Though it may seem United States residents have a heavy tax burden, in actuality it is rather light compared to that of other countries. Dr. Gabriel Ondetti, professor of law at Missouri State University, recently spent a semester-long sabbatical studying the tax burdens of several Latin American countries.

“The point is to understand what the determinants are for how much countries tax their citizens and business firms,” said Ondetti. “My project does that by looking in-depth at four Latin American countries that reflect a diversity in determinants: Brazil, Argentina, Chile and Mexico.”

Past political conflicts

To understand why a country has a heavy, moderate or light tax burden, one has to step into the past.

“These differences have to do with past political conflicts and how they were worked out,” said Ondetti. “In particular, I find that the lighter tax burdens in Mexico and Chile have to do with the fact that in those countries, earlier leftist governments attempted to implement radical changes that unintentionally politically mobilized businesses and the rich.”

Those who resisted the reforms formed interest groups and parties to work against the threat, said Ondetti. Essentially, by trying to implement such changes, leftist party members created their own barriers via the opposing party.

Taxes here and there

Though taxes are often mentioned by news anchors and politicians in the United States it would probably surprise many Americans that their tax burdens are low compared to countries in other parts of the world.

“The U.S. has a tax burden of about 25 percent of gross domestic product, or 25 percent of the economy, which goes to the state,” said Ondetti. “Look at European countries for example, and you’ll see their tax burden is often more than 30 percent. Places like Denmark have upwards of a 40 percent tax burden.”

The reasons for the lighter tax burdens in the United States and certain Latin American countries such as Mexico and Chile are not the same. While Mexico and Chile’s tax burdens were caused by political conflicts, the United States’ on the other hand was far more cultural.

“I would say that in the United States, there’s this long lasting ‘anti-government tradition’ that’s not just an elite tradition, it’s at the grassroots,” said Ondetti. “Historically, the U.S. as a society has frowned upon the government getting to decide who gets what. I believe there is a relatively ingrained cultural resistance to having a large government.”

This is very different than what has and is occurring in Mexico and Chile, said Ondetti. The history of class and political conflict, rather than cultural resistance, resulted in that light tax burdens that these two Latin American countries have.