Paul Caron posts an excerpt from an article written by Harvard Economist Greg Mankiw that suggests the pro-tax intelligentsia is wrong when it says that Americans are undertaxed:
Some pundits, reflecting on the looming U.S. budget deficits, claim that Americans are vastly undertaxed compared with other major nations. I was wondering, to what extent is that true?
The most common metric for answering this question is taxes as a percentage of GDP. However, high tax rates tend to depress GDP. Looking at taxes as a percentage of GDP may mislead us into thinking we can increase tax revenue more than we actually can. For some purposes, a better statistic may be taxes per person, which we can compute using this piece of advanced mathematics:
Taxes/GDP x GDP/Person = Taxes/Person
Here are the results for some of the largest developed nations:
Rank
Country
Taxes/Person
1
France
15,556
2
Germany
13,893
3
U.K
13,714
4
U.S.
13,097
5
Canada
12,789
6
Italy
12,478
7
Spain
11,014
8
Japan
8,992
The bottom line: The United States is indeed a low-tax country as judged by taxes as a percentage of GDP, but as judged by taxes per person, the United States is in the middle of the pack.
Did I read that right? Americans pay more taxes per person than Canadians do?
How, preytell, is that possible when Canada has socialized medicine? Oh, that’s right, Americans pay to defend Canadians, as they do to defend Europe and the rest of the free world.¹
Think about this: If France, Germany, Great Britain, Spain, Italy and Canada had to pay for their own defense in addition to their cushy government-funded healthcare plans, taxpayers there would be fleeing those countries faster than Pope Benedict flees an advancing investigative reporter.
I’ll go a step further than Mr. Mankiw and predict that when the progressive left in this country finally gets its way and foists a single-payer, government owned and operated healthcare system on Americans ² our per capita taxes will dwarf those of France and the rest of Europe.
Footnotes:
¹ Here’s a graph comparing the per capita spending of America and European nations:
² Not only the right has been upset with Obamacare. Hardcore liberals dislike it as well, saying that it doesn’t go far enough in providing healthcare to all Americans and dismantling, once and for all, the American insurance cartel. Obama, Pelosi and Reid have dealt with the left’s dissatisfaction by assuring it that the bill is merely a first step toward the utopian ideal of government run, universal healthcare.
Make no mistake, if Democrats had their way, the federal government would be everyone’s HMO. Such a cataclysmic shift from the private to the public sector would require further and steeper increases in income tax rates.
7 responses so far ↓
1 A Reader // Apr 2, 2010 at 10:34 pm
“Oh, that’s right, Americans pay to defend Canadians, as they do to defend Europe and the rest of the free world.¹″
Bull. Fucking. Shit. Nuclear weapons. Look then up.
Meanwhile, you somehow forgot to consider tax rates as they relate to income level in the relvant countries. Rather odd for a tax lawyer, unless your amnesia was intentional.
I mean, if you gotta be a liar, don’t be a clumsy one. You just came in your shorts, Esquire.
2 Peter // Apr 3, 2010 at 12:37 am
A Reader,
I feel your pain, eh?
Being Canadian and attached to the great United States of America you must feel like Danny DeVito being forced to go everywhere with George Clooney.
But you’re good at hockey.
LOL
3 shakedowncrews // Apr 19, 2010 at 3:40 pm
To “A Reader”:
Your point about nuclear weapons makes no sense. You appear to assume that these nations owning nuclear weapons means that they fully fund their own national defense. Newsflash: national defense implies far more than simply maintaining nukes. It also implies keeping trade lanes open, fighting piracy and terrorism, countering threating influences of dangerous international forces (Iran, Iraq, Taliban, al Qaeda, etc).
It also implies taking a lead in stopping genocides like the one in Sudan, the Balkans, and elsewhere. Without the US taking the lead, Europeans would have allowed the Serbs to annhialate the Bosnians.
You also completely overlook that fact that the United States nuclear arsenal was the real deterrant during the cold war. France’s paltry arsenal would hardly hold the Russians or Chinese at bay.
The United States’ presence in South Korea is the only thing that has kept the North from invading, at GREAT cost to us and great BENEFIT to the Koreans. Same for Japan.
Were we to adopt a new “America-First” policy and leave those socialist nations to fend for themselves, the author is right: they would collapse.
And I for one believe it is time to do exactly that. Close all those bases, redirect that money back to the USA, and let the Europeans and Asians solve their own problems.
4 shakedowncrews // Apr 19, 2010 at 3:43 pm
One more note: the author forgets that the USA also pays significantly MORE to support the United Nations and other international bodies, and contributes more for their (often failed) policies.
We should also stop supporting the UN, OAS, etc. Let the rest of the socialist world pony up and pay for that. I bet they would not do so, and those organizations would join the League of Nations on the trash heap of history.
5 The Rich in Connecticut Pay 2/3rds of State’s Income Taxes // Jun 8, 2010 at 10:53 pm
[...] Americans Overtaxed? Bookmark & Share: [...]
6 timetravellerparty.org // Jun 18, 2011 at 12:33 pm
@shakedowncrews
I am grateful for your ability to peer into parallel universes and see what would have happened without America in the picture, that’s very useful. You also appear to be living in a parallel universe if you think America averted genocide in Sudan.
7 Peter // Jun 18, 2011 at 4:17 pm
Timetraveller.
It has taken me many years to acquire this skill. It’s nice to hear that someone appreciates it.
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