The UHY, the international accounting and consultancy network, reported recently that the US has one of the lowest tax burdens for both high and low earners among the G8 countries.
According the UHY study, only Japan and Russia tax upper income earners less than the US does; for lower income earners, only Japan levies lower taxes than the US. The study focused on comparable domestic and social security taxes for high earners defined as workers earning $200,000 per annum while low earners were defined as workers earning $25,000 per annum. Equivalent state and local taxes weren't included in the study.
UHY studied tax data in 19 countries across its international network, including members of the G8 as well as key emerging economies. Each country calculated the ‘take home pay' for low and high income workers, which considered personal taxes and social security contributions. The calculations are based on a single, unmarried taxpayer with no children. Among the G8 only Japan takes less tax and social security from low earners than the US.
Todd Bensley, who leads the tax practice of the nationally ranked Top 20 firm of UHY Advisors, Inc., a UHY International member firm, commented: "The findings may surprise those who think we're uncompetitive globally due to high tax rates on our high wage earners. It may be equally surprising to those who think we tax our lowest wage earners disproportionately."
Bensley also noted that although the US is quite competitive among the G8 countries, many emerging markets like India, Mexico and Brazil are more competitive on tax rates. "Countries often try to strike that delicate balance between raising adequate revenue and creating attractive economic conditions for businesses to thrive," he adds. "Tax rates may be a deciding factor when a business chooses one location for expansion over another."