Scott Hodge at the Tax Foundation

During my recent testimony before the Senate Budget Committee (found here), I cited an OECD statistic that the U.S. has the most progressive income tax system among industrialized nations.[1] This prompted one Senator to point out that if the richest 10% of taxpayers earn the most of any OECD country, shouldn’t it make sense that they bear the largest tax burden of any country?

The answer can be found in the OECD table below. This table shows the share of taxes paid by the richest 10 percent 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.

The first column shows that the top 10 percent of households in the U.S. pays 45.1 percent 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 percent of households pays more than 40 percent of the income tax burden (42.2%). Meanwhile, the average tax burden for the top decile of households in OECD countries is 31.6 percent…

Table 4.5. Alternative measures of progressivity of taxes in selected OECD countries, mid-2000s
B. Percentage share of richest decile
1. Share of taxes of richest decile 2. Share of market income of richest decile 3. Ratio of shares for richest decile (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
Source: Computations based on OECD income distribution questionnaire.
Table 4.5. Alternative measures of progressivity of taxes in selected OECD countries, mid-2000s
B. Percentage share of richest decile
1. Share of taxes of richest decile 2. Share of market income of richest decile 3. Ratio of shares for richest decile (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
Source: Computations based on OECD income distribution questionnaire.