Here’s an instructive table from the Economist’s Buttonwood blog that shows how the U.S. taxes consumption of goods and services (as a percentage of GDP) compared with the rest of the OECD. And what it shows is that the US taxes them much less than, well, everyone else.

Buttonwood comments:

[T]he American number leaps out from this international comparison. There is, of course, no federal sales tax; this figure reflects the money collected by the states. If America wanted to close its deficit, this is the obvious place to start. Perhaps it would help drive America away from its consumption-led model.

And that wouldn’t be a bad thing either.

To reiterate, introducing some sort of federal goods and services tax is not a step that should be taken in isolation. It would need to be part of a wider package that included substantial spending cuts and reduced marginal tax rates on income. That was the model in the 1980s in the UK under Mrs. Thatcher (VAT rates were hiked and income tax rates were slashed, in both cases dramatically) and New Zealand (where a GST was introduced and income tax rates were cut). The result? Growth, restored public finances, and a reduction in the state’s share of the economy.

And while on the subject of how the U.S. tax system is currently skewed, this table is also worth noting. It shows that the amount that the U.S. raises from taxes on property is way above the OECD average, a thought that those contemplating removing the mortgage interest tax deduction should consider.

If you follow the links you’ll also find comparative studies on income tax and corporation tax and this concise summary:

Our many American readers will want to know the exact split of its revenue base. The answer is 40.9% comes from income, profits and capital gains (above the OECD average); 26.9% from social security (just above); 13.6% from property (second overall in the OECD); and 18.5% from goods and services (the lowest of all).