What do we get for our US tax dollars?
We like to think of Europeans as poor overtaxed serfs but the benefits they
receive show the shortcomings of the US system.
By Steven Hill
Guardian.co.uk: 15 April, 2010
Most Americans seem to regard 15 April - the day income tax returns are due
to the Internal Revenue Service - as a recurring tragedy on the order of a
biblical plague. Particularly this year, with US government deficits
soaring, everyone from the Teabaggers to Senate Republicans are reviving a
scary Friday the 13th scenario from the 1990s about a return to Big
Government. Recently Rudy Giuliani even stated that President Obama was
moving us towards - heaven forbid - European social democracy.
Europe frequently plays the punching bag role during these moments because
there is a perception that the poor Europeans are overtaxed serfs. But a
closer look reveals that this is a myth that prevents Americans from
understanding the vast shortcomings of our own system.
A few years ago, an American acquaintance of mine who lives in Sweden told
me that, quite by chance, he and his Swedish wife were in New York City and
ended up sharing a limousine to the theatre district with a southern US
senator and his wife. This senator, a conservative, anti-tax Democrat, asked
my acquaintance about Sweden and swaggeringly commented about "all those
taxes the Swedes pay". To which this American replied, "The problem with
Americans and their taxes is that we get nothing for them." He then went on
to tell the senator about the comprehensive level of services and benefits
that Swedes receive.
"If Americans knew what Swedes receive for their taxes, we would probably
riot," he told the senator. The rest of the ride to the theatre district was
unsurprisingly quiet.
The fact is, in return for their taxes, Europeans are receiving a generous
support system for families and individuals for which Americans must pay
exorbitantly, out-of-pocket, if we are to receive it at all. That includes
quality healthcare for every single person, the average cost of which is
about half of what Americans pay, even as various studies show that
Europeans achieve healthier results.
But that's not all. In return for their taxes, Europeans also are receiving
affordable childcare, a decent retirement pension, free or inexpensive
university education, job retraining, paid sick leave, paid parental leave,
ample vacations, affordable housing, senior care, efficient mass
transportation and more. In order to receive the same level of benefits as
Europeans, most Americans fork out a ton of money in out-of-pocket payments,
in addition to our taxes.
For example, while 47 million Americans don't have any health insurance at
all, many who do are paying escalating premiums and deductibles. Indeed,
Anthem Blue Cross announced that its premiums will increase by up to 40%.
But Europeans receive healthcare in return for a modest amount deducted from
their paychecks.
Friends have told me they are saving nearly a hundred thousand dollars for
their children's college education, and most young Americans graduate with
tens of thousands of dollars of debt. But many European children attend for
free or nearly so (depending on the country).
Childcare in the US costs over $12,000 annually for a family with two
children, but in Europe it cost about one-sixth that amount, and the quality
is far superior. Millions of Americans are stuffing as much as possible into
their IRAs and 401(k)s because social security provides only about half the
retirement income needed. But the more generous European retirement system
provides about 75-85% (depending on the country) of retirement income.
Either way, you pay.
Americans' private spending on old-age care is nearly three times higher per
capita than in Europe because Americans must self-finance a significant
share of their own senior care. Sixty million American workers have no paid
sick leave, millions more have no paid parental leave following a birth, and
so must self-finance their own time off. But Europeans receive all this in
exchange for their taxes.
Americans also tend to pay more in local and state taxes, as well as in
property taxes. Americans also pay hidden taxes, such as $300bn annually in
federal tax breaks to businesses that provide health benefits to their
employees. When you sum up the total balance sheet, it turns out that
Americans pay out just as much as Europeans - but we receive a lot less for
our money.
Unfortunately these sorts of complexities are not calculated into simplistic
analyses like Forbes' annual Tax Misery Index, a "study" which shows
European nations as the most miserable and the low-tax United States as
happy as a clam - right next to Indonesia, Malaysia and the Philippines.
But Forbes only adds up income tax, social security, sales tax or VAT and a
few other minor fees. A thorough analysis would need to create a ledger in
which all the supports and services Europeans receive are listed on one side
and the amount of taxes and any additional fees they pay are listed on the
other; and then do a similar analysis for Americans, listing what Americans
pay in taxes as well as out-of-pocket expenses for those same services.
In this economically competitive age, increasingly these kinds of services
are necessary to ensure healthy, happy and productive families and workers.
Europeans have these supports, but most Americans do not unless you pay a
ton out of pocket. Or unless you are a member of Congress, which of course
provide European-level support for its members and their families.
That's something to keep in mind on 15 April. Happy Tax Day.
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