Are US taxes too high or too low? Choose your chart
tax revenue is currently bigger, as a share of gross domestic product, than it’s ever been outside of major war or other crisis. Is that because spending is too high or tax revenue too low?
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“The federal government has a significant spending problem,” was Treasury Secretary nominee Scott Bessent’s answer at his confirmation hearing last week. The historical data would seem to back him up: Federal revenue, at 17.1% of GDP during the last fiscal year, was at just about the post-World War II average of 17.2%, but spending was 23.4% compared with an average of 19.8%.
A chart like this (which I originally made last month for a column on US spending) is useful context in the debate over taxing and spending in the US. But it’s not the only useful context. Consider the revenue statistics released in November by the Organization for Economic Cooperation and Development, the club of the world’s affluent democracies. Of the OECD’s 38 members, the US had the seventh-lowest government revenue relative to gross domestic product in 2023 — at 25.2% of GDP compared with an OECD average of 33.9%.
This includes state and local as well as federal taxes, tariffs and other income sources, because without combining the different levels of government it’s impossible to make meaningful
