by Mitch Kokai
Senior Political Analyst, John Locke Foundation
One suspects that those who endorse the president’s “tax-the-rich” rhetoric are immune to evidence, but Kevin A. Hassett explains in the latest National Review that the American tax system already requires high-income earners to bear a larger share of the tax burden than their counterparts in most European countries.
Before the recent hikes, the top bracket in the U.S. faced a marginal income-tax rate (35 percent) more than two times as high as that of someone making $30,000 (15 percent). Someone making $80,000 paid taxes at a 25 percent marginal rate, so the ratio there was a bit greater than 1.
This year, the highest earners will face a marginal tax rate of 40.8 percent—almost three times as high as that of a worker making $30,000. As of 2011, only four countries had a more progressive federal income-tax schedule by this measure: Finland, Germany, France, and the Netherlands.
Interestingly, the U.S. was comparatively progressive even before the tax increases. One reason is that the massive welfare states finance themselves by taxing everyone. In Belgium and Austria, for example, workers making $30,000 pay a marginal tax rate of more than 40 percent to the central government. An equivalent U.S. worker pays a 15 percent marginal tax rate. …
… This is not the only way in which the U.S. tax system looks progressive in comparison with its European counterparts. An OECD study in 2008 found that the wealthiest 10 percent of Americans paid 45.1 percent of taxes (including direct taxes, such as income and payroll taxes, national and local, but excluding sales and other indirect taxes), compared with the OECD average of 31.6 percent; and wealthy Americans paid more than the wealthy in any other OECD country even if one takes into account their share of total national income.
In other words, from now on, the European Left should point to the United States as a redistributive paradise.