One of the most widely accepted and destructive of these lies is the belief that Americans, especially the middle class, are overtaxed. It has been repeated ad nauseum over the last decade and has become so widely and fanatically embraced that any candidate who even thinks about raising taxes is committing political suicide. So let’s take a look at it:
The following table [1] compares the percentage of pay after taxes of the US to a number of other developed countries:
| Table: AVERAGE PAY AFTER TAXES January 1, 2000 | ||||
| Married | Married 2 Children | |||
| Country | $40K | $100K | $40K | $100K |
| Canada (Ont) | 76% | 64% | 76% | 64% |
| Denmark | 65% | 48% | 65% | 48% |
| Germany | 69% | 65% | 80% | 71% |
| Italy | 68% | 60% | 69% | 61% |
| Japan | 83% | 75% | 83% | 77% |
| Netherlands | 64% | 59% | 64% | 59% |
| Sweden | 60% | 53% | 60% | 53% |
| U.K. | 76% | 70% | 76% | 70% |
| U.S. | 78% | 74% | 84% | 77% |
What the table tells us is that on January 1, 2000, Americans were able to keep a larger percentage of their paychecks than any of the other comparable developed countries.
According to Wikipedia, “Tax Freedom Day is the first day of the year in which a nation as a whole has theoretically earned enough income to fund its annual tax burden.” Here in the United States, we’ve actually seen it decrease from May 1st in 2000, the height of the Clinton economic boom, to April 9th in 2010. Around the world, Tax Freedom Day is later. For example, Tax Freedom Day for Spain, the UK, Canada, Germany and France is May 21, 2008; May 30, 2010; June 6, 2009; July 8, 2008; and July 16, 2007, respectively.
Fact: Americans are paying less in taxes today than 10 years ago and less in taxes than other developed countries.
Most Americans would either disagree with these facts or cheer if they agree. Normally, I would be one of the ones cheering if it wasn’t for the downsides and there are a number of serious downsides. The most serious of these are crippling our local municipalities. With less revenue coming in, local municipalities have been forced to make drastic cuts in teachers, police, firefighters, and maintenance workers, with resultant deteriorations in public education, safety, and infrastructure.
In order to rationalize the deterioration in public education and justify tax cuts, parents, public officials, reformers, and reactionaries have made teachers their scapegoats. Teachers are frequently characterized as greedy and inept, supported by unions and out-dated tenure rules. Such criticisms, however, totally ignore the fact that, all things being equal, the most important factor in determining quality education is class size. Study after study has shown this to be true. As Don Iglesias, Superintendent of public schools in San Jose, California, was quoted as saying about teacher lay-offs: “This is not a choice that anybody is making because we think increasing class size is a wonderful thing for our schools. It's a choice because there's ineptitude in terms of our elected officials in Sacramento and their unwillingness to raise taxes.” [2] (Emphasis mine.)
Likewise, police and firefighter layoffs have left us less secure. For example, prosecutors in Camden, New Jersey, recently reported a dramatic rise in violent crime two months after 160 police officers were laid off. Aggravated assaults with firearms jumped 259 percent in January and February compared to last year, and violent crime over all is up 19 percent, the Camden County Prosecutor's Office told the Philadelphia Inquirer. [3]
In the case of maintenance of infrastructure, there other considerations. Postponing repairs not only incurs safety risks, but also increases their costs, because the problems inevitably get worse and because we pay for them with inflated dollars. Repairs that cost $1,000,000 in 2011 dollars might cost $2,000,000 in 2021 dollars.
There are more problems. First, irresponsible tax cuts exacerbate economic problems in a circular way: e.g., cut taxes → less revenue → layoffs → even less revenue → even more layoffs. Second, groups like the Tea Party say that one of their goals is to take back control from the Federal Government by cutting taxes and spending. What they don’t realize is that irresponsible tax cuts actually have the opposite effect. With less revenue coming in, local municipalities and states have had to rely more on money from the Feds. However, when Federal money is available, it always comes with strings attached and results in even more control over local municipalities and states. Lastly, this entrenched belief that Americans are overtaxed leads politicians to be even more dishonest than they usually are, because any hint of raising taxes could result in the death knell of their careers.
Let me make this clear, however: I am not saying that the solution to our economic and budget problems is to irresponsibly raise taxes in the future just as we have irresponsibly cut taxes in the past. What I am saying is that any sincere discussions about budget shortfalls have got to include raising taxes in a responsible way. If it doesn't, it is totally disingenuous, whether coming from the right, left, center, conservatives, liberals, Tea Partiers, rich, middle-class or what have you. The reason for this is that spending cuts will get only you so far, and in order to completely balance budgets, we would have to make so many draconian cuts that even the ultra-conservatives would cry uncle.
Unfortunately, the rich, with the help of their political proxies, have done such a thorough job of brainwashing Americans into believing that we are overtaxed as to take it completely off the table. So when any of those “inept elected officials” whom Superintendent Iglesias alluded to, suggests cutting taxes, even the people who would be hurt the most support it. As long as we Americans keep blindly accepting statements that are put forward by the short-sighted, statements such as “Americans are overtaxed,” and “AIG and other financial institutions are too big to fail,” we will keep shooting ourselves in the foot. As a wry poker player once quipped about continually calling with the worst hand, “First you shoot yourself in the left foot, then you shoot yourself in the right foot, and then you blow your head off.”
1. Adams, Cecil, “Are U.S. taxes low compared to the rest of the industrialized world?”, December 1, 2000, The Straight Dope.
2. Montgomery, Michael, “Class Sizes Begin to Rise Again in California Schools”, November 19, 2009, The California Report.
3. Goodwin, Liz, “Violent crime spikes after Camden halves police force”, March 7, 2011, The Lookout.
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