How Much Do We Pay in Taxes?

Not too much, actually.

If federal taxes increased, how would that change fit with our own history? How would our tax rates compare with other economically advanced nations around the world?

Both individual and corporate effective tax rates are at a historic low. (The effective tax rate is the amount actually paid to the government, as a portion of the income reported by the taxpayer. See more definitions in our tax glossary) Most taxpayers pay considerably less than the nominal, or published, rate for their income bracket, thanks to a plethora of tax deductions and tax credits.

The Center on Budget and Policy Priorities reports that a typical family of four in the exact middle of the income spectrum paid only 5.6 percent of its 2011 income in federal income taxes. Average income tax rates for these families have been lower during the Bush and Obama administrations than at any time since the 1950s, the Center reports.

The Congressional Budget Office reported in February that the effective corporate tax rate has dropped to 12.1 percent, the lowest recorded level during the 40 years it has been collecting such data.* This rate is about one-third of the top rate of 35 percent.

U.S. tax rates are also low by global standards.** In 2010 all federal, state and local taxes paid in the U.S. amounted to 24.8 percent of GDP. Only Chile and Mexico had lower taxes, at 20.9 percent and 18.1 percent respectively. Out of the 31 nations with higher taxes than the U.S., 11 of them have taxes that are at least 50 percent higher. The highest is Denmark at 48.2 percent of GDP. The Unted States would not be out of step with our trading partners—or our own history—if taxes went up a bit.

Find out more about the cost of tax cuts.

*The Congressional Budget Office Figure 4.3.

**Source: OECD (2011), Revenue statistics: Comparative tables, OECD Tax Statistics (database) Last updated: 30 November 2011