Will Joe Biden’s proposed taxes on capital make America an outlier?

IF PRESIDENT JOE BIDENOECDGDPOECD succeeds in raising America’s top rate of federal capital-gains and dividend tax to 39.6%, as he pledged to Congress on April 28th, it would be twice the average top rate in Europe. But it would apply only to the highest-earning 0.3% of taxpayers: those earning more than $1m. The fact that countries cast their nets differently makes comparing taxes on capital, which include levies on companies and property as well as on capital gains and dividends, tricky. The , a club of mostly rich countries, does not publicly track members’ capital-gains-tax rates because exemptions and carve-outs make them so hard to compare.Fortunately comparing how much money countries raise is easier. America’s total taxes on capital brought in revenues worth about 5% of in 2018, according to analysis by Spencer Bastani of the Institute for Evaluation of Labour Market and Education Policy and Daniel Waldenstrom of the Research Institute of Industrial Economics, two Swedish think-tanks. That compares with an average of 5.8% for a panel of 16 countries. What is distinctive about America is its mix of capital taxes. Its corporate tax raises relatively meagre revenues (see chart), whereas property-tax revenues are unusually high. Overall, America collects less tax than most rich countries, so as a share of total revenues, capital taxes are a hefty 20%, fifth among the 16 countries in the researchers’ sample.