In the last article, we looked at tax collections and Federal tax rates in the U.S. With a top income tax rate of 35 percent and a floor of 10 percent not including about 16 percent collected for Medicare and Social Security, we learned that the overall tax collections for the Federal Government are about 15 percent of Gross Domestic Product or GDP… about $2.1 trillion.
The total revenue figure includes not only income tax, but also Social Security, Medicare, unemployment taxes, royalties, rentals, sale of surplus properties, fines, licensing fees, application fees, and tariffs. And I’m pretty sure I’ve left something out.
The entire Republican position is based on the idea that Government spends too much and taxes too heavily. How does this assertion square with what goes on in other countries?
Three different organizations keep track of such matters. These are the Heritage Foundation, Organization for Economic Cooperation and Development (OECD), and Eurostat. Their statistics are remarkably reliable and show consistency between the organizations.
The differences between the 15 percent of GDP we’ve just been talking about and these numbers is that these statistics include all monies that go to states, cities, counties, and provinces in additional to the federal share above.
By the way, universal access to health care is provided in all these countries. This does not mean that they have socialized medicine. With the exception of Great Britain, each country has some combination of private health insurance and/or providers.
America spends 28.3 percent of GDP on all taxes (federal, state, and local) and we still don’t have universal access to health care. The average investment in taxes for OECD countries similar to us is 36 percent of GDP.
Out of 30 similar countries, America contributes to the governments of the country at a rate which is third from the lowest of similar countries. Compared to average, US taxes are already 21 percent lower than the OECD average.
Does adding the health care guarantee make the other countries government more expensive? No, the citizens of these 30 similar countries get better health outcomes on average for their people and pay about half as much as Americans.
Denmark pays 48.9 percent of GDP. The UK pays 36.6 percent. The Australians pay 30.6 percent. And so on… The only countries with lower tax rates out of the top 30 are Japan, South Korea, and Mexico.
Nobody likes higher taxes, but it would seem the United States is already an outlier on the low side when it comes to cumulative tax collections. If your rates are higher (and almost everyone’s is), it must be that someone isn’t paying their fair share of taxes or deductions have gotten out of hand for some people.
Don’t believe me. Go to the Organization for Economic Cooperation and Development and look it up. Or you might look up the facts on a leading Conservative Think Tank resource. See the Heritage Foundation website and look for the Index of Economic Freedom.
Despite the Grover Norquist pledge, it appears that the politicians on the right know that what they are feeding the electorate is less than accurate (kindly put). But the truth does not support their hypotheses and they will repeat what they think folks want to hear until it is accepted as Gospel.
Next, let’s look at energy independence. Most observers think energy independence is a good thing. Let’s examine benefits, costs, and risks. Will prices really be driven down if America achieves energy independence? Stay tuned.