What's a tax?

The Economist has a graph that lists effective tax rates around the world. It seems to indicate that India is a high-tax country and the US is a low-tax area. But there are two problems with this.

One: it's not a tax unless you pay it. The effective tax rate in India is supposedly 42% on someone making $100,000/yr. However, in India, only employees pay taxes. Tax compliance by small businesses is non-existent (and an income of $100,000/yr in India is unlikely to be wages).

Conversely, it's a tax regardless of how you pay it. Canada's tax rate of 31% includes health care coverage. Since health care premiums in the United States (counting both employee and employer contributions) is on the order of $5000/yr, the comparable US tax rate is not 26% but 31%. It's a wash.

American tax rates appear so low only because many things that are "included" in other countries are "a la carte" here. Indian tax rates appear so high only because everybody hides their real incomes.