How Do Our Taxes Compare?
There is substantial variation among nations and among states in the United States in approaches to the level of taxation and in reliance upon different types of taxes. The tables below give a quick look at how we stack up. It should not be assumed that being “average” is necessarily good. Tax systems are designed to accomplish the priorities of each state, and the differences reflect those priorities.
How do taxes in Massachusetts compare with the other 49 states?
In general, Massachusetts taxes are lower than other states. And the tax system is slightly more progressive. The differences between states is often striking. Many southern states rely heavily on the sales tax, which makes their systems less progressive than Massachusetts. Seven states do not have an income tax. Here are a few specific comparisons:
Massachusetts is 44th in the share of personal income that is collected in state fees and taxes. In 2000, state and local taxes amounted to 13.9% of personal income. Only six states had lower tax rates: Illinois, South Dakota, Texas, Missouri, Tennessee, and New Hampshire.
Massachusetts relies upon the income tax to a greater extent than the national average. Income taxes amount to 4.0% of personal income in Massachusetts which compares to the national average of 2.6%.
Massachusetts relies on property taxes somewhat more than the national average. Property taxes amount to 3.3% of personal income which compares to the national average of 3.1%.
Massachusetts relies less on sales taxes than the national average. Sales taxes amount to 2.3% of personal income which compares to the national average of 3.8%.
How do taxes in the United States compare with the rest of the world?
In general, our taxes are very low. We rely less on consumption taxes (which helps with progressivity).
Our taxes are near the bottom of developed nations. In 2001, total federal, state and local taxes in the United States were 29.0% of our gross domestic product, ranking 27th among the 30 OECD countries. Only Korea (27.5%), Japan (27.1%) and Mexico (18.3%) had lower taxes. Sweden had the highest taxes at 53.4% of GDP. In 2002, taxes in the U.S. dropped to 26.3% of GDP.
Corporate income taxes in the United States are significantly lower than in most other countries. They account for only 1.5% of our GDP.
Consumption taxes (such as sales taxes) in the United States are lower than in most other countries. They account for only one-seventh of our GDP.
Property and wealth taxes in the United States are slightly greater than in other developed countries.
Center for Tax Justice (www.ctj.org)
Massachusetts Budget and Policy Center (www.mbpc.org)
Organization for Economic Co-operation and Development, Revenue Statistics 1965-2001 (Oct. 2002)
U.S. Treasury Department (Oct. 2002)
U.S. Census Bureau (Oct. 2002).