US Tax Burden on Corporate Businesses, Non-commercial Industries, and Individual Households

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The Actual Tax Burden on Domestic Revenues
Summary
Tax and GDP go hand in hand in estimating the government’s tax revenue concerning the size of its economy as gauged by the gross domestic product. The tax to GDP ratio is critical as it reveals how taxation can be implemented based on the initial economy. It will influence their decision-making on what directions tax policies should follow. Furthermore, it will enable the comparison of different countries’ tax revenues compared to the United States. High tax revenues indicate that a particular country can spend more on developing infrastructures for the long-term agenda to the vision of its economy and its people.
Introduction
Taxes are an important subject in the fiscal, economic policies of particular countries. Being the primary source of revenue to various states in this globalized world, taxes influence a number of socio-economic mechanisms. Most literature uses the calculation of tax burden effects of taxes on the national and international economy. Generally, the tax burden refers to the periodic ratio of collected taxes against the gross domestic product. Empirically, the tax burden increases when the increase in tax revenue exceeds the increase in income. When the increase in tax revenue exceeds the increase in income, the tax burden will ideally rise. Certainly, an unabated increase in the tax burden, according to Celikay (29), will have detrimental impacts on economic pursuits, particularly taxable assets. This paper will examine the tax burden on corporate businesses, non-commercial industries, and individual households, as well as compare them similarly to Germany, a country that has piqued the government’s interest.
It is believed that high tax rates cause capital to be displaced. Celikay (30) believes that the tax burden impacts investment and savings. Many economic factors can influence the tax burden, which is defined as the correlation between the tax collected and the GDP. In fact, one of the most significant causes for an increased tax burden is the governmental fiscal obligation.
The OECD Analysis of Tax Burden on Economic Growth
According to literature, a 2.5 percent tax increase to gross domestic product ratio results in a 0.2 to 0.3 percent decrease in gross domestic product growth (Celikay 31). Likewise, economic growth is reduced by 1 percent when the tax burden on the gross domestic product is increased by 10 percent. The OECD analysis of countries between 1980 and 1999 concludes that individual income tax and property tax shares positively affect economic growth compared to payroll and goods and services taxes (Celikay 31).
Studies indicate that the increase in tax forms has a negative impact on an observed variable, whereby increasing a tax share of 1 percent in gross domestic product results in a 0.5 – 1 percent reduction in the gross domestic product per capita (Celikay 33). Individual income tax, business income tax, possessions tax, social security contributions, and taxes on goods and services all negatively influence GDP per capita, with the impact of tax property being statistically insignificant. Studi...