3 Facts About America’s Tax System

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  1. A new Citizens for Tax Justice (“CTJ”) analysis based on 2015 tax rates reveals that when federal, state and local taxes are tallied, the share of taxes paid by Americans across the economic spectrum is roughly equivalent to their total share of income – meaning our tax system is not really progressive. Although the federal income tax is somewhat progressive, state and local tax systems are highly regressive. A recent report from the Institute on Taxation and Economic Policy (ITEP) found that the poorest 20 percent of Americans on average pay 10.9 percent of their income in state and local taxes, while the top 1 percent pay half as much, only 5.4 percent. Also, one of the more regressive features of the nation’s tax code is the preferential tax rate on income derived from capital gains and dividends that allows many wealthy investors to pay a lower rate on their income than most middle class Americans.
  2. The United States has substantially lower overall taxes than the vast majority of developed countries. The United States had the fourth lowest level of taxes among the 34 OECD countries in 2013, the latest year for which data are available. Only Mexico, Chile and Korea collected fewer taxes as a percent of GDP. The level of taxation in the United States, 25.1 percent of GDP, is well below the 33.8 percent average for developed countries.
  3. The United States is among the very lowest of all developed countries for corporate taxes. In fact, many highly profitable corporations, including CBS, Jetblue, Xerox and Time Warner, paid nothing in taxes in 2014.  Over the five year period from 2010 to 2014, General Electric paid an effective rate of negative 11.1 percent and received a refund of $1.4 billion on $33.5 billion in profits. Dozens of corporations, including Apple, Nike and Microsoft, have publicly disclosed avoiding billions in taxes by holding their profits offshore in tax havens. A new CTJ report estimates that Fortune 500 companies are avoiding up to $600 billion in federal income taxes by holding profits offshore.  tax
April 16, 2015 by Larry in News & Updates