Comparing Tax Rates and Realities

In a country whose origins are found in a tax revolt, most Americans are reluctant taxpayers, at best. Which is one reason the amount of taxes people have to pay is often referred to as the “tax burden.” In April, that burden is more on the minds of Americans than at other times of the year because federal income tax returns are due. But the tax on income is just one form of tax that individuals pay, and some taxes are paid year-round—and often unknowingly. Besides income taxes, there are sales taxes, excise taxes (such as on gasoline), property taxes, and more. Most taxes are assessed and collected by state and local government.

Although federal tax laws apply equally across all states, citizens of different states pay different levels of taxes. This is because sales and excise tax rates vary, as do state income tax rates. Seven states have no state income tax at all. Even within a state, people may pay different levels of taxes depending on where they live. Individual cities and local government entities such as transportation authorities and community colleges sometimes tack on a sales tax. The state with the lightest tax burden is Alaska, while Californians pay the highest taxes in the nation. According to one source, gas taxes range from 8 cents per gallon in Alaska to five times that amount in California.

Taxation policies differ among nations as well; therefore, the tax burden that Americans shoulder is not the same as that paid by Germans or Swedes or Canadians. Country-to-country comparisons are complicated, but when the level of taxation is viewed as a percentage of a country’s gross domestic product, the US tax burden ranks well down the list of the world’s developed countries.

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Related Links

  • Tax Facts
    The website of the bipartisan Tax Policy Center includes tax information compiled from such sources as the IRS, the Congressional Budget Office, the Treasury Department, and the Organization for Economic Cooperation and Development.
    (Source: Tax Policy Center; accessed March 31, 2012)
  • Federation of Tax Administrators
    This website contains research and information on state tax policies throughout the United States.
    (Source: Federation of Tax Administrators; accessed March 31, 2012)
  • State Taxes Summary: Comparison Chart
    View comparisons of the income tax, sales tax, and the gasoline taxes of every state in the United States.
    (Source: Vaughn’s Summaries; accessed March 31, 2012)
  • 12 Countries with the Highest and Lowest Tax Rates
    Read capsule descriptions of six high-tax countries and six low-tax countries around the world.
    (Source: Business Pundit; accessed March 31, 2012)
  • International Tax Rates Comparison
    View this graphic comparing individual tax rates in selected countries around the developed world; includes comparison of corporate tax rates.
    (Source:; accessed March 31, 2012)

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