As the nation faces truly sobering budget deficits amid the rising recession, the answer of some folks remains steadfast: Cut taxes!
The chorus resumed on April 15 with a series of tea parties, designed to be redolent of the Boston Tea Party of revolutionary fame. The low point of that exercise had to be Texas'ê Republican governor, Rick Perry, letting slip that he could see why people would want to secede from the union. Now that'ês patriotism.
The problem with the tea parties is that the original tea party was in no way about taxes; it was Boston tea merchants protesting the British government dumping tea on the North American market to try to bail out the nearly bankrupt British East India Company, in which the crown was a major investor. 'êNo taxation without representation'ê was, on the whole, a secondary issue in the break from the Brits.
But in America, where we think a) we'êre in the greatest country on earth, but also think that b) our taxes are way too high and yet still expect all the services government can provide, and c) frequently have only a dim notion of how government actually works — we cling to such cherished myths like an old blanket. Nonetheless, our taxes are not that high, compared to the rest of the world. Nor are the rich being taxed into oblivion.
It'ês true that the richest 5 percent or so of Americans pay more than 50 percent of total personal income tax receipts. But as they also control well over 50 percent of total personal wealth, it'ês hard to argue that they'êre being taxed into the poor house. (When President Obama, earlier this year, said he might push to end the Bush-era tax cuts, radio investment guru Ray Lucia whined that people making more than $300,000 weren'êt really rich. Personally, I'êd like to try that level of poverty to see just how much suffering I could stand.)
Moreover, what'ês missed in the personal income tax numbers is that in total tax burden — including Social Security and state and local taxes — the super rich'ês share of the tax burden falls to around 40 percent, and that'ês for the top 20 percent of wage earners. Ultimately, the super rich pay between 20 and 25 percent of their total incomes in taxes. Personally, I'êm OK with that, if only they'êd stop whining about it so much. In fact, people in the $100,000-$200,000 income bracket pay a slightly higher share of their income in taxes than do the richest Americans. Bill Gates notwithstanding, they also give a higher percentage of their incomes to charity.
The point of this is not to bash the rich, some of whom (aside from all the CEOs who have run their companies into the ground of late) have probably earned their wealth. The point is that in a country that allows people to become egregiously wealthy and where some folks actually succeed, what'ês all the fuss about?
Comparing our tax rates to those of the rest of the world yields similar results. Tax-whiners like to complain that the U.S. has the highest corporate tax rate in the world, which is both demonstrably untrue and, again, ignores reality. At 40 percent, India has a higher top corporate tax rate than the U.S.; the U.S. does not have a value-added tax (VAT), a common feature in many nations; and given all the exemptions and exceptions, the U.S. corporate tax rate is probably closer to 26 percent than it is to the stated rate of 39 percent.
Forbes magazine, hardly a bastion of liberal revisionism, simply lumped all the world'ês taxes together for each nation to create a 'êtax misery index,'ê and the U.S. came out 92nd. France was No. 1. Qatar had the lowest total tax rate, and a number of petrostates were congregated near the bottom. I haven'êt been to Qatar, but I'êve been to a number of other Persian Gulf nations, and, on the whole, I'êd rather be in France.
The fact of the matter remains that among both U.S. states and among nations of the world, the ones with higher taxes tend to be nicer places to live — less poverty, higher quality of life scores, police and public servants who aren'êt so poorly paid they'êre all in business for themselves.
So as much as we may not like paying taxes — and from what I read, going to back to prerevolutionary days, Americans have pretty much never liked paying taxes — we'êre probably stuck with them. As for the rich, who by so many accounts are about to flee (or secede) from our fair but over-taxed shores, I continue to recommend Somalia, which probably has the lowest tax-collection rate on earth and, aside from the occasional civil war and piracy, has lots of sun and some lovely beaches.