Across the OECD, tax revenues as a percentage of GDP are continuing to increase and in 2016, they averaged 34.3 percent, the highest figure since records began back in 1965. The ratio indicates the share of a country’s output that is collected by the government through tax and it can be regarded a key measure of the degree to which a government controls a country’s resources. While Greece recorded the largest increase in its tax-to-GDP ratio last year (2.2 percentage points), Denmark had the highest of any OECD country at 45.9 percent.
People living in Denmark know all about high levels of tax, especially when it comes to buying an automobile. There is a 150 percent registration tax on vehicles, though there have been proposals to reduce that to 100 percent. Despite, that, Denmark is and will remain one of the most expensive places worldwide to buy a car with the cheapest version of a Volkswagen Golf costing about $34,000, according to Bloomberg. In Germany, the same vehicle would cost $21,500 while in Poland, it would only cost $18,900.
Tax comes to 45.3 percent of GDP in France and 44.1 percent of GDP in Sweden while the ratio is far lower in the United States. U.S. taxes are low in relation to other developed countries and in 2016, taxes at all levels of government came to 25.3 percent of GDP. Most U.S. tax revenue comes from personal taxes on income and social security contributions rather than from corporate income tax. Even though the U.S. does maintain high rates of corporate tax, some companies avoid it by reducing investment or moving their operations overseas.
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