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United States outline with money
Tax Day was a few weeks ago and it shows a big part of American’s strange relationship with their government which is basically themselves as Lincoln described in the Gettysburg Address, “Government of the people, by the people, for the people ...” Americans spend hours upon hours struggling to figure out how to legally pay the absolute minimum dollars in taxes to all levels of government. Americans do not like to pay for government, yet when something goes wrong—a hurricane, a flood, a lack of jobs in a recession, a manmade catastrophe like an oil spill, or a pandemic, for example—we Americans go running to our government to save us like a five-year-old runs to her mommy to make it all right.
Americans will argue that we deserve all the benefits available to humankind, including great public educational systems from kindergarten through post graduate universities. We want to know that the food we eat and the water we drink is safe; we want help buying our homes with the government enabling financial institutions to issue 30-year fixed rate mortgages at reasonable rates; we want safe neighborhoods; and we want fair and honest court systems, to name just a few.
When the pandemic hit in March 2020, we ran to government to save us by developing a safe and effective vaccine, delivering checks to cover our daily costs when we couldn’t go to work, and monies to business owners so they stay in business and ensure our jobs are still there for us when the pandemic loses its deadly force. Wanting and expecting all the above plus much more is totally reasonable when you live in the richest country the world has ever seen.
So why don’t we want to pay our fair share?
Do we Americans just seem to not connect the thousands of benefits that we get and expect from government with the taxes we pay, or do we just want our neighbors to pay more taxes so we can sneak by paying less. As a society, we unfortunately do a poor job of explaining all the good government does. When I was in the legislature a few decades ago, I would do a lot of door-to-door contact with my constitutents. I would always smile to myself when someone would go off attacking government spending, but then say something like, my mother is in a nursing home and because of some government action or program, she is safe and well cared for. That’s how government should be spending its money, not all that other stuff. Then days later, I knock on another door and this family has a child with special needs and a particular government program was really helping her so her parents would say, “That’s what government should be doing with its money not all that other junk.” When it affects a person directly, they seem to love government but otherwise they see it as a waste of money.
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No one enjoys paying taxes. Americans, however, are extreme about it even though we are far from having the highest tax rates in world. Not all countries have this hatred for paying taxes like we Americans. Many French, for example, who live in one of the three highest taxed countries in the developed world are okay with paying these high taxes because they want their generous benefits like early retirement and excellent health care. Of the 38 OECD countries, the world’s most developed free market countries, the US ranks number 32 in tax-to-GDP. In comparing the total tax rates in all the countries in the world, we are not even in the top 50 highest taxed countries.
So, what explains this? As with most complex issues there are many reasons. One is that we view the tax system as unfair and that’s because it is. The army of high paid lobbyists, along with the legislators they seem to control, constantly chip away at our tax laws to help the super wealthy avoid taxes. In his 2016 debate with Hillary Clinton, Donald Trump was accused of not paying taxes for years. His response was simple, “that makes me smart.”
Another rap on government is that it does not make the smartest spending decisions and pays more than it should for goods and services. Government can’t just hire its brother-in-law who can do your home repair on the weekends. To avoid political interference in government purchases and corruption, the government must go through a rigorous competitive process and abide by all the various health and safety standards. That costs money.
Also, the corporate lobbyists are often able to shape our laws to weaken the government’s intent. After decades, Medicare and Medicaid can finally negotiate lower drug prices thanks to the Inflation Reduction Act signed into law last year. This will now save the taxpayers billions of dollars.
Finally, the wealthy right wingers don’t like to spend money on programs that help struggling families and individuals but would rather blame the victims. Directly attacking programs like school breakfast and lunch programs sounds cruel. So, instead they argue taxes are too high. If they are successful cutting taxes for the wealthy, the result is either run up the deficit as the Republicans did in 2017 or cut programs for the vulnerable who don’t have high priced lobbyists.
So, are we burdening ourselves with too high taxes?
That depends on what kind of country you want to live in. Right now, we have a country where clever billionaires can avoid paying taxes for years while a recent study showed that 56% of Americans can’t cover a $1,000 emergency expense with what they have in savings. We have shorter life expectancy than a majority of our peer high-income countries. Also, compared to our peer high-income countries, we lead in obesity and diabetes, second highest in heart disease, and Americans die years earlier than out peer countries due to alcohol and drugs. This list can go on and on.
Photo by Tyler Nelson
Louis Fortis
Louis Fortis
So, when politicians like Speaker Kevin McCarthy complain that we are spending too much and running up the deficit, he should look at the facts. Yes, the deficit is high, however we can sustain that and can keep our interest rate relatively low, albeit not forever, because the dollar remains the world’s reserve currency.
About a quarter of the entire deficit $7.8 Trillion was incurred during the four years of the Trump. In Trump’s first year in office, Wisconsin’s former congressman Paul Ryan, who claimed to be a deficit hawk, pushed through a massive tax cut in 2017 that primarily benefitted the rich and guys like McCarthy were helping to lead the charge.
So, we need to decide what kind of society we want to live in and then fight for a fair tax system to pay for it. Many of the other wealthy advanced democracies seem to be able to provide a decent life for the vast majority of its citizens, why do 56% of Americans live in financial insecurity?
