TAX CUTS IN EUROPE
November 17, 2004
President Bush's tax cuts over the last four years were strongly opposed by liberals, and even many moderates saw them as controversial. So it is interesting to discover, according to a new report from the Organization for Economic Cooperation and Development, that governments of the left in Europe have been doing pretty much the same thing that President Bush has done here, says Bruce Bartlett.
- There have been a number of major tax cuts in Europe that have lowered taxes as a share of the gross domestic product by one percent, from 39.9 percent in 2000 to 38.9 percent in 2002.
- Among the 15 members of the European Union, the reduction has been a little greater, from 41.8 percent in 2000 to 40.6 percent in 2002.
Such a tax cut may not seem terribly significant, explains Bartlett, but one must realize that taxes have been climbing very sharply in Europe for decades and this is the first sustained reduction since records started being kept in 1965:
- At that time, the 15 EU countries took only 27.9 percent of GDP.
- By 1975, that figure had risen to 33.2 percent and by 1985 it was up to 38.8 percent.
Interestingly, European tax cuts have included meaningful cuts in individual income tax rates for the rich -- the most controversial element of President Bush's program. According to the OECD, 17 of 30 countries cut tax rates on the rich between 2000 and 2003 -- some by much more than here. The rich are defined as those with 10 times the average worker's income, explains Bartlett.
Source: Bruce Bartlett, "Tax Cuts in Europe," National Center for Policy Analysis, November 17, 2004.
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