Post Chart on Corporate Taxes as a Share of GDP is Deceptive

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Friday, 26 July 2013 05:38

The Post had a chart showing that corporate income taxes have risen as a share of GDP across the OECD over the last 45 years. This is somewhat misleading. The chart is showing an unweighted average. This means that the sharp rise in the tax share in Norway would have the same weight as the sharp decline in the tax share of GDP in the United States. As a practical matter, the OECD data shows sharp declines in the corporate tax share of total tax revenue in most of the large countries.

For example, in the United States corporate income taxes as a share of GDP dropped from 4.1 percent in 1965 to 2.7 percent in 2010. In Japan the share declined from 4.0 percent to 3.2 percent. In Germany the drop was from 2.5 percent to 1.5 percent. In Canada corporate income taxes declined as a share of GDP from 3.8 percent in 1965 to 3.3 percent in 2010. In the United Kingdom there was a rise over this period from 1.3 percent of GDP to 3.1 percent, but the latter is down sharply from a 4.7 percent share of corporate income taxes in GDP in 1985, so there has not been an upward trend there either.

For those interested, here is the long-term picture in the United States.

btp-2013-07-26

Note: Spelling errors corrected from earlier version.