Tax jump would hit all of us
The “tea” in tea party is sometimes explained as “Taxed Enough Already.” Well, are we?
The left believes we — or at least “the rich” among us — are undertaxed, and wants to squeeze out more revenue. Just “spread the wealth around” to get wider health care coverage, better education, more mass transit, smaller budget deficits, less public debt, fully funded entitlements. Take your pick from this all-we-can-give-away buffet.
But what if I told you the average American already pays as much or more in taxes than the people in countries that do many of these things?
That’s the somewhat surprising revelation from Harvard economist Greg Mankiw. On his blog, he wrote that viewing taxes as a share of gross domestic product and concluding there’s more revenue to be had “may mislead us into thinking we can increase tax revenue more than we actually can.” That, he argued, is because “high tax rates tend to depress GDP.”
So, Mankiw did a simple calculation to compare taxes paid per person in the United States to those in the other Group of Seven industrialized countries.
The result: We are right in the middle, paying about $13,100 per person in taxes.
By this measurement, France is a high-tax outlier (paying 19 percent more per person than we do) and Japan is a low-tax outlier (31 percent less than us). The other countries — Germany, Britain, Canada and Italy — are right above or below us, even though all four have higher tax rates than we do.
(We now pause for all those people who lamented that we spend more on health care than other nations, without better results, to wring their hands about why we pay more in taxes than Canadians or Italians without getting “free” health care, high-speed rail, etc.)
There is an obvious explanation for why we pay about the same as these counties in absolute tax dollars despite having (broadly speaking) lower tax rates. The average American makes more money than the typical German, Briton, Canadian or Italian.
The question is whether we would continue to be more prosperous if taxes were higher. Can we raise tax revenues with impunity?
Maybe to a point. But the data from other nations suggest we’re more likely to pay a price, in lower incomes and standards of living.
Here also lies the rub for the “tax the rich” mentality. The countries that have what the left wants apply their higher tax rates to much lower income brackets than we do.
In Britain, for example, a 40 percent rate applies to individual taxable income starting at just $58,000. That level of income is taxed at 25 percent in the United States.
Similarly, in France, a 40 percent rate applies to $94,000 and above. In the U.S., those earnings are hit at 28 percent.
Our current top rate, 35 percent, applies only to taxable income of more than $373,000. So, our tax code is already far more progressive than those of the European welfare states.
That’s not even counting the value-added tax (VAT) on consumption that the European nations apply on goods and services, ranging from 17.5 percent to 20 percent. Paul Volcker, the former Federal Reserve chairman and current adviser to President Barack Obama, suggested this week that the United States might adopt a VAT in the near future.
Don’t buy the argument that taxes could go up without doing harm, and only on the rich. The bigger the government, the bigger the tax burden on all of us.
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168 comments Add your comment
Hillbilly Deluxe
April 9th, 2010
7:14 pm
Warren Buffett claims that he pays a lower percentage of his income in taxes than his secretary does. If he’s telling the truth, the system might need fixing.
Keep up the good fight!
April 9th, 2010
7:37 pm
Kyle…simplistic analysis leads to a simplistic conclusion that is wrong. You are looking at the tax rates without adjustment for state taxes, sales taxes and of course, adjustments for tax credits, deductions and incentives. And you fail to account for the 15% capital gains tax which is what hedge fund managers are paying on their income.
Further your conclusion is just another inane talking point that does not at all follow even your assessment. Obama does not want bigger government, he wants smarter government. You should be smart enough to know the difference.
mit
April 9th, 2010
7:46 pm
So you would rather have worse schools, less mass transit, less health care coverage, bigger budget deficits, and underfunded programs. Because that is what you’re saying. If you would rather pay lower taxes and get all of this instead, you sir are an a-hole. I would gladly pay a little more in taxes and get better schools for kids, lower budget deficits, funded programs (that are there for a reason i might add, not my fault you didn’t pay attention to history lessons). Not to mention better mass transit, less public debt and all the rest of that awful, bad stuff.
mit
April 9th, 2010
7:58 pm
kutgf. the only thing kyle knows is what time glenn beck airs.
get out much?
April 9th, 2010
7:58 pm
wonder how many of those countries are trying to “project” their military power to all four corners of the globe or are fighting two wars (one of which was completely of choice).
jimmy
April 9th, 2010
7:59 pm
mit, your an idiot and so is your govt. it’s people like you their trust the govt. that proves whats wrong with everything in this country. ‘government is not your friend’ best bumper sticker ever.
mit
April 9th, 2010
8:31 pm
jimmy wants poor performing schools so his kids will be able to graduate. that’s no excuse.
and you think your insurance provider has your best interests at heart? I would trust govt. before someone trying to make a buck. Isn’t it the FDA the govt. keeping you safe from contaminated food and poisons? Lets just get rid of them. No need for drug companies to tell you the side effects in jimmy’s world. Let’s get food contaminated with e. coli because the companies don’t think they need to keep it clean. go read the jungle. then come back with all that govt interference crap.
samuel
April 9th, 2010
8:33 pm
I find it interesting that the Japanese pay lower taxes than us. On the one hand, their mass-transit infrastructure is much more highly developed than ours. Japan was the first country to develop high-speed trains (the shinkansen) and the Tokyo Metro is the cleanest, fastest and most well-run subway system in the world. On the other hand, Japan’s public debt is almost 200% of its GDP in spite of – or maybe because of – its low taxes. Japan’s economy has been sluggish for almost 20 years because of what started as a speculative housing bubble. And even with the bursting of that bubble, Tokyo is the most expensive city in the world to live in. So low taxes don’t always mean boom times, as we’ve learned in this country in the last couple of years.
Duga
April 9th, 2010
8:38 pm
Mit –
Are you kidding? “Worse schools” Throwing money at schools has proven to be useless. Child/school success is tied to parent involvement and taxing families even more than they are now paying means parents will be less involved in their childrens lives as they try to make ends meet financially.
When was the last time you took mass transit? If you would become educated on the transportation of European countries you would find out they have marvelous mass transit. Think it has anything to do with the fact that people can’t afford to buy cars given that they pay up to 40% tax….
Moderate Line
April 9th, 2010
8:42 pm
Keep up the good fight!
April 9th, 2010
7:37 pm
Further your conclusion is just another inane talking point that does not at all follow even your assessment. Obama does not want bigger government, he wants smarter government. You should be smart enough to know the difference.
+++++++++++++++++++++++++++
It just so happens that smarter government results in bigger government.
mit
April 9th, 2010
8:47 pm
duga, i didn’t say anything about throwing money at schools improves graduation rates. kyle simply lumped it in with his nonsense. i was simply pointing out the fact if a little more tax keeps schools up and running that’s good. lower taxes equals lower funded schools to underfunded schools to closed schools. is that what you want? I own two cars and still take marta sometimes. so yes i do us mass transit. I also don’t care about europe because this america and if you have been to chicago and ridin’ theirs you would be very disappointed in atlanta.
mit
April 9th, 2010
8:48 pm
ML, so too does republican govts. Bush grew ours by what percentage? Dept. of homeland security. Medicare D. but at the same time didn’t care to fund these programs.
Kyle Wingfield
April 9th, 2010
8:53 pm
Keep up, the tax data toward the top (absolute tax dollars paid) are derived from stats compiled by the OECD and, as best as I can tell, include state and local taxes.
As for the rates, you’re right — I’m only talking about headline federal income tax rates. But most if not all of the other countries also have local and regional taxes, corporate taxes, tax deductions, tax credits and, as I mentioned toward the end, consumption taxes (a VAT is a bit different from a sales tax). I’d be pretty surprised if all that wasn’t more or less a wash.
Michael H. Smith
April 9th, 2010
9:01 pm
Isn’t it the FDA the govt. keeping you safe from contaminated food and poisons?
Nope!
Michael H. Smith
April 9th, 2010
9:03 pm
Dept. of homeland security.
Bush didn’t want a DHS. That GUB’MENT product belongs to the Democrats.
artatlarge
April 9th, 2010
9:12 pm
Why has no one mentioned that Exxon/Mobil and GE both paid NO income tax last year?
They are making BILLIONS and not paying income tax on it.
And it IS shameful that 1/2 of Americans don’t pay income tax…it’s either because they are too poor to owe anything, or too rich to pay anything.
Michael H. Smith
April 9th, 2010
9:19 pm
@ – Kyle Wingfield
April 9th, 2010
8:53 pm
By the way, Kyle, what are the unemployment rates in these countries compared to that of the U.S.?
Any VAT will have a negative job growth affect. Paul “BITE THE BULLET” Volcker of Jimmy Carter fame, who nearly had us all “biting the dust” during the ‘70s is not one I’d put much stock in, his cures are more malignant than cancer.
MiltonMan
April 9th, 2010
9:30 pm
Mit, if anyone is an a-hole it is you. Spending more money to make schools better??? Atlanta averages 12k/child to educate children & what do they get in return – stupid kids & schools admin that cheat on test scores. North Fulton uses less than half than that & the kids excel much more. Funny to see idiot libs like yourself who always think that “just spending more money” would solve the problems.
MiltonMan
April 9th, 2010
9:32 pm
Mit, you forgot to mention Social Security moron. That fine DemoRat program is a wonderful program is it not douchebag?
Michael H. Smith
April 9th, 2010
9:42 pm
Oh it is too funny to watch the liberals deride the very unfairness of the “progressive tax” they so love most all other times, until a “consumption tax” which they hate as a replacement at any other time is to be added on top of their dearly beloved “progressive tax”.
Fickle is thy love for the money of others, aye liberals?
Michael H. Smith
April 9th, 2010
9:48 pm
When is a ponzi scheme legal?
When it is run by GUB’MENT and not Berny Madoff!
Rodney S.
April 9th, 2010
9:50 pm
Please! No more government programs, departments or czars. Work on making what we have functional. If it that is not feasible, dismantle it and try something new.
Keep up the good fight!
April 9th, 2010
9:54 pm
Smart government does not equate to bigger government. It means effective regulations and proper enforcement. More inspectors for some agencies may mean leaner management layers. The FDA has a critical role in our society…but the number of inspectors have been reduced.
Look at your local building departments. There was so much home construction in some areas that inspectors averaged 6 minutes per inspection per permit..including travel time. That means the contractor effectively had no inspections and cut corners in not building to code. You may be living in one of those homes. Your children may suffer injury because of a code violation (an electrified shower killed a number of our troops). Now they have time to inspect. Pool drains have been modified so that they do not suck the insides of a child out (google Virginia Graham Baker and read about her horrendous death and she is not the only one). Industry can work to help make better regulations that work. Government agencies do perform an important function.
More inspections can mean more fines and penalties for violations. More fraud investigators can deter fraud and recover money. Think of the economic waste that occur from the peanut recall, the medical cost of treating those who were ill, the deaths and all because one company owner put his profit before safety.
Smart government can reduce overall costs and waste as well as aiding free markets with a level playing field.
Michael H. Smith
April 9th, 2010
9:55 pm
It just so happens that smarter government results in bigger government.
HOOEY!
Keep up the good fight!
April 9th, 2010
9:55 pm
There are less “czars” now than there were under Bush.
Michael H. Smith
April 9th, 2010
10:02 pm
Ah, from the FDA to local building code inspectors. So much for relative comparisons.
The BIG FEDERAL GUB’MENT is too big to function and shall by its’ size, cost and continuing rate of growth eventually implode.
Michael H. Smith
April 9th, 2010
10:08 pm
And Obama is now seen to be as much of the problem in leading the nation in the wrong direction as Bush was by the present majority in this country.
* See Juan Williams article in the WSJ citing the TEA Party as politically attune with mainstream America.
Keep up the good fight!
April 9th, 2010
10:20 pm
Smith…. sure trying to dumb it down for you and get it to a level you might understand does not work…. Okay you want federal level….more medicare fraud investigators would help recover some money stolen…and of course an updated payment system. Increasing the GAO could help save millions. Going after Haliburton and Xe for all the millions they have taken is okay..but would have been nice to have inspectors/auditors in place to prevent the money from being fraudulently taken.
by hey….you be the genius right. So when do you run for office?
Keep up the good fight!
April 9th, 2010
10:22 pm
by the way… Consumer Product Safety Commission is federal agency.
mit
April 9th, 2010
10:27 pm
miltonman, so white kids just do better with less than the lower income kids? You are the moron. You know how much extra money those North fulton kids get from their well off parents? For tutors, and whatever else they need to make good grades and pass tests. Some people aren’t that lucky.
But you would rather they have no school to go to and toss them in prison because they found a way to beat your system and make money by selling your housewife drugs.
jimmy
April 9th, 2010
10:28 pm
mit…. you poor ignorant soul, sooooooo trusting in the govt. , their schools they provide, their insurance for you and obvious needy family. Maybe NASA could use you? or possibly the post office? They are GREAT uses of our tax dollars. I used to feel sorry for people like you, not anymore. Your stupid enough to think the govt. has YOUR best interest. The FDA? Serious what a f-ing joke!!!! The feds? What have they done for anyone lately? except provide for mooching zombies like you….
Michael H. Smith
April 9th, 2010
10:38 pm
Smart government can reduce overall costs and waste as well as aiding “free markets?” with a “level playing field?”.
Article One
Section Eight
Clause 1: The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
Clause 3 To “regulate Commerce” with foreign Nations, and among the several States, and with the Indian Tribes;
So mush for this “free market” bunk!
Nothing in the Constitution directs the government’s attention to address uneven playing fields, only that all the players shall have equally the same rights to play upon all the fields regardless of the natural conditions as they exist, according to each their own abilities whether by means of endowment from their creator or by means of their own enhancements.
Dusty
April 9th, 2010
10:40 pm
Thank you, Kyle, for giving us facts about taxes, the long historical scourge of all people. Let’s say it again: DO NOT RAISE TAXES.. Amazing that some people actually want their money taken away. They seem to believe that life is going to be better without their own hard earned dollars.
When I go to the grocery store, I pay with my own money, not food stamps. When I go to a doctor, I want to go to my own, not the one assigned by government. When my husband and I bought a home, we got credit that we knew we could cover with our income. When our country was attacked, we did not mind supporting the military with money and spirit. Two of our family have served in the military.
I am just an ordinary lucky-to-be American who enjoys the freedoms we now have. I don’t want it changed. I don’t want “more support”. I just want to maintain what we have always had and that is FREEDOM, freedom that is not dragged down by excessive taxation.
Keep up the good fight!
April 9th, 2010
10:42 pm
jimmy….what have the feds done lately? Hmmm…forced Toyota to issue recall of defective cars, provided flood help here in Georgia, have you driven on an interstate (paid for mostly with federal dollars), provided tax credits to small business, helped the oil industry (those poor companies) get access to more oil fields. We can go on for days.
Do you know how many products you use every day that are a result of the science advances made because of NASA?
Do you get Netflix movies? thank the Post Office. Yeah they are losing money because of changes to the economy (email, UPS, FedEx) but they provide a needed services and some business models need the Post Office (again, NetFlix for example). Smarter operations are needed but it would devaste the economy to shut it down.
Gator Nation
April 9th, 2010
10:42 pm
Interesting data Kyle. Thank you.
I’m a democrat.
I would be against a VAT.
I would be for a flat tax instead of our current tax code.
I am in favor of those in higher income brackets being taxed at higher rates. We are a capatalistic system…system being an important part of that equation. Much like a pryramid, you don’t get to the top without standing on the shoulders of others.
Though I wouldn’t be for taxing the rich much higher than we do now.
I would be for a state food tax until we replenish our coffers and get out of the economic doldrums. Then I would repeal it again. This tax would be the same for all income brackets.
I have a hard time listening to the TEA party. To me, they come across as people who do not want to pay for the services they enjoy…..and where in the heck were they prior to Obama being elected? That they are more vocal now then the past 6-8 years smacks of duplicity.
mit
April 9th, 2010
10:42 pm
they obviously in error have keep you alive, jimmy. Who is who funds all the scientific research that the drug companies can buy the patent and then produce for the public? your govt. and rich people organizations. I never said I believe or trust in everything they do but neither you nor kyle have named a program worth not funding. NASA and the post office? So you actually want to live in the days before? NASA has given more than you ever deserve.
Michael H. Smith
April 9th, 2010
10:43 pm
…the freedoms we now have.
Yeah, what little remains of them.
Atlantan
April 9th, 2010
10:47 pm
No MIT you are a loser
Keep up the good fight!
April 9th, 2010
10:47 pm
Its not worth arguing with you Smith…you seem to know it all but you know nothing. Your post is nonsensical. Just some rant citing the Constitution. Regulations are part of regulating commerce.
Atlantan
April 9th, 2010
10:49 pm
MIT you are what is wrong with America it is pathetic losers like you who depend on people like me to take risks (which could end in failure and certainly involve strife) to support pathetic losers like you. Get off your keester and get to work. You are a cancer on our country and society.
Keep up the good fight!
April 9th, 2010
10:52 pm
wow smith….what freedoms have you lost? I mean real freedoms…not your made up ones
jimmy
April 9th, 2010
10:53 pm
your right mit, again!!! velcro and tang!!!!! awesome!!! thanks NASA!!!!!
scientific research by the govt.? who do you think they are in bed with? Anyone they can brainwash for more funding!? how can you be so ignorant? What a joke. I could argue this with you all night, but they have obviously brainwashed you too. Like i said before, it’s sad, really sad your so loyal to the govt. and their system.
Atlantan
April 9th, 2010
10:54 pm
Gator Nation you are a simplistic JACKIE – do you have any clue how hard it is to become part of the tax bracket of which you are so envious that you think people should pay more, because why, because they make more money. Individuals in America make money based on their contribution and value to society. Clearly you don’t do much. I bet you work 8 hours a day and not a moment more, but expect raises as you contribute next to nil whatever you do. Go out and do something – I mean really do something. Take a risk – a big risk, give your all and then come back and share with all of us how you are going to give close to 50% of your hard earned labor because it is FAIR. You are a joke.
Keep up the good fight!
April 9th, 2010
10:54 pm
Atlantan…really? Tone it down. You have no idea who take what risks or who is a “cancer”.
Keep up the good fight!
April 9th, 2010
11:00 pm
Atlantan….so you think firefighters and police are worth less to society than, oh say, baseball players or maybe some reality TV star. A porn star is worth more? Or a prostitute?
Would you tell your wife/daughter that they performed a more valuable contribution to become a high paid prostitute than to join the military because they could earn more money?
Keep up the good fight!
April 9th, 2010
11:05 pm
jimmy…now why dont you settle down like a good moron and watch your satellite TV? Who put the satellite there? NASA has more than 6300 patents. just google “NASA inventions” and spend some time educating yourself before you demonstrate to the world your ignornance.
But then all you seem to know is Tang.
Gator Nation
April 9th, 2010
11:05 pm
Atlantan,
If you want to have an educated debate about tax’s, lets do it. But don’t come at me with BS like “Individuals in America make money based on their contribution and value to society”. I’m sure your hateful, jealous little soul thinks that NBA players make way to much money. Individual’s make money in America for a variety of different reasons. That’s a different debate, an economic debate. Let’s talk tax’s or are you to much of a JACKIE to handle having a civil debate? Never mind, you probably fall in the category of “think like me or your evil”. I’m sure our founding fathers would be so proud of you.
Michael H. Smith
April 9th, 2010
11:08 pm
Your only problem, no name phony, is your inability in debate to defend the non-sense that you spew on these blogs. If the Constitution is a rant to you, then you’re going feel terribly distraught in this nation of laws.
A “regulated commerce” is not “free commerce”. Like it are not, in this country we have a “limited market” and our rights as well have limits. As Justice Scalia rightly said, there are no “unlimited rights”. (not for a person or the market)
Go ahead now it’s time to throw your tantrum, change phony names if you need to and call me your very worst imaginable names, just because your trite screeds fail you.
Keep up the good fight!
April 9th, 2010
11:14 pm
So your point is that by virtue of the Constitution we dont have free markets…and therefore regulation is constitutional? Therefore the Constitution is taking away your rights?
Now when you use the dictionary and thesaurus…try to make sure the sentences add up to convey a point.
Michael H. Smith
April 9th, 2010
11:19 pm
wow smith….what freedoms have you lost? I mean real freedoms…not your made up ones
Oh since you asked phony, now that your BIG GUB’MENT SOCIAIST ObumerCare is the law of the land I’ve lost a great deal of personal freedoms. I can no longer choice in any degree what is acceptable healthcare to me. My healthcare now has to meet the approval of BIG GUB’MENT SOCIAIST ObumerCare.
WOW, that didn’t take long, now did it?