Taxes are Good
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Why Highly Taxed Europeans are Not in Revolt
Here’s a questions that has vexed conservatives for decades: Why isn’t there a huge tax revolt in Europe? Citizens in most European countries pay much higher taxes than we do in the United States, but virtually no substantial tax revolt movements exist in these countries. They should be marching in the streets by the millions demanding large tax cuts – but they aren’t. Why is that the case? The answer probably has much to do with the fact that people in Europe can recognize more easily the inherent connection between the taxes they pay and the benefits they receive. The benefits of government programs in these countries are much more obvious than they are in the United States – and so the taxes that pay for them are not resented as much. The European social welfare state is so much more extensive than what we have in the U.S. that it is impossible for citizens to not notice all the valuable things they are getting for their taxes.
T.R. Reid, in his book The United States of Europe, tells a story which illustrates this point very well. He lived in Great Britain for years, and at first he was stunned by the 17.5% tax that was added to virtually every purchase he made. “I kept wondering: Why do the Brits put up with a tax that high?” He came to understand the answer to this question when his youngest daughter had to go to the emergency room with a severely infected ear. After a wait of fifteen minutes, his daughter was seen and given effective treatment. Grateful, he went to pay the bill only to have the nurse proudly announce to him that “There won’t be a bill to pay. We do it a bit differently here. In the National Health Service, we don’t charge for medical treatment.” And suddenly he “got it” about the taxes:
Had the same minor medical crisis occurred in American, we would surely have received the same level of professional treatment. But we would have received something else along with it: a wad of bills. Having had a similar experience in emergency wards in the United States, I would expect that treatment like we got at St. Mary’s in London would have brought bills of about $200 from the hospital, another $150 or so from the doctor, and another $100 from some lab technician. And I would likely have faced a three-month battle with an insurance company trying to get the bills paid. In Britain, there was no need to argue with the insurance company over the bill, because there was no bill (and consequently, no insurance company). As we left the hospital, my wife said quietly, “Now I see why we pay that 17.5 percent."5
And beside universal health care, the typical European also gets a lot more for their taxes – including a free university education, paid maternity and paternity leaves for everyone, clean and efficient public transportation, retirement security for all, and so on. So ironically, the reason many people in the U.S. hate taxes more than Europeans may be because we pay so little in them and get comparatively so little for them in return. If we paid more taxes like the Europeans do, and then got many more important and obvious social and economic benefits, we would probably see the connections between taxes and government benefits more clearly – and so resent our taxes less. Strange but true.
Addressing Criticisms of Taxes
In the battle over Americans’ hearts and minds concerning taxes, only one side is really fighting. Virtually no one is promoting the more positive and constructive view of taxes. Many Democratic politicians wouldn’t be caught dead advocating tax increases. So the political effort is all on the other side, with a continual and vociferous conservative assault on taxes – one that typically goes unanswered. But we need to take a more careful look at how this assault is mounted. We need to look more critically at the main reasons the anti-government forces offer for why taxes are bad and tax cuts are good.
In a nutshell, these are the main conservative complaints:
- Americans are greatly overtaxed and their tax burden is continually rising.
- Most of our taxes don’t go to programs that help average Americans, but to foreign aid and welfare.
- Taxes are bad for the economy because they hinder productivity and economic growth.
- We would all be better off if we could keep more of the money we now pay in taxes.
There is nothing surprising here. In fact, these points are repeated so often by tax critics that most of us are very familiar with them and we often readily accept them as fact. And if they did happen to be true, they would be a pretty damning indictment of taxes and a powerful rationale for cutting them. But in reality these typically conservative criticisms about taxes are at best confused and misleading, and in most cases simply not true at all.