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1 Chris Atkins, In OECD Comparison of Wage Taxes, U.S. Ranking Would Slip Badly If 2001 Tax Cuts Expired 1 (2007)

handle is hein.taxfoundation/ffijxz0001 and id is 1 raw text is: FO! N AT O July 9, 2007 In OECD Comparison of Wage Taxes, U.S. Ranking Would Slip Badly if 2001 Tax Cuts Expired by Chris Atkins Fiscal Fact No. 89 I. Introduction When U.S. lawmakers enacted personal income tax cuts across the board in 2001, they were part of a larger, worldwide tax-cutting trend that continues to the present. Last year, Iceland instituted an individual flat tax of 23.75 percent of income, which will fall to 22.75 percent this year.' In August of this year, lawmakers in the Czech Republic will vote on a plan that will swap the current income tax system, with rates ranging from 12 to 32 percent, in favor of a system that taxes income at a single rate of 15 percent.2 Tax rate information is most current and available for the 30 nations that form the Organization for Economic Cooperation and Development (OECD), which includes most of the United States' major economic competitors. The tax-cutting trend in these nations has mostly kept pace with the Bush tax-cutting pace here. Thus, while the U.S. has improved its competitive position on wage taxes between 2000 and 2006, other countries are improving their rankings as well. If the Congress now imposes a surtax on wages above a certain amount-$100,000 in some plans-as part of an AMT fix, and then in four years, the 2001 rate cuts are allowed to expire, the U.S. will jump considerably in the rankings among OECD nations, erasing all positive movement in those rankings since 2000 and leaving us worse off than we were before the 2001 tax cuts. This will certainly harm the competitiveness of American businesses in the international marketplace. II. A Comparison of Top Marginal Combined Individual Income Tax Rates in the OECD Table 1 shows the top marginal combined individual income tax rates for all 30 countries in the OECD in 2006 and 2000. The rates in 2006 ranged from a high of 59.74 percent in Denmark to a low of 19 percent in the Slovak Republic. The average top rate in 2006 was 42.95 percent, with seventeen countries levying rates lower than average and thirteen countries levying rates higher than average.

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