As our quarter’s focus on taxes comes to a close, we will step back from the details and examine our overall system of taxation. Some Americans believe the only sound tax policy is the policy that minimizes taxes. However, most of these same people would be appalled at the devastation that such tax policy would wreak on our schools, roads, parks and military. So, dismissing this extreme position leads us to accept the fact that taxes must be levied and a more relevant question might be the consideration of the factors that make for a sound tax policy.

Our federal income tax code is uniform for every state in the union, so one might conclude that the answer to this question would be “No”. However, the fact that property law is not uniform across the nation can actually create a circumstance where this can become a reality.

Federal income tax rates attract a great deal of attention. This is to be expected because our federal income taxes are the largest tax bill most of us will pay. However, state taxes are also significant and they come in multiple forms. How much will the average American pay in state levies? Which state extracts the most from its residents?

Many people live their lives without wondering if things are different elsewhere. Still others realize that the “world is a big place” and that circumstances and living standards can be very different in other countries. This second group will be interested in a recent analysis completed by economist Christina Enache. Ms. Enache compared government revenue sources in the United States to the typical country within the Organization for Economic Cooperation and Development (OECD). The OECD, founded in 1961, consists of 37 primarily European countries plus the United States. Included as members are Germany, France, the UK, Israel, Norway, Italy, Chile, Japan, South Korea, Canada and Australia among others. Some countries such as China are non-members but maintain working relationships with the OECD.

The net investment income tax came into being on January 1, 2013 to defray some of the costs associated with the Affordable Care Act. It is assessed at a rate of 3.8% in addition to normal income taxes (capital gains and ordinary income taxes) that might apply to income generated by investments held in taxable investment accounts. Net investment income includes interest, dividends, capital gains, rents, royalties and non-qualified annuities. It does not include wages, unemployment compensation, Social Security benefits, alimony, municipal bond interest and most self-employment income.