A new study from the Fraser Institute ranks the United States as having the most progressive tax system among 33 OECD countries examined. The report, published in June 2026, analyzed 45 jurisdictions across the developed world using five separate metrics to measure how much tax codes shift burdens toward higher earners. California topped the rankings as the single most progressive jurisdiction, while Texas came in fourth, with both states reflecting the broader pattern that places America at the head of the pack.
The Fraser Institute's index evaluated tax progressivity using five key measures: the gap between top and bottom income tax rates, the income level where top rates kick in, the size of basic exemptions for low earners, income tax's share of total revenue, and consumption tax's share of revenue. California scored first overall with the widest income tax rate range and the highest ranking in both tax revenue categories, where the US ranks second only to Denmark in income tax share and first in having the lowest consumption tax share among OECD nations. Texas, despite having no state income tax, still ranked fourth globally due to the federal tax structure's progressive design. The analysis covered jurisdictions in 33 OECD countries, excluding Chile, Colombia, Costa Rica, Mexico, and Turkey due to data limitations. For countries with significant regional tax differences, the study sampled high-tax and low-tax regions—California and Texas for the US, various provinces for Canada, and different cantons for Switzerland.
According to the report's authors, "the data continues to show" that while "the US tax code is often believed to be insufficiently progressive," the opposite is true. The study design deliberately isolates tax policy from broader spending and welfare programs, providing insight into "the distributional burden of how countries raise tax revenue, separate from how they spend or redistribute that revenue through transfer payments." The report emphasizes this distinction matters because "two fiscal systems may result in the same individual outcomes, yet achieve them through different combinations of tax and spending policies." The authors note the US's high ranking stems partly from its lack of a national value-added tax, unlike other OECD countries that rely more heavily on consumption taxes, which are generally considered regressive since they take a larger bite from low earners' incomes.
The report acknowledges several limitations in its methodology that may affect the findings. The index doesn't account for refundable tax credits targeting lower-income households, which "play a major role in the progressivity of the US tax code" compared to other countries. Because credits reduce income tax collections, the index may paradoxically interpret progressive credit programs as a decline in progressivity. The study also doesn't adjust for cross-country differences in how business income is reported—the growth of pass-through businesses in America shifts more income onto individual returns, making top incomes "appear more concentrated" and potentially inflating measured progressivity. Despite these caveats, the authors argue their framework offers a credible comparison by focusing on measurable tax structures rather than mixing taxes with redistribution programs.
The report warns policymakers to consider the international context before pushing for even more progressive tax policies. The authors point to "potential downsides of higher marginal tax rates, which can include slower economic growth and increased avoidance with relatively little additional revenue." The findings align with other recent studies showing the US at or near the top of OECD progressivity rankings, depending on methodology. For lawmakers weighing tax reform, the bottom line is clear: America's tax code already places a heavier relative burden on high earners than virtually any other developed nation.