Back in the 1960s, Clint Eastwood starred in a movie entitled The Good, the Bad and the Ugly.
I was thinking that might be a good title for today’s post about some new research by Michelle Harding, a tax economist for the OECD. But then I realized that her study on “Taxation of Dividend, Interest, and Capital Gain Income” doesn’t contain any “good” news.
At least not if you want the United States to be more competitive and create more jobs. This is because the numbers show that the internal revenue code results in punitive double taxationof income that is saved and invested.
But it’s not newsworthy that there’s a lot of double taxation in America. What is shocking and discouraging, however, is finding out that our tax code is more punitive than just about every European welfare state.
This is the “bad” part of today’s discussion. Indeed, the tax burden on dividends, interest, and capital gains in America is far above the average for other industrialized nations.
Let’s look at some charts from the study, starting with the one comparing the tax burden on dividends.
As you can see, the United States has the dubious honor of having the sixth-highest overall tax rate (combined burden of corporate and personal taxes) among developed nations.
Though maybe we should feel lucky we’re not in France or Denmark.
The next chart looks at the tax burden on capital gains.