The Organization for Economic Co-Operation and Development (OECD), a group of 35 wealthy countries, ranks its members by overall tax burden—that is, total tax revenues at every level of government, added together and then expressed as a percentage of GDP—and in latest year for which data is available, 2014, the United States came in fourth to last. Its tax burden was 25.9 percent—substantially less than the OECD average, 34.2 percent. If the United States followed that mean OECD rate, there would be about an extra $1.5 trillion annually for governments to spend on better schools, safer roads, better-trained police, and more accessible health care.
Among the American right, by contrast, the conversation about taxes often seems infused with magical thinking. Specifically, it is imagined that even severe and abruptly implemented tax cuts will serve to actually increase government revenue, thanks to the turbo-charging effect on economy growth. As T. R. Reid of The Washington Post writes in his recent book, A Fine Mess: A Global Quest for a Simpler, Fairer, and More Efficient Tax System, there is scant evidence that supports this idea—and much that opposes it. Denmark, with a tax burden of 49.6 percent, stands atop the OECD index. It also happens to be a wonderful place to live, with a high standard of living funded by a diversified, high-tech, export-driven economy.
By contrast, when Kansas Governor Sam Brownback abruptly slashed the state’s top income tax rate by 26 percent in 2012, state revenues went into a freefall. Yet the notions that government is always a plague upon the economy and that lower tax rates will lead directly to growth and prosperity—which have together accreted into a core plank of U.S. conservative ideology since the Reagan years—still remain popular. And Donald Trump seems intent on steering the country onto the same downward trajectory as Kansas: His “Taxpayer First” budget plan, released in May, proposed enormous tax cuts that, his administration claimed, would pay for themselves through the economic boom they’d bring about. (In an analysis released last week, the Congressional Budget Office took a much dimmer view.)