Do Americans Pay Too Much in Taxes?
The Tea Party says yes, but worldwide statistics suggest it's not that clear cut.

Nobody likes paying taxes, but it’s the only way to pay for those basic government services that everyone agrees are necessary, such as defense. There is no agreement, however, on a host of other government services that push up spending, which means there is no consensus on how high taxes need to be. In fact, the Tea Party movement grew out of a sense that taxes are too high. “Tea” is actually an acronym for Taxed Enough Already.
But are we?
Historically, taxes are actually fairly low as a percentage of personal income, according to the Bureau of Economic Analysis, and as a percentage of GDP, according to the Organization of Economic Development. They’re also low in comparison with the rest of the world. Of 30 developed countries across the world, including all of western Europe plus South Korea, Canada, Mexico, Japan and a handful of eastern European countries, the U.S. ranks fifth lowest measuring as a percentage of GDP. And that includes state and local taxes plus payroll taxes for unemployment, etc., as well as federal income taxes.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Though 2006 is the latest year for which data are available, the rankings don’t shift much from year to year -- just one or two spots.
Which raises the opposite question: Are U.S. taxes too low? Should they be raised to help close the budget deficit?
Not necessarily. Keep in mind that low taxes typically correlate well with high productivity gains. Ireland, Poland, South Korea and Slovakia, for example, enjoyed strong growth in labor productivity in the last expansion. All have subpar tax burdens. So higher taxes could have a negative effect on productivity, which would slow growth.
It's something to think about as Congress searches for tax hikes in order to offset spending and reduce the deficit.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
-
Stock Market Today: Stocks Are Mixed Before Liberation Day
Markets look forward to what comes with the reordering of 80-year-old global trade relationships.
By David Dittman Published
-
Stagflation: What It Is and Why Retirees Should Care
Stagflation — the economic bogeyman of the 1970's — may return to the US. Here's what it could mean to your retirement.
By Donna Fuscaldo Published
-
‘Are You Better Off Than You Were 71 Days Ago?’ Cory Booker Historic Senate Speech Highlights Tax Debate
Tax Policy A speech protesting Trump’s policies, including tax plans, breaks U.S. Senate records.
By Kelley R. Taylor Last updated
-
What’s Happening With Trump Tariffs? Updates for April 2025
Tariffs Donald Trump continues to use tariffs as a central tool of his trade policy. Here’s where tariffs stand now.
By Kelley R. Taylor Last updated
-
Taxpayer Revolt? Why More People Are Avoiding Filing Taxes This Year
Tax Season It may be tempting to skip filing due to the overwhelmed IRS, but doing so could have financial and legal consequences.
By Kelley R. Taylor Last updated
-
Why You May Owe More Tax Soon on Popular Employee Benefits
Tax Law Workers could foot the tax bill for employer-provided benefits like parking, gyms, and meals.
By Kate Schubel Published
-
Are Armed IRS Agents Headed to the Border?
IRS Enforcement The Trump administration is considering a controversial move to redeploy some IRS agents.
By Kelley R. Taylor Last updated
-
Trump Federal Employee Buyout Offer: What It Means for You Now
Law & Politics The federal deferred resignation program accepted by thousands of workers continues to cause confusion and concern.
By Kelley R. Taylor Last updated
-
‘Back to the Old Days’? What’s Wrong With Trump’s Plan to Abolish Income Tax
Tax Policy The likelihood of Trump eliminating income tax and the IRS remains low, but the ongoing debate highlights the need for tax reform.
By Kelley R. Taylor Last updated
-
No New IRS Agents? What Trump’s Federal Hiring Freeze, Firings Mean for Your Taxes
IRS Will an executive order and firing IRS workers reshape the federal tax agency and impact how long it takes to get your tax refund?
By Kelley R. Taylor Last updated