While politicians and pundits natter on about whether or not Americans are paying our "fair share" of the national protection money forked over to that extortion racket known as government, it's worth noting that, whatever you may think of how the tax code allocates the pain, Americans are notable for paying what they're told to pay. When comparing personal income tax compliance rates gleaned from studies carefully hand-crafted by international craftsman-researchers, taxpayers in the U.S.A. are notable for their unequalled willingness to reach deep into their pockets and hand the taxman what he says they owe.
According to the IRS, compliance with the personal income tax stands at 83.1% — down a smidge from the 83.7% recorded in 2001. That makes American taxpayers international overachievers when it comes to tax-day honesty.
In What Explains Tax Evasion: An Empirical Assessment Based on European Data, a paper prepared for the Vienna Institute for International Economic Studies, authors Edward Christie and Mario Holzner calculated tax compliance rates for European Union members and several candidate countries. A separate paper by Lars P. Feld and Bruno S. Frey, Tax Evasion in Switzerland: The Roles of Deterrence and Tax Morale, puts Swiss income tax compliance at 77.7%. Taken altogether, and using numbers from more-developed countries while excluding, say, Latvia or Bulgaria, rates look like this:
Personal Income Tax Compliance Rates
United States: 83.1%
United Kingdom: 77.97%
Yes, these numbers are drawn from a few different sources, and a couple of the figures date to the late 1990s (oddly, most tax shepherds don't advertise the extent to which their flocks flip them the bird). But there is a remarkable pattern here: nobody pays like Americans pay.
So, the next time some tax-happy friends wax eloquent about the ultra-fair tax systems in Europe, where the rich and poor joyfully skip arm and arm to give the state its take, take the wind out of their sails.
Oh, and of course check out Veronique de Rugy's take on just which tax systems are more or less progressive.
Update: And don't even think of trying to flee overseas.
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