I often cite the OECD’s data on “actual individual consumption” to show that the average American enjoys higher living standards than the average European.

In this clip from a recent presentation, I compare the United States and France.

I’m motivated to write on this topic because of a recent tweet from Arnaud Bertrand.

I don’t know who he is, but he shares some very depressing data about the well-being of ordinary people in France.

The above data, according to Monsieur Bertrand, is before taxes on income.

Which makes me curious, of course, so I went to the OECD’s data on “Taxing Wages.”

Here is the data from Table 3.1, showing the tax burden on lower-income and middle-class taxpayers in France and the United States.

As you can see, the tax burden is much higher in France for every type of household. It doesn’t matter whether the household is single or married, the level of income, or the amount of children.

Indeed, the tax burden in France in every case is above the OECD average and the tax burden in the US is below average.

And don’t forget that average Americans also have much higher incomes than their French counterparts.

The bottom line is that Americans earn more and keep more. Something to keep in mind the next time one of our leftist friends agitates to make America more like Europe.

P.S. From the perspective of French taxpayers, the only good news is that nobody seems to be treated as poorly as the Spanish government treats Senor Alvarez.

https://youtu.be/KP3s1Jy42Zg

Many people are stunned by the data I shared early last year showing that ordinary people in the United States tend to be much richer than their peers in advanced European nations.

Here’s some more evidence, courtesy of the Manhattan Institute’s Chris Pope.

As you can see, the poorest people in America are about equal to the poorest people in Germany, France, Canada, and the United Kingdom, but Americans are ahead of their peers when looking at the top 90 percent of the population.

For the top 70 percent, Americans are comfortably ahead.

But not everybody agrees.

Here’s a tweet from John Burn-Murdoch of the U.K.-based Financial Times. He has a very negative portrayal of the United States (and the United Kingdom).

The tweet from Burn-Murdoch includes a link to an article he wrote.

Here are some excerpts.

…one good way to evaluate which countries are better places to live than others is to ask: is life good for everyone there, or is it only good for rich people? …If you’re a proud Brit or American, you may want to look away now. …Norway is a good place to live, whether you are rich or poor. …The rich in the US are exceptionally rich — the top 10 per cent have the highest top-decile disposable incomes in the world, 50 per cent above their British counterparts. But the bottom decile struggle by with a standard of living that is worse than the poorest in 14 European countries including Slovenia. …transpose Norway’s inequality gradient on to the US, and the poorest decile of Americans would be a further 40 per cent better off while the top decile would remain richer than the top of almost every other country on the planet. …Until those gradients are made less steep, the UK and US will remain poor societies with pockets of rich people.

The United States is a poor society with some very rich people?!?

Is that possibly true?

As you might expect, that is utter hogwash. Here’s a chart, based on data from the Paris-based (and left-leaning) Organization for Economic Cooperation and Development.

It shows “actual individual consumption” in the OECD’s member nations, and people in the United States are far better off than people in any other nations.

Indeed, they have 50 percent more consumption than the average person in other OECD countries.

All you need to know is that Burn-Murdoch took some data about America’s poorest people and wants to mislead readers into thinking it also applies to the general population.

And he doesn’t even show his calculations. For what it’s worth, his numbers are not very consistent with some other data sources that are publicly accessible.

Professor Noah Smith also debunks the FT‘s report.

…when we look at how Americans in the middle of the distribution are doing, we see that America is not a “poor society” at all — in fact, it’s one of the richest on Earth. …the median American has a higher income than the median resident of almost any other country… Some people argue that because European countries buy health care for their citizens via the government — which is not counted in disposable income — that it’s not fair to use disposable income as the comparison measure here.But this isn’t right. The U.S. has a relatively low percentage of out-of-pocket health spending — our employers and our government pick up most of the tab. In fact, when we look at “adjusted disposable income”, which includes the value of government services like health care, we find out that the U.S. comes out even more ahead relative to other countries. …someone at around the 18th percentile of income in America in 2019 — a working-class person on the edge of being considered poor — lived in a household making $21,400 a year. That’s about the same as the median income of households in Japan, and about 84% of the median income of households in the UK. In other words, a working-class American on the edge of poverty makes as much as a middle-class person in some rich countries.

I’ll close by noting something else that was misleading in the FT report. Burn-Murdoch compares Norway to the U.S. and U.K., but that nation’s oil wealth makes it very unrepresentative.

Since the report concludes by endorsing more redistribution, it would be more honest and appropriate to compare American living standards to the performance of Europe’s other welfare states.

But Burn-Murdoch did not do that because his already flimsy case would look even weaker.

Also, note that he did not highlight Switzerland. After all, it is richer than Norway, even though it does not enjoy abundant natural resources.

I suspect that’s because Switzerland is a libertarian-oriented nation with a comparatively small welfare state. In other words, it’s a role model for good policy, whereas the reporter seems interested in promoting dirigisme.

P.S. Speaking of libertarians, the Burn-Murcoch story in the Financial Times begins with this passage.

Where would you rather live? A society where the rich are extraordinarily rich and the poor are very poor, or one where the rich are merely very well off but even those on the lowest incomes also enjoy a decent standard of living? For all but the most ardent free-market libertarians, the answer would be the latter.

At the risk of stating the obvious, libertarians want a society with the smallest-possible government. Limiting coercion (the non-aggression principle) is the main motive.

Libertarians will view the resulting distribution of income as just, but they also will point out that freer societies do a much better job of generating broadly shared prosperity than government-dominated societies.

The bottom line is that Burn-Murdoch is either extraordinarily ignorant about libertarianism or he suffers from Nancy MacLean levels of bad faith and dishonesty.

To begin Part III of this series (here’s Part I and Part II), let’s dig into the archives for this video I narrated back in 2007.

Here is the argument why corporate tax rates should be as low as possible.

• High corporate tax rates discourage investment.
• Less investment reduces worker productivity.
• Lower rates of productivity result in lower wages.

In an ideal world, there would be no corporate income tax (or any income tax).

But I’ll gladly accept any movement in the right direction, which is why the reduction in the corporate tax rate was the crown jewel of Trump’s 2017 tax plan.

The bad news is that Biden wants to undo much of that progress.

Today, let’s look at some new academic evidence on the issue. A new study from the National Bureau of Economic Research, authored by Professors James Cloyne, Joseba Martinez, Haroon Mumtaz, and Paolo Surico, finds that lower corporate rates are especially beneficial for long-run prosperity.

We use…post-WWII U.S. data on output, taxes, productivity and R&D spending to estimate the dynamic effects of income tax changes…and focus on personal and corporate income tax changes separately. …In Figure 1, we present our first set of main results. The figure contains two columns. On the left, we show the IRFs to a reduction in the average corporate tax rate. On the right, we show the results for a reduction in the average personal tax rate. …The first row in Figure 1 reveals that, following a shock to corporate and personal income taxes,the average tax rates decline temporarily. …The second row in Figure 1 shows the impulse response functions for the percentage response of real GDP. … Looking at the first column it is clear that, despite the transitory nature of the corporate tax reduction, there are very persistent effects on real GDP, whose short-run increase of 0.5% persists throughout the ten year period shown in the figure. In other words, the corporate income tax cut has disappeared after 5 years, but the effect on the level of economic activity is still sizable and significant after 8 years. …A similar picture emerges for productivity, as shown in the third row of Figure 1. Both tax rate cuts boost productivity on impact, with the size of the initial response to a personal income tax cut being much larger than for a cut to corporate taxes. On the other hand, the effects of corporate tax cuts grow over time and remain significant even after 10 years.

Here’s the aforementioned Figure 1 from their research.

I’ll conclude by noting that permanent tax cuts are much better than temporary tax cuts.

But if taxes are being cut, regardless of duration, the goal should be to get the most bang for the buck. And there’s plenty of evidence (from the United States, Australia, Canada, Germany, and the United Kingdom) that lowering corporate tax rates is a smart place to start.

P.S. It’s unfortunate that Biden wants a higher corporate tax burden in the United States. It’s even more disturbing that he wants a global tax cartel so the entire world has to follow in his footsteps. But he apparently does not understand the topic.