Complaining About High Taxes? Don't Tell France And Germany...

Tyler Durden's picture

To all Americans complaining about high taxes, better keep your beef on this side of the Atlantic. According to a recent OECD report, captured by the Economist, when it comes to total taxes paid out by both employees and employers, the US doesn't even come close to its just slightly more socialist European cousins. In fact, while total taxation as a % labor costs is about 30% in the US, comparable with Japan and Ireland, in France and Germany this number is nearly half of the total. Which explains why there is no greater threat to these two countries than the perpetuation of the status quo welfare state. Should Greece file Chapter, who knows what will happen to the Bismarckian ideal. Incidentally, on the other end: Chile, which pays out just 7% of labor costs to taxes. Per the article: "The report splits out the tax burden on employment which is paid by employers (in the form of social-security payments) and employees (as income tax and more social security). France and Germany have some of the most costly tax regimes—with people who earn the average wage taking home just over 50% of their total labour cost. The effect of fiscal austerity, particularly across Europe, has meant that the tax burden rose in 22 out of the 34 countries in the OECD from 2009 to 2010. Meanwhile real incomes for average-wages earners fell in 15 OECD countries. As the second chart shows, these reduced earnings caused by the world recession and subsequent inflation tend to have a much larger impact on incomes." Also notable: these charts exclude any Value Added Taxes: another favorite European mechanism to fund the welfare state. Should that be included in the total and the take home may in fact drop to less than 40% in some cases.

Of course, one may say that the American perspective is certainly stunted, as among the chief taxes omitted are property taxes, city taxes, private medical insurance, not to mention sales tax. Perhaps a more objective analysis would confirm that the US is just as bad on the communism scale. One thing is certain: the global population is already taxed seemingly to the max. How the global population will be able to afford another round of imminent, austerity and/or debt ceiling debate induced tax hikes, is completely unclear...