK’s NHS (covers everyone)).

I suppose you could take a table of government spending as percentage of GDP (simplified chart here) and compare it with the Human Development Index to get a very general guideline for any relationship between total government spending vs. quality of life, but that would not account for several factors.

Among them, it wouldn’t distinguish between government spending vs. private spending on social programs like health care, nor would it account for government revenue that is not from taxation, like Brunei’s oil economy.

There are comparisons, but they’re extremely difficult and ultimately flawed, for a number of reasons:

  • There can be huge variance based on individual circumstances. In the U.S., there’s a major tax advantage in owning a house (paying mortgage interest) rather than renting; there’s lower tax on a two-income family than on a one-earner family at the same rate; there’s tax advantages for capital gains; etc. In other countries, there are tax advantage for other situations.
  • Most income tax systems are graduated – that is, the higher the income, the higher the tax rate. So, comparison depends on what level individuals you’re talking about.
  • There’s more than just income tax: there’s property taxes, sales taxes, value-added-tax, automobile tax, social security taxes, taxes on gasoline, etc. Then there’s corporate taxes, different from individual taxes.

So, making comparisons requires using different income levels, which says that currency conversion rates can affect the comparison.

Finally, there’s the question of what taxes are used for. Brits pay a high tax to the National Health Service; Americans pay similar costs for medical care. The costs are similar, but one is through taxes and one is through individual payments.

Having said that, there are organizations that try to calculate tax differentials for various income levels, but they’re geared at helping companies transfer employees from one country to another. Such matrixes may be useful to the employer, but are of dubious value in trying to answer a question such as “which country has the highest tax rate?”

I think the real question is not the tax rate but how evenly the country’s wealth is distributed.
The Saudis may have low taxes but only those linked directly to the royals and the oil barons has anything to be grateful for.

But a calculation of the tax burden takes those variations into account. Tax burden isn’t a collection of tax rates. If you scroll down here to table 2, that’s a list of the tax burden, or effective tax rates, for various incomes. But as you say, this is the tax burden for an average American who has 2.3 kids, 1.9 cars, and 3.9 limbs.

The costs are not even remotely similar. Setting aside any questions of the mechanisms of payment or the quality of care, an American pays 2.5 times what a British person does per year for health care.

But this is yet another reason why it is difficult to compare qualitative differences with tax payments. For example, does a Norwegian get just as good health care for the higher taxes he pays, or does an American get better health care for lower taxes but higher private insurance fees? As I said before, that’s a tough nut to crack.

What I was getting at was probably does higher taxes equal out as you pay less for services?

Like my friend from New Zealand paid $150 (American dollars) for her root canal, cause her dental is subsidized. I paid $1,300 (American dollars) for mine. But she paid much more over the years in taxes. So does it even out?

With her certain things were easy to compare, like in NZ food is dirt cheap but they pay way more for Cars and electronics. But comparing the two you can see they begain to cancel each other out. That’s a bit oversimplified but that’s what I’m getting at.