We’re Not Receiving Value

Catherine Rampell expresses outrage in her Washington Post column over how little Americans pay in taxes and what she refers to as “the disconnect between the direction of tax changes and the direction of Americans’ views of their taxes”:

Alas, there’s not remotely enough money on those would-be money trees to pay for all the things that Democrats want. Or even the things that past Congresses have already committed to: Recall that the United States already has large fiscal deficits in the years ahead, even without creating new programs. We also already have a lower overall tax burden as a share of the economy than most rich countries, which generally have broader tax bases and higher average rates than we do.

Including for the middle class.

By all means, raise taxes on the ultrawealthy. They should pay more. But if we really want a more robust welfare state, or even to sustain the welfare state we’ve already promised, that probably requires higher taxes from most of the rest of us, too.

I have two answers for Ms. Rampell, one reasoned and one snarky. Reasoned first.

Here in the United States we pay less in taxes than Denmark or France, slightly less than Germany, roughly the same as in the UK, and more than in Canada, Japan, and Australia. Rough numbers for U. S. taxes are 19% of GDP for federal taxes, 15% for state and local taxes. Most comparisons between countries ignore that in the U. S. we are taxed by multiple levels of government.

However, we get tremendously less for what we spend than in any other country. We pay more in absolute dollars, more per capita, more as a percentage of GDP for education, healthcare, law enforcement, defense, and everything else on which government spends money than practically any other comparable country. We pay more per mile of road constructed or foot of bridge constructed than other developed countries.

For our money we get worse outcomes in education and healthcare, declining lifespans, more violent crime, and roads and bridges that are falling apart. A typical American wonders “why spend more?”

Why do we get worse bang for the buck? I’m open to suggestion. I attribute much of it to low social cohesion. We are much more diverse than most other countries. You could also say “individualism”. Everybody including government officials is “looking out for #1” and not overly scrupulous about it. Other possible explanations are the ever-popular waste, fraud, and abuse which I suspect translate into about the same thing.

I think the line of least resistance is improving return on investment rather than increasing taxes.

Now for the snarky response. Based on records available publicly Ms. Rampell has a household income of around $350,000/year. That places her family well within the top 2% of income earners. What is holding her back from sending more of the money she earns to the federal government?