> I went to double check, and the best answer is that America collects less tax/GDP than its peers. Even accounting for state and federal taxation.
Again, this depends on the state, because all the states have different tax systems. You're also comparing by percent of GDP rather than something like tax dollars per capita, but that has two major problems. One, US GDP per capita is higher than the OECD average and so is the cost of living, so in the US the tax collected in real dollars per capita is higher and the percent of GDP that you could collect as tax without bankrupting ordinary people is lower.
And two (this is the big one), the US healthcare system represents 17% of US GDP and is mostly private insurance. In countries where the entire healthcare system is paid for out of taxes, tax rates are correspondingly higher, but in turn US citizens are paying in the form of insurance premiums. So to be comparing like with like you'd have to count those insurance premiums when comparing to countries that pay the premiums entirely out of taxes. Or to put it another way, you couldn't raise taxes in the US and spend the money on anything other than healthcare and regard that as equivalent.
> This … I mostly agree that simpler tax codes are beneficial, I am not sure its complexity is the core reason discussion is difficult.
It's the thing that enables tax avoidance.
There is a very simple way to do taxes: If a business sells a product or service in the US, they collect whatever the tax rate is and remit it, showing the customer what proportion of the purchase was tax so they can see how much they're paying. Let them advertise the pre-tax price; that should satisfy the people who want citizens to notice when they're paying taxes. The business can in turn deduct any tax paid on cost of goods sold from what they remit, like VAT.
Since this uses a single tax rate, there are no games to be played arbitraging the rate or fudging with transfer pricing, and you can get a progressive tax system by combining it with a UBI, which produces a progressive effective rate curve.
Then there's no practical way to avoid the tax. If you buy or sell something, the tax is remitted. When Apple sells an iPhone in the US they have to remit the tax regardless of where they made it or where their headquarters is or what country they stash the profit in. No more loopholes. No more pretending that the employer is paying half of FICA instead of it being a >15% regressive tax on the working class.
> Tax payment itself is made as painful as possible, so that it remains a focus of ire for citizens.
I feel like this is a talking point. Some tax reform guy says something like this and it's highly unsympathetic (Do you see? They want you to feel pain! On purpose!), so then the other side likes to point to it to deflect blame for the status quo onto their opponents. But that doesn't explain why FICA has an income cap, doesn't apply to investment income and hides half the amount being paid from the taxpayer. This is over $10,000/year in tax from the median household with half of it being hidden and all of it being collected transparently. If these "want you to feel it" people had the real power then that wouldn't be happening.
> And then have progressive taxes for people higher up the wealth ladder.
The naive legacy way we try to do progressive taxes is one of the avoidance mechanisms. People hire their kids or cousins who are in a lower tax bracket to move family business income to someone in a lower tax bracket etc. You can get the result you want from a system which is actually simpler.
We have a bunch of social programs like food stamps and housing assistance which have phase outs. The combined rates of the phase outs and ordinary taxes are higher than the effective rates imposed on the wealthy, whether now or historically. So convert the benefits to cash (UBI), eliminate the phase outs and use a flat tax system which effectively makes the phase outs implicit. The effective rates on lower income people are now low or negative. You at slightly below median income get a $12,000 UBI and "pay $10,000 in taxes" so really it's -$2000. A billionaire gets the same UBI but it doesn't make a dent in their tax burden so they're paying the full flat rate.
> I dont know - we are well aware of the kind of steps firms take to avoid paying taxes, and instead move them to tax havens. The numbers indicate that firms tend to pay much lower taxes in America compared to their OECD peers.
Companies avoid paying taxes because they can. The question is, is this the primary reason the companies are worth so much?
But it clearly isn't. Apple currently pays an effective tax rate of just under 16%, i.e. they keep 84%. If they paid three times that much (48%), they'd keep 52%. If we oversimplify and assume their valuation is proportional to how much profit they keep, this would reduce it from $3.5T to $2.2T. Which is still preposterous. A founder who owned a significant chunk of Apple would still have a million times more wealth than an ordinary person who owned the same proportion of a small business. Tripling their tax rate wouldn't even change the number of significant figures in their valuation -- because it's a percentage, so it's proportional to the base, which is the real thing out of all proportion.
Moreover, the company size is how they can pay executives such high salaries -- and those salaries are tax deductions to the corporation. A small business can't pay an individual employee tens of millions of dollars a year, they don't even have that much revenue. Concentration of wealth is caused by market concentration.