OECD Study on Income Distribution, Poverty, and Relative Tax Burdens of Members, Released October 2008

The OECD has released a very interesting new study of relative income distribution, poverty, inequality, and tax burdens and progressivity of the tax burden, comparing the OECD member states.  “Growing Unequal? Income Distribution and Poverty in OECD Countries.”  

The study is sure to produce a number of discussions about the relative position of the US in relation to the OECD countries and the OECD average.  A couple of possibilities:

Income inequality.  The United States, the report says, has the highest level of income inequality of any country in the OECD (although a common criticism of these comparisons is that there are considerable method problems in comparing very large (US) and very small (Denmark) economies).  

Wealth inequality.  Likewise, the US, according to the report, has the highest level of wealth inequality, and indeed it is much higher than the income inequality.  The top 10% in the US, says the report, have 28% of total income, but 71% of total net worth, i.e., wealth.

Tax burdens.  Interestingly, however, the report notes that the United States has the second highest level of tax progressivity in the OECD countries, exceeded only by the small economy of Ireland.  In part this reflects the fact that the US tax system is used much more extensively as a redistributive welfare device than direct welfare payments are; through such things as the earned income tax credit and such mechanisms, the tax system serves as a welfare payment mechanism.  The taxes paid are extracted far more from the wealthiest than in other OECD countries, according to the report.

(I see from a quick google that the report is in fact being widely discussed; the methodologies are also being discussed around the economics blogs.)