PolitiFact | Tim Pawlenty says the U.S. is not undertaxed compared to its competitors: "Actually,' Marcus wrote, 'the United States is on the low end in terms of the overall tax burden -- 28 percent of gross domestic product in 2007, according to the Organization for Economic Cooperation and Development, compared with an average of 36 percent in the 30 OECD countries. Only South Korea, Mexico and Turkey were lower.'
By locating the OECD chart -- which is exactly what we would have done -- Marcus ably did much of our work for us. But we still wanted to check with a few tax experts to make sure that she didn't miss anything in her analysis.
Three experts we queried -- Daniel J. Mitchell, a senior fellow at the libertarian Cato Institute, William Ahern, the director of policy and communications at the Tax Foundation, a tax research group, and Dean Baker, co-director of the liberal Center for Economic and Policy Research -- all agreed with Marcus's conclusion, though Ahern and Mitchell took the opportunity to add some additional context.
Ahern said that tax-burden-to-GDP ratios -- the data that underlies the OECD chart -- should be used carefully because they can obscure deficits. A country with a low tax-to-GDP ratio may have a substantial deficit, and in time, that deficit will put upward pressure on taxes. So nations with low tax-to-GDP ratios may not find those ratios sustainable over the long term.
Mitchell, for his part, agreed with Marcus' point about the overall tax burden, but he noted that in the U.S., the burden from different types of taxes varies. Some types of taxes, such as corporate taxes, are among the highest of the OECD nations. Others are closer to average, such as the top income tax rate and the capital gains tax rate.
'The big reason the U.S. has a lower aggregate tax burden when measured as a share of GDP is that we don't -- yet -- have a value-added tax,' Mitchell said. 'Our payroll taxes also tend to be lower than average.'
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