Recent Items

Debunking the Idea that Americans are Overtaxed

Posted on by

Now admittedly, there are some apples and oranges problems with this chart, in that the other countries on the list have government paid medical systems or public/private systems. And Australia has a publicly-mandated private pension scheme in which employers are required to set aside 9% of wages into a “superannuation” fund (workers are encouraged to contribute as well). Of course, we do have a higher level of military spending than the other countries on the list (although if you check the World Bank rankings, some small countries have a bigger proportion of GDP in military expenditures, such as Saudi Arabia). Nevertheless, the overall picture is striking.

I’m using Wolf Richter’s version of this chart, since it’s easier to scan than the original from the Center for Tax Justice. Note that this chart captures total taxes, meaning Federal, state, and local. CTJ also points out how America has always been low tax, but has become relatively even lower taxed. In 1979, the total level of taxation in the US was 26% of GDP versus 24.8% now. That means the vaunted Reagan Revolution served mainly to shift taxation from progressive income taxes (hitting the rich harder) and corporate taxes to regressive sales taxes, rather than lower the level. But our tax level has fallen while they’ve grown in other advanced economies. Tax burdens in OECD countries excluding the US were 31.7% of GDP in 1979 and have risen to 33.4% in 2010. So the US ranking has fallen from 16 out of 24 to 32 out of 34. Any wonder why our infrastructure is crumbling and our educational attainment is falling?

Americans have been trained to resent taxes even though we are trying to run an advanced economy Walmart-style. My impression is that the citizens of many other countries are far less exercised about higher tax levels because they perceive they are getting value for money (medical services, good public transportation, etc). By contrast, we’ve had a 30 year campaign to make government incompetent by running it on the cheap and demonizing people who work in government jobs, and the result is less service and more corruption. This experiment is working just fine for those wealthy enough to be effectively stateless or to otherwise isolate themselves. And it will probably take at least a generation for the costs (such as public health problems) to afflict even them. Nicely played.

Screen shot 2013-04-11 at 4.17.26 AM

Print Friendly
Twitter51DiggReddit0StumbleUpon54Facebook134LinkedIn1Google+11bufferEmail

196 comments

  1. whitey

    ” Any wonder why our infrastructure is crumbling and our educational attainment is falling?”

    This is way to simplistic: when you compare for example the infrastructure in Belgium (rather shitty) and the one in Switzerland you see absolutely no correlation between higher tax rates and better infrastructure. AFAIK, Belgium doesn’t have a huge defense budget compared to the swiss, both also have multiple levels of government (wether cantons or regions and federal), it mostly depends how efficient you are in allocation resources, the belgians suck, the swiss not so much.

    1. nonclassical

      whiteboy,

      some of us actually lived-taught in Europe-”infrastructure” as you describe, is most imperfect-includes fully educated workforce, through 4 year university or vocational equivalent for FREE 4 ALL..as well as healthCARE (rather than healthPROFIT), dental, 4 ALL…”infrastructure sucks”?? You have done NOTHING to in any way document your “opinion”..do so, or deservedly be marginalized…

  2. Bobbo

    Add it all up (federal income taxes, state income taxes, payroll taxes, sales taxes, real estate taxes, etc.) and Americans definitely are overtaxed when it comes to what you get for your tax dollar. Public transportation is terrible. The sick care system is a disaster. Higher education fees are out of control even at public universities. And now the social security pension system is on the chopping block.

    1. nonclassical

      bobbo,

      …don’t think you realize what those “taxes” are actually for-”Confessions of An Economic Hit Man”:

      http://www.amazon.com/Confessions-Economic-Hit-John-Perkins/dp/0452287081/ref=sr_1_1?s=books&ie=UTF8&qid=1365717904&sr=1-1&keywords=confessions+of+an+economic+hitman+by+john+perkins

      “John Perkins started and stopped writing Confessions of an Economic Hit Man four times over 20 years. He says he was threatened and bribed in an effort to kill the project, but after 9/11 he finally decided to go through with this expose of his former professional life. Perkins, a former chief economist at Boston strategic-consulting firm Chas. T. Main, says he was an “economic hit man” for 10 years, helping U.S. intelligence agencies and multinationals cajole and blackmail foreign leaders into serving U.S. foreign policy and awarding lucrative contracts to American business. “Economic hit men (EHMs) are highly paid professionals who cheat countries around the globe out of trillions of dollars,” Perkins writes. Confessions of an Economic Hit Man is an extraordinary and gripping tale of intrigue and dark machinations.

      Perkins writes that his economic projections cooked the books Enron-style to convince foreign governments to accept billions of dollars of loans from the World Bank and other institutions to build dams, airports, electric grids, and other infrastructure he knew they couldn’t afford. The loans were given on condition that construction and engineering contracts went to U.S. companies. Often, the money would simply be transferred from one bank account in Washington, D.C., to another one in New York or San Francisco.”
      ………………

      then there’s 30′s depression era historical parallel, whistle blown by twice awarded Congressional Medal of Honor recipient, Marine General Smedley Butler:

      http://www.amazon.com/Racket-Profit-That-Fuels-Warfare/dp/1481978551/ref=sr_1_2?s=books&ie=UTF8&qid=1365718236&sr=1-2&keywords=war+is+a+racket+smedley+butler

      “War Is a Racket is written by the most decorated American soldier in U.S. history, Major General Smedley D. Butler. Butler frankly discusses from his experience as a career military officer how business interests commercially start and benefit from warfare. After his retirement from the Marine Corps, Gen. Butler made a nationwide tour giving his speech “War is a Racket.” The speech was so well-received that he wrote a longer version as this book with the same title which helped popularize his message. Lowell Thomas praised Butler’s “moral as well as physical courage” in telling the truth about war profiteering. This message has never been more relevant, as we see the war racket in full swing in recent history like never before in endless perpetual wars, i. e. Iraq and Afghanistan, and elsewhere.”

  3. Sleeper

    It’s pretty simple -

    Taxes pay for services. Want that EMT at your door? Want clean drinking water ?

    Taxes pay for services. !!!

    1. Heron

      A good point, but most EMT’s in the US are private contractors working for what are, in effect, very expensive taxi services. I’ve only ridden in an ambulance once in my life, and they spent the next year trying to bully me into cutting them a 15000 dollar check for the ride to the hospital while they negotiated with my insurance company.

      1. banger

        Excellent point. The government exists, these days, simply to enable hustlers. We get little in return for our tax money because the government has become thoroughly riddled with corruption. In the federal gov’t the move towards “reinventing government” created the current trend towards increased corruption.

        1. Heron

          Indeed. Privatization has been a terrible experiment in the US, and resulted in all manner of inefficiencies, cost-increases, and service depreciation. My favorite example of this is Enron and California power generation. Once they got thier hands on the power plants out there, Enron began deliberately turning off generators, creating brown- and black-outs intentionally to both drive up prices, and extort the state government into further deregulation and sweeter new plant contracts. The problem with letting the fox guard the hen house is that, while you no longer have to take care of the hens, now you’ve got to negotiate with the fox every time you want an egg.

          1. Eric Patton

            Privatization has been a terrible experiment in the US

            Incorrect. It’s been great for the owning class.

  4. Ev

    How about this: Any taxes (i.e. forced wealth transfers) greater than zero are by definition over-taxation; thus, Americans ARE overtaxed anytime taxes rise above zero.
    BUT, you say we simply MUST tax people. Then tax them for the only legitimate purpose of government: To keep others from taking your life or your stuff. Whenever a governments role is expanded beyond this protection of each individuals life and property – then GOVERNMENT ITSELF BECOMES THE THIEF!

    1. ambrit

      Dear ev;
      Way too simplistic there pard.
      For instance; if an industry destroys the water supply for your region through crappy “waste disposal,” the resulting spate of disease and privation would definitely be “taking your stuff” in my book!
      “Beware of simple solutions. They only lead to more problems.”

    2. Massinissa

      Sorry man, as much as I hate the government, im probably even more angry at banks and large corporations.

      Private property protection is the “only legitimate function of government”? Bullcrap.

    3. Heron

      Clean drinking water? Your taxes pay for that. The roads you drive on to work? Your taxes pay for that. Civic plumbing that works? Your taxes pay for that. The Electrical grid? Your taxes pay for that. The hundreds of thousands of miles of cabling that -since privatization- you have to pay the telecom companies whatever they care to charge to use? Your taxes paid for that. Public health clincs which you’ve probably never considered exist but which provide low-cost health care to the poor so your streets aren’t clogged with corpses? Your taxes pay for that. Job-finding and Job-training programs for the disabled so that they can be productive members of society instead of eternal dependents? Your taxes pay for that. The buses you think are “horrible” but which aren’t actually that bad and which lots of working class people ride to work, and thrifty students ride to class? Your taxes pay for that.

      I could honestly go on like this all day. There are a million tiny services you use everyday without even thinking about it, services that increase the ease and simplicity of your life in ways which once would have been considered miraculous, that your federal, state, and local taxes pay for. When those taxes are cut, those services necessarily take a hit. A good example? Here in low-tax Texas a <100-yard section of the major road outside my house is being expanded by a single lane, and having a new side-walk installed. This job, which with better funding could be accomplished in a year or less, is projected to take 3 years due to funding and supply-chain stoppages. The people doing the work -contractors chosen through the typical corrupt system of connections this state uses instead of an honest public bidding process- are, due to the work being done on the cheap, generally incompotent as well, and two days ago managed to badly damage the cable line for our entire neighborhood which, of course, they didn't bother to tell our private cable service about. Complaints about the problem have yet to result in repair, and who knows when they will considering the rate-of-work on the project and the fact that to repair the line they have to get through the road-workers construction zone. A well-funded public utility service, legally required to share information, could have noticed and taken care of this problem the day it happened. If they didn't, complaints would be heard and people would be pay-docked or even fired. Instead of such efficiency and professionalism, low taxes and privatization have given us corruption, foot-dragging, and long-term inconvenience.

    4. PQS

      From Scalzi:

      http://whatever.scalzi.com/2010/09/26/tax-frenzies-and-how-to-hose-them-down/

      “I really don’t know what you do about the “taxes are theft” crowd, except possibly enter a gambling pool regarding just how long after their no-tax utopia comes true that their generally white, generally entitled, generally soft and pudgy asses are turned into thin strips of Objectivist Jerky by the sort of pitiless sociopath who is actually prepped and ready to live in the world that logically follows these people’s fondest desires. Sorry, guys. I know you all thought you were going to be one of those paying a nickel for your cigarettes in Galt Gulch. That’ll be a fine last thought for you as the starving remnants of the society of takers closes in with their flensing tools.”

    5. banger

      I don’t like the U.S. government because it is hopelessly corrupt. However your ideas are caca. What you on the right don’t understand is that other countries from France to Singapore have governments that may have problems here and there but enhance and enrich society. I will give an example here. If you allow massive numbers of children to go hungry they will not just suffer physically but their brain development will be stunted and your fellow citizens will be a cause of trouble. Now the right-wing solution is that there is no such thing as society–we are all separate with responsibility only for ourselves. I submit to you this is fantasy. We are always connected, in fact, neuroscience has proven that we are hard-wired for connection and that how others around us feel makes a big difference in our own emotional weather. This weird ideology that has taken over the right is ugly and stupid and has no basis in either reason or science.

      1. Noonan

        @banger – the governments of other countries are irrelevant. The government of the United States was not designed to enhance or enrich society. It was created with specific enumerated duties with all other powers left to the States. Government and Society are two completely different concepts, unless you are a socialist. Have there ever been “massive numbers of children” going hungry in the US, even before there was a social safety net? I don’t think so. Society can take care of the disadvantaged without government involvement.

        1. Elisabeth Spenser

          It isn’t? I thought a primary driving force behind the American Revolution was to free the American Colonies from a tyrannical government, and to provide (at least some) Colonies with representative participation in the laws governing their society? That certainly seems like an enhancement and enrichment of society– an incredible one. And (per Wikipedia), the powers of Congress (the legislative branch elected to (supposedly) represent members of our society) include “establish[ing] post offices and roads, promot[ing] progress of science by issuing patents, … combat[ing piracies and felonies, ... mak[ing] rules for the regulation of land and naval forces,…” — the last of which was to help prevent tyrannical search and seizure, I thought…. Are those things not enhancements and enrichments of society?

          1. Elisabeth Spenser

            Sorry, that should be “to provide (at least some) Colonial residents with representative participation…”

          2. Noonan

            My point is that the duties of the US govt are specific and enumerated. The govt does not have unlimited power to enhance and enrich society, although our “representatives” in Washington seem to disagree. If the people want a social welfare state like France, we will have to reduce our military spending to the level of France. This would be fine with me.

          3. Elisabeth Spenser

            I didn’t suggest that that the federal government does or should have “unlimited power to enhance or enrich society.” I was merely responding to the claim that the US government “was not designed to enhance or enrich society,” which seems inaccurate to me. Rather, it seems as though many of the specific and enumerated powers of the federal government were designed to enhance and enrich society, and continue to do so today, despite the corruption and problems large and small — all related to abuse of power by moneyed interests — that have infiltrated it for a long time.

          4. Nathanael

            Worth noting in this context: “…to *promote the general welfare*….” is one of the primary purposes of the US Constitution. Right there in the preamble.

            Also, “insure domestic tranquility”. If people are angry enough to Occupy, the government isn’t succeeding at that.

        2. Stelios Theoharidis

          I don’t know where these people get their rather absurd narratives concerning history. How did society ‘take care’ of children before the government got involved? It put them to work in sweatshops, on the streets, or in early graves. Capitalism would be happy to have a illiterate workforce of children so that it could bring the ‘jobs’ it exported overseas where regulations concerning labor conditions was nonexistent. The deregulated paradise of Rand is here on earth it is in Somalia. We can put some money together to give you a one way ticket over there and you can update us on your survival prospects.

          1. Noonan

            Nice. If I interpret the US Constituion as written, I am a Randian who wants the US to be Somalia. We should split the US in half. One half will have a truly limited govt. This half will grow food, manufacture durable goods, and produce oil and gas to the maximum extent possible. The other half will provide a social welfare state from cradle to grave and rely on alternative energy and finance to create prosperity. Everyone gets to pick where they want to live. Which half do you think would prosper?

          2. Elisabeth Spenser

            Why does it have to be so all-or-nothing? It doesn’t seem as though anyone commenting here is either suggesting, or would want, the U.S. government to “provide a social welfare state from cradle to grave” or that we should solely “rely on alternative energy and finance to create prosperity.”

          3. Massinissa

            The argument that the social democratic north would not ‘produce durable goods’ is sort of scurrilous isnt it? Obviously the social democratic half of the country would have industry as well.

            Furthermore, that we would ONLY have alternative energy is a complete straw man. We just want to lessen our dependence on fossil fuels. Have you never heard of peak oil?

          4. Nathanael

            Noonan: you obviously haven’t read the US Constitution. Try reading it.

            “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

            While you’re at it, you might read the Ninth amendment. You don’t seem to understand what the Founders were getting at. They were all for taxes. There is no “right” to not be taxed. There is an explicit constitutional grant of power to raise taxes.

        3. Massinissa

          ACtually, hunger in America is very high for an industrialized country. I am doubtful that private aid would take up the slack of food stamps at the moment. If you did not realize, the poor are getting poorer as the government continues to decay and rot, and private charity has been unable to cope with it. Im not sure the government collapsing today would cause private charity to immediately be able to take up the slack.

          America isnt the land of plenty it seems in the media. The ranks of the underfed are rising every day. The irony is many of the underfed are ‘overweight’, because the poor are largely only able to acess cheap, unhealthy food.

          Youre severely underestimating the effects of poverty in the country today since the market failure of 2008.

          Thank you for your time. Pardon any earlier snark.

      2. nonclassical

        “hopelessly corrupt”???…easily overcome by elimination of ALL campaign contribution, on the basis it is ILLEGAL to “give PROPERTY” to influence “the people’s representative government” legislation…

        Even Reagan’s budget director David Stockman recently defined “Citizens United” needs overturned-political campaigns must be PUBLICLY financed..
        simple solutions we all KNOW are necessary-NOT “hopeless”..

  5. Ev

    . . . and another thing. Comparing one thief to another and saying he doesn’t “over-steal”, because he steals less than another thief is asking the wrong question and getting the wrong answer. The worst form of slavery is to not know that you are enslaved.

    1. rkka

      Tell ya what, move to Latvia, a veritable Galt’s-Gulch-on-the-Baltic!

      Trivial taxation of capital and property, a great place to start a business!

      Pity that yearly deaths exceed births there by 1.5 to 1…

      And pity businesses there that will need a labor force in 20 years… or customers…

      We see your Randoid fantasy ideas at work there, and it isn’t pretty.

      It’s death.

    2. wunsacon

      >> The worst form of slavery is to not know that you are enslaved.

      …by plutocrats, who *market* / re-brand *their privilege* as “your freedom”.

    3. Massinissa

      I would say the same thing considering the entire system of capitalism. How about you go read some Das Kapital tonight eh? Learn how the entire system of wage labour essentially fleeces the worker at the expense of capital.

      To think that everything would be damn fine and dandy if government was 100% removed isnt seeing the entire picture and, pardon my frankness, sounds a bit naive to me.

      I mean, im assuming youre a libertarian and not an Anarchist. At least anarchists have proposed alternative ways of structuring society.

    4. Heron

      So do you consider the monthly fee you pay for your cell phone theivery? Premium cable channel subscriptions? Your credit-card bill? The money your bank makes investing your money which you’ll never see? These are all private services that you are expected to pay a repeated rate for, just like the public services you fund through taxation, the difference being that while your taxes stay a relative percentages of your income these private taxes can change to whatever rate their collectors wish at any moment.

      Now, you’ll say “but I don’t choose to use those public services like I do the private ones, and I’ve got to pay the taxes regardless” but you see you do choose; you interact with society, and that’s you choosing. By being part of society you cannot help but to use those public services. You could very easily choose not to use them, and not to pay taxes for them. Stop driving on the roads. Stop owning a house within a recognized municipality. Stop drinking water from civic sources, the quality of which is closely montiored and managed by fricking engineering and chemistry graduates everyday. Stop having your garbage picked up, and sending your kids to public school, and using electricity, and allowing fire-fighters to protect your property. If you live in a big city you probably see people who only lightly use these public services and don’t pay any taxes on them rather frequently; they’re called bums, and they’re the reality of your Galtian fantasies. It’s very easy to drop out of society and avoid paying your share for it, but that decision carries high costs of its own.

      1. vlade

        More importantly, I ask everyone saying “tax is theft” to stop asking for any law (including protection of property) enforcement.

        And since if they do not recognize any lawful property protection (which costs money), the stronger taking from the weaker is “situation normal”, and the person in question should be grateful they are still alive (since w/o law protection technically anyone can kill them on a whim).

        1. VincentP

          Way to fight the good fight Ev, but you won’t get anything but shrill recriminations for your absolutely correct view that all taxation is theft ’round these here parts. It’s kind of sad, really; these “arguments” have been so debunked so thoroughly and so many times that the folks here obviously simply cannot turn off the part of their brain that sat in a government school for over a decade and has been indoctrinated since birth to worship the state yea as if it were a God. They cannot even argue against your main point, which is that anything that is taken without the owner’s permission and against his/her will is obviously theft. Since they cannot possibly argue that taxation is NOT theft, they are left trying to justify the theft, a sad state of affairs, by loudly shouting variations on the phrase “b-b-b-but WHO will EDUCATE the ROADS!”, forgetting of course that all services provided by “the government” are easily capable of being provided by private parties. Public roads can be replaced with private roads (or trains, or helicopter taxi services, or jetpacks; who knows what the free market might provide in the absence of government coercion!), “law enforcement” (who have no obligation whatsoever to protect or serve ANYBODY) can be replaced by private security, lots of places have private or volunteer firefighters, private (or home) education of course works fine, and on and on and on. It is a complete myth that a service that the government has taken over cannot be provided by the private sector. It’s analogous of those who resisted the abolition of slavery by loudly shouting “b-b-but WHO will PICK the COTTON!” How do you explain to those people that it doesn’t MATTER who picks the damn cotton, threatening with guns and whips to do it is downright EVIL.

          And fine, people in the US aren’t “over-taxed” compared to some of the most socialist countries on the planet, but what about compared to 100 years ago? You know, before there was an income tax or a central bank or things like passports existed? Oh right, lets not talk about that.

          Finally, lets take the argument that stealing people’s money from them so that it can be spent more wiseley by the thug overseers in the State is a Very Good Thing. Why allow people any autonomy at all? Why not raise the income tax to 100% so that our benevolent dictators can wisely allocate ALL of the fruit of our labor on our behalves? They could find a place for us to work, a place for us to sleep, and they could feed us and provide us health care. What a utopia! Except, a hundred years ago, we would’ve called that SLAVERY. Hey, maybe it wasn’t such a bad deal after all! So many “free” services! People today are free-range slaves in a bigger pen, but slaves they are and slaves they will always be until they can shake off a lifetime of propaganda that tells them that it is good and right and just that they be slaves and finally see the iron shackles that bind them and keep them down.

          1. Mr. Jack M. Hoff

            So, how about you address the theft that those at the top of the economy pulled off at the expense of others? Or is your take thats its just fine to rip others off, but then once its yours, to hell with accountibility or giving any back? Fuck you libertarians.

          2. VincentP

            Absolutely! Examples:

            “Tell ya what, move to Latvia, a veritable Galt’s-Gulch-on-the-Baltic!”

            “We see your Randoid fantasy ideas at work there, and it isn’t pretty.”

            “How about you go read some Das Kapital tonight eh?”

            “they’re called bums, and they’re the reality of your Galtian fantasies.”

            Do you have any actual arguments, or would you rather avoid the debate by focusing on semantics?

          3. Massinissa

            How is asking people to read a good book a shrill decrimination? I simply dont follow.

            Wonderful book :3

          4. Charles LeSeau

            “They cannot even argue against your main point, which is that anything that is taken without the owner’s permission and against his/her will is obviously theft.”

            By what means does this owner claim to own anything? A system that legitimizes it. Guess what you need to prop up your precious property with legitimacy? A government, right now one that has appropriated for you your property in the first place via mass genocide and plunder, followed by portioning of the spoils to a privileged class, followed by sales and inheritance of all of it – sometimes to brats who think they did it all on their own and blithely disown the tragic horror behind their ownership completely. “I didn’t steal the Indians lands!” Yes, and a stolen bicycle magically becomes unstolen the moment it’s sold to someone else. “But some of them fought each other over lands!” Pure tu quoque. Seriously, no you didn’t kill any Indians, TRVTH, but have some goddamned humility for once about the tremendously cruel fortune that allowed you to set up your little sovereign state of you and only you, and acknowledge that it was a government – the same “no taxes” one you’re raising up to the heavens – that provided it, and exactly by violently stealing the property of others. THERE ARE NO JOHN GAULTS. Not one. Get it through your thick brains. You are lucky to have a system that provides you with so much property and hideously gluttonous wealth as the current one does at all.

            Also, the left doesn’t just blindly support “government,” but a type of government – just like you do, but different – and the actual left hates this current government at least as much as you do, if you can’t already tell for some reason. This catch-all (the left loves “government”) is one of the many ways in which Libertarians tend to be particularly odious in the very transparent game of distorting word semantics, particularly with high abstraction words. See: “Freedom,” and “earned” (as opposed to “acquired”), and “stealing my money” and “exploitation doesn’t exist” and “mob rule” (always accompanied by the FAKE Franklin “quote” about democracy, lambs, and wolves) and etc. You folks might get more traction if you tried to be a little more honest. Some of your ideas I agree with fundamentally, but crikey, all that horseshit.

            Briefly: Assuming that what you want from gov’t isn’t stealing or tyrannical but what someone else wants from it is both is absurd and frankly callous on its face. You want police and property and laws (your laws, of course) and that’s all – okay, great. But don’t ever assume everyone wants the same laws and that only your concept is valid. This will tend to run into problems when your sole political motive is to own the entire planet for your little club.

          5. Stelios Theoharidis

            This is a Democratic Republic that you live in, we have chosen over time through representative government to have government fulfill a variety of services that the private sector has historically been deficient in providing like social security, medicare, education, transportation, etc. We have collectively acted to have the government regulate numerous areas of activity that the market failed to accomodate for (pollution, monopolies, labor standards, etc). It is certainly not perfect and needs a substantial amount of reform but it is how this nation has evolved over time. If you had any awareness of history you would know that most of the midwest and south up until the early 1900s was a third world country until the government came in and build highways, electricity, and water projects. That is where the private sector got them. You can spout on all day about the founding fathers and the constituion and what they wanted (while they were holding slaves and denying women rights) but that is literally like asking an Egyptian why they no longer follow the rituals of the Pharoahs and sacrifice part of their year to building the Pyramids. This nation has evolved over time into its current state for better and for worse. But, if you want the private sector to educate your children, build your roadways, invest in basic research and development, police your cities, then you are going to have to get the rest of our permission through representative government. We have collectively structured this society and government over time into its current form through our consent. Or you could always vote with your feet and move to whatever Galt paradise you can potentially find on this planet. Good luck either way. Since most of the people that ascribe to your philosophy are old white, male, and on social security (ironically) the political route is unlikely. Maybe you should start looking for places to move.

          6. VincentP

            Still waiting for an actual rebuttal… you may disagree with my charactarization of the non-arguments that were posted as a reply to Ev, and that’s fine. I’ve rebutted them as well as denouncing them as shrill. You may charactarize me as being shrill as well – you may even be partially correct – but do you have any actual ARGUMENTS? Otherwise you are merely avoiding the substance of my arguments to focus exclusively on form, which is a common tactic of the sophist.

          7. VincentP

            Finally, some pseudo-arguments.

            @Stelios:

            You’re basically parroting the government propaganda that there is some kind of “social contract”, that the free market has “failed” and that “If I don’t love it, leave it”.

            1. You’ve got your history very, very wrong. Up until the 1900s, the US was not a “third world country”, it was the economic powerhouse of the world. Have you seriously never heard of the Gilded Age?

            2. That “we” all “agreed” that “we” need goons with guns to fill in for the free market is absolutely false, this is merely the lie you’ve been told your entire life. I really cannot help you with this one. History is written by the vitctors, but the true history of economics and freedom are out there for anyone with the corage to look.

            2. There is nowhere to go – you enablers and defenders of the State have literally taken over the entire world. I know, I know, Somolia right? That’s a perfectly free stateless society, why don’t I move there? Some facts on Somolia:

            https://www.youtube.com/watch?v=qtGkTRnocZI

          8. Elisabeth Spenser

            Sorry, where is the part about “‘we’ all ‘agreed’ that ‘we’ need goons with guns to fill in for the free market”? Since we’ve poured gazillions of dollars down the drain for 2 unfunded wars, hard to imagine anyone on the political spectrum being comfortable with goons with guns, whether the market were truly “free” (it’s not) or rigged (it is). And didn’t the concept of the “social contract” inform the language of the Declaration of Independence?

          9. Massinissa

            Elizabeth, I think he may not be referring to the military but to the police.

            The police certainly need reform (less descriminating against black folks, for starters…), but I like having a police force, just saying…

            I dont want to live in a world where I need to have a closet full of rifles to protect myself and my property from brigands and gangsters.

            And as an anti-imperialist non-interventionist, I would like to taxe an budgetary axe to the military and shrink it considerably, if thats what you mean by armed goons, Vincent. And I assume most of the leftests (Im not an MMT-er myself, more of a democratic socialist) would agree with that at least in part.

          10. VincentP

            “By what means does this owner claim to own anything? A system that legitimizes it. Guess what you need to prop up your precious property with legitimacy? A government”

            Wrong! Ownership can be claimed by anyone who has created something from a state of nature (for example, planting and harvesting crops, milling dead trees into boards, etc.) or anyone who has exchanged goods or services voluntarily for other goods. No “authority” is necessary to “legitimize” anything. Do you really not steal from your friends/family because there is some “system that legitimizes” their property? Is that the only thing that keeps you out of your Mother’s jewelry box? Remind me not to invite you over for a barbecue…

            “Some nonsense about bicycles and indians”

            Everything I own, I obtained through voluntarily transactions, not by pointing guns at people or murdering them. As far as I know, all of the goods I have received were obtained the same way, not through violence. Can the same be said of anyone who works for the state and receives stolen monies as compensation?

            “THERE ARE NO JOHN GAULTS. Not one. Get it through your thick brains. You are lucky to have a system that provides you with so much property and hideously gluttonous wealth as the current one does at all.”

            Ad-hominem aside, I am lucky to have this system, but the system you describe has nothing to do with the government and everything to do with voluntary transactions. Check this essay out for a great example:

            http://www.econlib.org/library/Essays/rdPncl1.html

            “Also, the left doesn’t just blindly support “government,” but a type of government – just like you do, but different – and the actual left hates this current government at least as much as you do (ad hominem)”

            First off, I don’t support any type of government, as governments by definition exist via the use of force (otherwise they’d be called “charities”). Second, the left hates our current government but supports their fantasy ideal of what govenrment could/should be, just like how Catholics denounce all the child rape that seems to be institutionalized but they’re all ra-ra about the whole God thing. What you’re describing is religion, belief in an ideal that cannot and does not actually exist in the real world.

            “Briefly: Assuming that what you want from gov’t isn’t stealing or tyrannical but what someone else wants from it is both is absurd and frankly callous on its face. You want police and property and laws (your laws, of course) and that’s all – okay, great. But don’t ever assume everyone wants the same laws and that only your concept is valid. This will tend to run into problems when your sole political motive is to own the entire planet for your little club.”

            I never said any of that stuff. You are projecting. Personally, I am a voluntaryist, which means that I view all uses of force outside the realm of personal self-defense as illegitimate. I don’t want “police” (uniformed thugs) or “laws” (opinions with guns), and property exists whether you choose to acknowledge it or not.

          11. VincentP

            @Massinissa

            I don’t really see a distinction between “police” and “military” – they are all thugs who work for the state, wear costumes, and carry guns which they use to go around threatening people to comply with their arbitrary rules, to kidnap people and lock them in cages, and to murder people.

            You want the police to protect you? Wise up. The police do not care about you, they cannot protect you, and they have no obligation to do so. They are paid for with money stolen from YOU, and they lock up more people in this country than any place else in the world for victimless “crimes”. These people are NOT your friends.

            If you are not inclined to defend yourself – perfectly reasonable, as violence is terrible wherever it occurs – in a world where you weren’t being fleeced for 25% – 75% of your income, why not hire a private security firm to protect your property? Seems to be working fairly well in Detroit:

            http://www.time.com/time/magazine/article/0,9171,1931750,00.html

            You can also get property insurance, which will compensate (with double or treble damages if you’re willing to pay for it) if you are stolen from. Who can protect you from the theft of the State?

          12. Nathanael

            Vincent: you’re an idiot, and here’s why. You hire private security? Ha! Who will protect you from the much larger and more powerful mercenary firm of Blackwater/Xe/Academi, perhaps hired by ExxonMobil? You have no hope against them.

            The only protection is in a *community*. A community militia / police force can defeat outside mercenaries.

            And this is why serious anarchists are socialists.

          13. Nathanael

            Oh, and Vincent, please research how property insurers work when there is no government department of insurance regulation.

            In short, they take your premiums, and then when you make a claim, they’re nowhere to be found. It was a common problem in 19th century America.

            All your “solutions” rely on the presence of a government and you don’t even realize it.

          14. Nathanael

            “Ownership can be claimed by anyone who has created something from a state of nature (for example, planting and harvesting crops, milling dead trees into boards, etc.)…”

            Thief! What if I wanted to use those dead trees for something else… perhaps bird habitat, for breeding birds who I then harvest eggs from? You have no more right to the products of nature than I do. “I grabbed it first” is the claim of a thief.

            Nature is the common inheritance of all of us JOINTLY, and decisions about how to allocate it must, in all fairness, be made JOINTLY. Which means we have to organize governments.

            Vincent, you have not thought through your philosophy, and I’m giving you some pointers. Your views are shallow, but if you listen to us you could develop deeper views.

            None of this means we should support corrupt, undemocratic, and non-responsive governments. But the idea that you can do without government entirely is asinine.

          15. Nathanael

            So, Vincent, I’ve been more polite than you really deserved.

            Perhaps now you understand why people are dismissing your sophomoric arguments with one-liners, however. Most of us moved past those arguments long, LONG ago.

            If you’d like to develop a coherent, sensible philosophy of government, please do your homework. There are decent minarchist socialist philosophies of government, and you may eventually arrive at one if you do your research.

          16. VincentP

            @Nathanael

            I didn’t read past your first sentence, where you called me an idiot – ok I did out of curiousity and to challenge my confirmation bias, but I won’t be responding directly to your points until you apologize to me for the completely unnecessary ad-hominem. Suffice it to say that your condescending, ill-informed claims about how insurance can’t work and how Wal-Mart will hire thugs to kick in my door and force me to purchase sub-par Chinese merchandise is nonsensical. Your understanding of history is completely off-base (I notice you didn’t provide any references) and riddled with obvious government propaganda that is routinely dessimenated to the masses. Clean up your interpersonal skills, apologize for insulting me, provide some references, and I’d be happy to have a conversation with you. Finally, briefly, I’ll provide YOU with a source that will describe in detail how a stateless society could work, though unlike me who did you the courtesy of reading your treatise despite your rude and unnecessary behavior, I doubt you’ll read it. People don’t really want to seek the truth; they merely want to reinforce their preconceived notions.

            Here’s the link:

            http://www.fdrurl.com/PAPDF

            Good luck to you, friend. The way you treat strangers on the internet whose ideas you disagree with, you’re going to need it.

          17. nonclassical

            “V.P.” (says it all)…

            and to you libertarian sir, I say SHOW us anyTIME-anyWHERE in history where the oblique ideological fantasy you stand for EVER existed?

            Perhaps you should actually READ historical documentation-comprehend Wall $treet destruction of economies throughout history:

            “Wall $treet-A History”:

            http://www.amazon.com/Wall-Street-Charles-R-Geisst/dp/0195396219/ref=sr_1_1?s=books&ie=UTF8&qid=1365720146&sr=1-1&keywords=wall+street-a+history

            “Wall Street is an unending source of legend–and nightmares. It is a universal symbol of both the highest aspirations of economic prosperity and the basest impulses of greed and deception. Charles R. Geisst’s Wall Street is at once a chronicle of the street itself–from the days when the wall was merely a defensive barricade built by Peter Stuyvesant–and an engaging economic history of the United States, a tale of profits and losses, enterprising spirits, and key figures that transformed America into the most powerful economy in the world. The book traces many themes, like the move of industry and business westward in the early 19th century, the rise of the great Robber Barons, and the growth of industry from the securities market’s innovative financing of railroads, major steel companies, and Bell’s and Edison’s technical innovations. And because “The Street” has always been a breeding ground for outlandish characters with brazen nerve, no history of the stock market would be complete without a look at the conniving of ruthless wheeler-dealers and lesser known but influential rogues.

            This updated edition covers the historic, almost apocalyptic events of the 2008 financial crisis and the overarching policy changes of the Obama administration. As Wall Street and America have changed irrevocably after the crisis, Charles R. Geisst offers the definitive chronicle of the relationship between the two, and the challenges and successes it has fostered that have shaped our history.”
            ………………..

            of course you sir, couldn’t even define you are evaluating “economics”…

          18. Nathanael

            “I won’t be responding directly to your points until you apologize to me for the completely unnecessary ad-hominem.”

            Unnecessary? In the rest of the paragraph, you prove that you ARE an idiot. You can’t answer any of my points — which are, of course, all correct, and can be proven by historical research — so you resort to being offended.

            Classic.

            Now, I know insulting someone means they’re even less likely to listen. But I’m not writing this for you — you’re hopeless, and really extremely badly trapped in a ludicrous economic cult. I’m writing it for the peanut gallery. They’ll get it.

          19. Nathanael

            Also, Vincent, I don’t listen to audiobooks. Waste of time, since I know how to read. Which is much faster. I’ve gone through a dozen practical anarchist theories, and even witnessed a few attempts to live that way.

            None of them have quite worked, but the ones which come close are fundamentally socialist.

          20. Nathanael

            You really are confused, too — you don’t understand why ExxonMobil would send thugs to overwhelm your private security? It has nothing to do with Wal-Mart, which I didn’t mention.

            Have you been following oil sands politics and fracking politics at all? You should. There’s big money in poisoning people’s water in order to extract oil. You’re not going to stop that with anything smaller than a community militia, at which point you have a government, Mr. P.

          21. Charles LeSeau

            “Some nonsense about “creating something from a state of nature” = legitimacy in owning the land it came from”

            Bull. You or someone equally obtuse just made that up. I see no causal or necessary connection whatsoever to how planting a plant means you now own the ground underneath it all to yourself, mine forever, legit for realz, if any of you touches this or the lands from here to the ocean you are stealing from me. And what about unused land? Clearly we can own that, and never intend to use it to produce?

            “Some nonsense about me stealing from my mother and barbeques.”

            Okay, if we’re going to be ridiculous: If you found yourself stranded on an island the size of a couple soccer fields with 10 other people, starting from scratch, who owns what? Maybe you get busy planting things and thus claiming the land forevermore by the true natural right of “creating something from a state of nature.” That tree is mine! I just now nonviolently plucked this coconut from it! What if 3 disagree with your arrangement and get down to picking fruits from every tree, not producing, and sleeping wherever they want? Kill them or lock them away with your new mercenary police force? Banish them to the sea? Or do you own that too because you were the first to catch a fish and sell it to someone?

            So yeah, great. Ho hum. We’ll have central African warlords and private mercenary armies instead of official bureaucracies, and people can own stuff exclusively by planting things and chopping trees and claiming they do.

            “Everything I own, I obtained through voluntarily transactions, not by pointing guns at people or murdering them.”

            I see. And all I asked for was a bit of humility and honesty about it, but no. Too easy. You claim ownership comes from creation and nonviolence, but oh how often it originates with destruction instead, my point with the utter triviality of the American Indian genocide or any other landgrabbing war that then installs friendly trade among the victors for the spoils, who then act as if their lot in life had nothing to do with it because they don’t philosophically condone it. Kind of like you’re doing here. In your world, if Dave kills Henry and sells the watch to Joe and Joe in turn sells it to Bill, the watch is now legit and so are the profits! But you’ll just ignore that and call it nonsense, because you have no valid argument.

            I don’t deny private property validity or the need for privacy or a market of some sort, by the way. I would despise a world with no privacy. But I do believe in ceilings to acquisition (Socialist!) on this tiny rotating waterball and I very much acknowledge inherent unfairness of any social structure, of which property claiming based on trade is but one. You are wrong.

      2. Nathanael

        “So do you consider the monthly fee you pay for your cell phone theivery?”

        That absolutely is thievery in places with no competition in cellphones. Remember, cell towers require government licenses. Why is my government allowing them to extract cash from us for the profits of their CEO?

  6. Bill Smith

    Who says infrastructure is crumbling? Engineers who want full employment? Why should they be believed any more than any other interest group?

    1. ambrit

      Dear Bill;
      My irony detector must be at low power this early in the morning.
      “Who says infrastructure is crumbling?” I do! Just drive around any of the small to medium sized towns in America and count the times you bounce on in and out of a pothole in an hour!

    2. lolcar

      Potholes, leaking pipes, gridlock – all inventions of the corrupt engineering-industrial complex and unquantifiable by any objective standard.

      1. Malmo

        Infrastructure is in a constant state of repair. Ever try driving during our 8 month road construction season? Our problem is that we have too damn much happy motoring infrastructure to maintain, leading to as JH Kunstler says, to the geography of nowhere.

        1. William C

          I am a European, made a big road trip in the US in 1977 was very impressed by the quality of the roads etc. Made another big road trip in 2009, got the impression very little maintenance had been done in the intervening 32 years with the inevitable consequences.

    3. Bill Smith

      Imposter! I am Bill Smith. I had it first.

      Besides, what’s wrong with employing engineers anyway? The ones from China and India are cheap, and soon those will be the only engineers with job experience!

      1. AbyNormal

        lawd, i was afraid this would happen.
        time for me to go drink a lunch…hope yall get it figured out.

    4. Maude

      You mean the water lines that were installed over 75 years ago that bust and close roads in my semi-large city at least once a month? Those Engineers sure put one over on us with their planned obsolesence…

  7. oblomovIII

    To those who hate all forms of taxation, build your own roads, your own streetlights, man the border yourself, arrest that drug dealer yourself, build your own playpark, meeting places, educate all your kids. And keep a job. Don’t have enough time? Seriously, stop it with your childishness.

    Did your income not depend on these state provided necessities? Did you ever use a highway? GPS? Educated people? – Then YOU owe something to pay for it all from that income.

    (Not intending to say ANY govt uses all it’s tax income well, but generally speaking).

    1. banger

      You are, of course, correct in what you say; however, our situation involves two major issues: 1) our governments, particularly at the federal level (the level I’m familiar with), are deeply and, in my view, hopelessly corrupt; 2) the American people do not like the American people–there is too much division in the country both culturally and ideologically to maintain coherent policies as should be pretty obvious.

      1. alex

        “there is too much division in the country both culturally and ideologically to maintain coherent policies”

        Good point. Maybe the country is just too big. Let’s split it, say into North and South.

        1. Nathanael

          There was a lot to be said for getting rid of the Confederacy.

          Unfortunately, the Confederacy insisted on violently attacking US military forts, which is a no-no when seceding. (For the correct way to secede, look at Norway’s secession from Finland). Then the Confederacy moved on to attempting to invade Pennslyvania.

          So the US kind of had to conquer it. Should have executed all the rebels, though, would have saved no end of trouble.

    2. VincentP

      “To those who hate all forms of taxation”

      It would be more accurate to say that we hate all forms of theft, and all taxation is a form of theft, because it is accomplished by threatening imprisonment (or death if one resists being imprisoned) and against the wishes of the “taxpayer” (theft victim).

      “build your own roads”

      Why do I have to build them myself? Why can I not pay someone else to build them for me, or pay someone who has already built them a toll to use them, or use some other form of transportation?

      “your own streetlights”

      Only government can build lights now? Now we’re really getting quasi-religious…

      “man the border yourself”

      What are these “borders” of which you speak? They look like arbitrary lines drawn on a map to me, whose only purpose is to keep the livestock in their pens…

      “arrest that drug dealer yourself”

      Why would I have any issue with adults freely trading goods and services? What business is it of mine what people put into their bodies?

      “build your own playpark, meeting places”

      You can’t be serious about these, can you? TONS of private parks and offices out there that work just fine!

      “educate all your kids”

      Happily! This is how it’s naturally been done for generations, until the government got into the forced schooling business about a hundred years ago. Why would I send my flesh and blood to be indoctrinated for twelve years by government bureaucrats?

      “And keep a job. Don’t have enough time?”

      Well I would have plenty of time for all that and more if I hadn’t had hundreds of thousands of dollars stolen from me over the last decade to pay for your precious roads and bureaucrats and thugs in costumes (“cops”, “soldiers”).

      “Seriously, stop it with your childishness.”

      The ad-hominem attack – the last refuge of those bereft of actual, logical, rational arguments.

      continued…

      1. Massinissa

        Because paying someone every single goddamn time you want to use a road would be sooooo cheap right?

        If every single road was a toll road, alot of roads would be virtual monopolies due to lack of good alternatives, allowing the owners of said important roads to have unnecessarily high rates.

        Its much cheaper to just pay taxes than to be gouged like that.

        1. VincentP

          Do the research friend, you are simply stating your opinion as fact. The reality is quite the opposite – private roads exist, and have existed, for a long time, and the cost of their construction and maintenance is much more efficient than “public” roads, since the price mechanism can be used to allocate resources. Here are a few non-threatening links for you to get started:

          https://en.wikipedia.org/wiki/Private_road
          https://en.wikipedia.org/wiki/Free-market_roads

          Can you admit that you just might be wrong on this one? If so, can you acknowledge that you may be wrong about all the rest? Even to yourself?

          “I am the wisest man alive, for I know one thing, and that is that I know nothing.” –Socrates

          1. Massinissa

            Yes, they do exist, buddy. But im saying it wouldnt work if ALL roads were private. Private roads today usually have free public competition, so I can spend 5 more minutes or whatever going to another road.

          2. VincentP

            I mean, you’re just making stuff up at this point right? More opinion as fact? Did you take my advice and consider, for even a nanosecond, that you might be wrong about the necessity of government vis a vis roads? Here’s a reference (I could find many more) to back up my position, care to provide one that backs up yours?

            https://www.youtube.com/watch?v=bvFWQYiR-DM

          1. Nathanael

            You mean roads on land stolen from private landowners, surely?
            :-)

            Ever tried to assemble a long right-of-way without the power of eminent domain? It’s essentially impossible. In the 19th century, the US government actually gave private railroads the power of eminent domain because the problem of assembling right-of-way through private purchases was completely intractable.

    3. VincentP

      “Did your income not depend on these state provided necessities? Did you ever use a highway? GPS? Educated people? – Then YOU owe something to pay for it all from that income.”

      That’s like telling a slave, “Did your income not depend on these slaveowner-provided necessities? Did you ever use a horse and plow? Farming tools? Educated masters to instruct you? Then YOU owe something to pay for it from all that imcome.” Of course, the slave had the rest of his “income” absconded to pay for the rest of the “necessities” – shelter, food, healthcare, etc. Should I be grateful that I am allowed to keep ~50% of my income? Please.

      “(Not intending to say ANY govt uses all it’s tax income well, but generally speaking).”

      So in the end, you backpedal on everything you said by acknowledging the inherrent corruption and misallocation of resources that is inherrent to government. The system doesn’t work, of course, as you point out. The problem is that threatening people and taking their money draws those who enjoy using and abusing power over others like a moth to a flame. Indoctrinated, deluded pro-government indoctrinees advocate the violence of the State to solve problems, and then are mystified when those who are attracted to the use of violence inevitebly wind up in positions of power in the State. You cannot separate corruption from the state, because corruption goes hand in hand with coiercion.

  8. lolcar

    As I understand it the federal government collects around 19% 2\3 of the American federal budget consists of transfer payments – interest, social security, medicare and the like. 2/3 of the remainder is devoted to the military in one form or another. Doesn’t leave much to actually provide services. No wonder Americans feel over-taxed. Despite having tax burdens only slightly higher, government in Korea and Australia does a hell of a lot more I think.

  9. yojimbo

    Corporate and personal tax revenue used to be roughly equal. I believe corporate tax is less than than 1/3 now, while profits as a % of GDP are at an all time high and labors share is at an all time low. WTF!? Sympton of corporatocracy?
    The data page for the Bloomberg Description show an effective tax rate (accuracy?) for every company. Most are between 5-15% despite a 35% statutory rate.
    Corps should be forced to pay based on GAAP and what they report to shareholders, at a globally competitive rate (15-25%).
    Americans are very ignorant of VAT and confuse it with a Final Sales Tax. Yes it it can be regressive but through the use of credits this can be solved. This is most sure fire way to make corps pay up and it is almost impossible to cheat. The data collected also makes it easier to find other forms of cheating. It is also the only way to properly tax imports. Reagan killed the VAT because it made it “too easy to collect taxes”.

    1. banger

      About VAT, anything foreign can be demonized in this country because most Americans pride themselves on militant ignorance even in “progressive” circles. For example, whenever progressives get into discussions on health-care they think that there are two systems in the world–the American system and single-payer. In fact, as people who read this blog know, there are a myriad of systems out there most of which are a mixture of public and private entities–but they have one thing in common: they are based on reason at least mainly.

    2. Bill Smith

      Latest numbers I’ve seen is corp income tax is down to 20% of Federal tax revenue, the other 80% being almost all personal income tax. (they do collect some fees, but not much)

  10. Malmo

    I’m middle class. I pay a much higher percentage in taxes–state, local, federal– than the chart indicates. Back of the napkin calculation is somehwere in the area of 38%, much of which is regressive. And, btw, I haven’t been trained to resent anything tax rate wise. Any resentment, where it exists at all, is purely rational on my part.

    1. Massinissa

      Youre missing the meaning of the chart. The chart isnt implying the middle class isnt taxed enough: Its that the revenue we generate is really low compared to other countries.

      Namely, corporations and the top few percentiles are getting away damn scotfree and not contributing to society the way they either should, or have been in the past.

      I mean, for gods sake, alot of corporations like General Electric are 100% tax exempt for some shit reason.

      1. Malmo

        No. It’s a sweeping generalization to claim, “Americans have been trained to resent taxes”. But if I were to pen a sweeping generalization it would read, “Americans are right to resent one of the most regressive tax systems in the developed world”

    2. jrs

      Yea so it’s slightly above 25% just what comes off of income alone, which might make the chart look about right. But then there’s sales taxes, car taxes, taxes on utility bills (half of the phone bill is taxes!), gas taxes, property taxes if I owned property. To pay for a place I can’t be assured I won’t eat catfood in my old age, where you have to buy in super expensive neighborhoods just to get your children into a decent school, and where public colleges are so overcrowded as to be almost hopeless (where paying much more for a private education is fairly rational). But I’m supposed to be getting a good deal I guess ..

  11. Moneta

    It’s hard to have a good government when there are so many leaders trying to prove that government does not work because it’s easier to make a mess than to clean it up.

    Then, you’ve got a population that wants its safety net but does not want to pay taxes because it has a syncope when it hears the word socialism. Therefore, a large percentage of social policies seem to go through the back door or into the corporate sector’s pocket.

    I don’t understand why health care should go through the employer… that is the last person on earth with whom I would like to share my health issues. It’s like the farmer marking his cattle.

    The American’s hatred of socialism is its Achilles heel. It is profound and probably explains why corporate America wields so much power. Everything is done to maintain the artifice of capitalism, even if pure capitalism is utopia.

    The government is implicated in the economy and controls a good chunk of the capital, therefore the US is a mix of socialism and capitalism. The American population needs to get over it.

    If you want a social net but don’t want to pay, somebody might provide it but it might just be the piper.

    1. banger

      The hatred of socialism here stems from two basic sources: 1) we have a tradition of feeling contempt for foreign ideas and ideologies–America, for a long time was a kind of worker’s paradise compared to the rest of the world for most of its history so why make a change; and 2) Americans do not like other Americans–we have deep cultural and ethnic differences and most Americans just do not feel connected to the country as a whole and are encouraged by PR and advertising to live selfishly, i.e., greed is good, selfishness is moral, self-indulgence is the ultimate meaning of life and that is true for all groups including “Christians.”

      1. Dan Kervick

        … and even many “progressives” in America seem to respond to challenges by retreating into individualist and localist approaches.

        1. Nathanael

          Localist is very different from individualist.

          Basically, the localist idea is:
          (1) you can’t build a good, large organization from rotten parts;
          (2) our local governments are actually, often, NOT rotten;
          (3) where they are, they should be our first target for reform, as we are likely to make more progress than attempting to fix things nationally;
          (4) and if enough of us do this in enough localities, we can start building a larger community once the individual communities cohere.

          It’s a theory I find attractive. I’m unsure whether it’s really the best approach.

          The individualist responses, by contrast, are nuts. You get nowhere without a community, which is to say a government. And I say this as someone who doesn’t really like being sociable. Yet it is true.

      2. alex

        “we have deep cultural and ethnic differences and most Americans just do not feel connected to the country as a whole”

        Is there any country bigger than a postage stamp where everybody feels like one big happy family? In the US we joke about secession, but it was talked about seriously in Quebec in the 1970′s, and is mentioned seriously in Spain (Catalonia?) today. Scotland is going to take a vote on independence. Yet all those countries have better social services than the US.

        As for not feeling connected, almost everybody identifies with being an American. I’m from the NY area (Long Island) and am used to jokes, maybe mixed with a trace of actual animosity, when I travel in some parts of the US, especially rural areas. When I traveled a few months after 9/11 it almost felt weird. When people found out where I was from they practically saluted me. Then I realized, for all my Alabama jokes, for example, I would have felt exactly the same way if the terrorists had hit Birmingham or Selma.

        It really depends on what buttons you press. Mention “those people” (whose implied definition depends on the situation) and you’ll get divisiveness. Mention America and Americans and almost everybody, including me, will say “yeah, that’s us”. And you don’t have to wrap yourself in the flag.

        In short, I think the whole “too divided” thing is a poor excuse, and the real problem is how the presentation and the politics are played.

    2. Gerard Pierce

      The health care issue goes back to FDR’s time. One of the wartime regulations prevented unions from bargaining for higher wages. (The unions has a lot of power at the time.)

      There was no restriction that prevented bargaining for medical and othe benefits.

  12. Malmo

    It’s also simplistic and innacurate to claim that public education is falling apart due to lack of funding. It’s falling apart in large measure because it’s not moved much from the factory model roots it was desinged from. As John Taylor Gatto has intoned it’s an 8 hour a day, mind colonizing, jail sentence.

      1. Nathanael

        Naw, it’s falling apart because there’s a rather powerful group of people who want to break public education.

        And there’s no countervailing lobby with any power.

        The problem is that the elite don’t want educated people. Educated people can see through the propaganda. Much better to have obedient drones.

        The mistake the elite are making is that you can’t make people into obedient drones just by oppressing them. (Instead, you make them into sneaky break-the-law-and-don’t-get-caught types, and then society starts collapsing. As is happening.)

        1. Nathanael

          The thing is that it’s not actually that hard to make a society of obedient drones, but it requires providing people with a fairly high standard of living for free. In other words, a welfare state. People get uppity if they’re hungry.

          1. Malmo

            “Naw, it’s falling apart because there’s a rather powerful group of people who want to break public education.”

            Yeah, concern parents.

          2. Nathanael

            Eh, I’d say a lot of parents are included in the list of people who want to break public education.

            Perhaps top on the list are money-making educationist careerists, the sort of people who waltz into a school as principal, with little or no teaching experience, but with an agenda of turning everything upside down, putting a mark on their resume, and moving on.

  13. Marty Heyman

    Actually, this is an incomplete analysis. Taxes in most countries also include national healthcare. To get an apples to apples comparison, you have to add back to our taxes the 17% of GDP that goes to Healthcare. While you are at it, remember that many of those higher tax countries also have free higher education available as well.

    1. Ricardo

      That’s not apples to apples. What the taxes are used for is immaterial when discussing a tax burden. You aren’t being taxed for your health care so you can’t use it to fulfill your Randian need to be put upon by the gov’t.

      Why not throw in the cost of housing and entertainment, anything to support your worldview?

  14. Capo Regime

    Simple–U.S. taxes are in fact high for what you get in so called “services”. Note spain. I have lived in both U.S. and Spain and what did my taxes get me in Spain–virtually free university for my daughter, very low cost health insurance and health care, lots of public space and low crime and really good transit. What do I get in the U.S.? A whole lot less.

    A couple of years in Australia (and contributing to Super) were an eye opener as well.

    Big miss in the comparisions is that most places do not have subnational income taxes and other junk fees like the U.S. some do. Also, much of what is covered in social security is in the taxes of other palces so the somparisons are often off.

    So sure taxes (federal) may be lower than other places but you get so little that in fact taxes in the U.S. are quite high.

    1. banger

      Part of the reason you get less is that the U.S. government may be the most corrupt government in the developed world. A good example, to name just one issue, the feds spend 9% of GDP on health care already and few people are covered–that’s almost as much as Canadians spend for their single-payer system? How does this happen?

      The right is right in the sense that most government programs are, in fact, “giveaways” but not to the poor but to the power-elite that, through corruption and thievery, syphon off ever-increasing amounts from the government and, worse, the government knows this. You can also look at Defense, the capo di tutti capi for corruption in Washington I will not even begin to get into that one.

      BTW, I say this as a former government consultant who has seen the underwear and more.

      1. Mr. Jack M. Hoff

        Banger said;
        “The right is right in the sense that most government programs are, in fact, “giveaways” but not to the poor but to the power-elite that, through corruption and thievery, syphon off ever-increasing amounts from the government and, worse, the government knows this.”
        Thats absolutely correct. Follow the money always. Who do you suppose is all for the free cell phones for the poor? Why ATT, Sprint, Verizon, all get a check for them every month. They don’t really care who issues it. Who is for renovating the poor’s houses? All the contractors who stay busy that way as there’s nothin going on otherwise. Again, who pays the bill doesn’t matter, its that it gets paid. Why is health care so wildly expensive? Simply because our gov’t guarantees payment for a large part of the population. That includes all public employees with health plans, as well as those below certain income levels. When an industry is guaranteed payment they will charge whatever they can possibly get away with. Same goes for higher education.
        So yes, there’s truth from all corners in this debate. Its a mix of socialism and capitalism in this country. The main trouble with that, is that those at the top end of income feel they shouldnt pay any more than or even less than those towards the lower end of those who actually pay in. Thats why they push so hard for regressive taxation like sales and property taxes. Then to top it off, the top earners want total taxpayer backup against any losses in anything. Think about their investments, which is where their money goes. Without the fraud and props like the TARP program, they would have lost a huge chunk of their investments. The top end love socialism when it comes to potential losses, but hate it passionately when it comes to taxation. Those who effectively pay no taxes either don’t care, or are all for it. Those caught in the middle, rather through property ownership, or being labor, would generally like to see something for the taxes they do pay. The trouble is, thats pitifully little for them, but lots for the top and bottom.

        1. Nathanael

          EXCELLENT summary:

          “Its a mix of socialism and capitalism in this country. The main trouble with that, is that those at the top end of income feel they shouldnt pay any more than or even less than those towards the lower end of those who actually pay in. Thats why they push so hard for regressive taxation like sales and property taxes. Then to top it off, the top earners want total taxpayer backup against any losses in anything.”

          1. Nathanael

            Don’t call them “top earners”. “Top thieves” would be more accurate.

            Pretty much nobody “earns” a million dollars a year, and certainly not the CEOs who are raking in 10 million or 100 million. You only get that much if you’re writing your own salary, i.e. stealing from the corporate treasury.

    2. Yves Smith Post author

      Capo,

      Can you not READ???

      The post clearly states that this is a comparison of ALL taxes, Federal, state and local. It’s apples to apples in that respect.

  15. banger

    Yes, but this has been known for generations. Americans think they are overtaxed and respond to appeals to cut taxes because they don’t believe they get a benefit from the state. Most Americans, at least those living in between the coasts, are pretty adamant that the do not want their tax dollars to go to the poor or immigrants–that’s the chief complaint I hear from people. Lazy people of all races are content to live off of their tax money.

    This is because we are a country of very separate and semi-hostile sub-cultures. The whole “personal responsibility” is really about the fact most Americans (in my view) do not see their fellow Americans as kin whereas the Danes and the Swedes feel they are a real people despite different tastes and minorities who have managed to integrate into Scandinavian culture with some friction to be sure.

    There is no likelihood at all that Americans will move towards the progressive domestic policies of FDR through Nixon. Americans really don’t like other Americans very much.

    1. Elisabeth Spenser

      “Americans really don’t like other Americans very much”: the sad but true result of long and misguided devotion to the myths of “the rugged individualist” and “every man for himself.” Which are weird concepts, really, when we consider the crucial cooperation, collaboration, and intra- and inter-community support of the barn-raising era.

      http://en.wikipedia.org/wiki/Barn_raising

    2. Nathanael

      Please note the bait-and-switch. Politicans (mostly Republican) run by claiming that they will “cut taxes”. Poor people, angry at high sales taxes, vote for these Republicans.

      The Republicans repeal the estate tax for the obscenely rich, cut the income tax for CEOs, cut the capital gains and dividend taxes. They then cut state aid, and the states respond by raising sales tax.

      The poor fools say “Why are my taxes still so high?” The Republican runs claiming that he will cut taxes more — rinse and repeat.

  16. Capo Regime

    Also, by propogating the idea that Americans are not overtaxed by using incomplete comparisons only gives those in government more credibility. Also, just yesterday Yves pointed out that unlike other nations the U.S. uses hedonics to adjust GDP and that U.S. GDP may well be signficantly overstated….i.e. taxes are actual data and gdp is overstated so if gdp is recorded in the same fashion as other countries then taxes in the u.s. are a lot higher as a portion of GDP. Not withstanding less and lower quality services compared to other oecd countries.

    Nope, in reality americans are severely overtaxed, good lack pushing that on people. I also wonder if other countries have such aggressive tax collecting regimes and people in jail for non payment or evasion of taxes.

  17. Paul W

    Are foreigners less hostile when it comes to being taxed? I would say yes. In Canada we’ve always had a Quisling minority of American wannabes who hate taxes and government. That minority is growing as government services decline – health care being the biggie. I’ve also traveled a bit in Europe and spent much time in Ireland yet I’ve never heard complaints about taxation. The assumption one is tempted to make is that foreigners are simply more mature and understand that you can’t get something for nothing therefore taxation is necessary.

    Now what happens if it all falls apart? People don’t mind paying taxes if they see something in return, however if returns vanish drastically(we know our elites will use any excuse to target the social safety net) views against taxation and big government will grow. We could easily fall into a vicious circle of greater social cuts leading to greater resentment which then creates the atmosphere for even more social cuts.

    Is social democracy with its big governments and extensive taxation sustainable? Every country in the West has attracted the worst elements of society who have corrupted the system. Apathy/ignorance of the general populace have allowed this corruption to happen. Can we not make the case that the entire system is at fault? That social democracy is something that only works well in theory?

    Perhaps we just have to ride the cycles and enjoy the period before the corruption rots everything. Then after, we start again and hope the period of social welfare lasts longer next time. But is there a second chance after everything falls apart? The Roman Republic never got a second chance.

    Seeing there will be no violent revolution to throw our rulers out, I guess we just have to be mature about things and accept that life isn’t perfect. As westerners, outside America, accept taxation as a necessary evil, we now all have to accept this is the end game and social democracy is done for good. If next to no citizens of the West are willing to fight to save it then it is only natural it should be finished.

  18. Capo Regime

    Missing from the chart is of course incidence. Ilke an other poster I don;t think I n U.S. ever paid less than 38% to 40% including SS and state, medicaide (forgetting property tax etc). Of course If I were an investment banker and earned via capital gains then I would be paying zilch.

    I paid 29% in Australia and about 27 in spain on abotu same income than that which I paid 40%

    Incidence is key–the GDP percentage chart is too crude and innaccurate. Rates paid by income groups would should that say americans earning around median pya a lot more than their counterparts in Austalia or EU. American high earners would be shown to be paying a lot, lot less than their counterparts.

    The chart and the so called analysis is incomplete and misleading.

    1. Yves Smith Post author

      Capo,

      I don’t know who did your taxes in Oz and here. As a small business person, I gotta tell you Oz was brutal. The compliance requirements were insane (actual receipts for everything, no exemption for under $75 or some similar notion like here, plus forget about using your credit card payments. After all, that newstand purchase you said was a business magazine might be porn!). And you had GST, aiee! Being self employed in the US allows you to shield a lot of income (of course you DO have to generate it all yourself, no small task) and that was not the case in Oz.

  19. Rodger Malcolm Mitchell

    Americans are overtaxed because for a Monetarily Sovereign government, taxes are unnecessary. Monetarily Sovereign governments neither need nor use taxes to pay their bills. They simply create their sovereign currency, ad hoc.

    So every penny of federal tax (including the worst tax in American history, FICA) is unnecessary.

    By contrast, euro nations, being monetarily non-sovereign, need to tax.

    1. Mr. Jack M. Hoff

      That is so utterly insane. Money for nothing and your sex for free, huh? If this govt or any were truly able to print at will, what do you suppose they’d be paying for services, to their direct employees and the private enterprises they dealt with? As rampant as corruption is, do you honestly think itd trickle down to you? In a short while, the connected would own all the properties, farmland, and anything of value. The rest would truly be slaves. Id bet that even if you think you’re connected Rodger, you’d find out that you really aren’t.

    2. Nathanael

      The purpose of taxes is, in part, to prevent the rich from buying the government. That is actually very important. It is not currently being done and the rich have bought the government.

  20. John Ware

    Depending on which special interest group, PAC or whatever you listen to or read, an average of 55% PER TAX DOLLAR IS WASTED ON FRAUD, BUREAUCRATIC RED TAPE OR JUST PLAIN INEFFICIENCY. I get weary of stories that talk about amount of taxes collected, but who don’t talk about what that tax money is used for or how it’s handled. Needless wars, govt inefficency and fraud, and “repriortization” of funds to unnecessary programs or projects have made us all cynical and skeptical to one degree or another. I’d rather have a Norwegian 50% tax at this point in my life, not have to worry about utilities, health care of any ilk, and marvel at the cleanliness and infrastructure upkeep than the system we have here. If you want to call it a system.

    1. Capo Regime

      +10. Its not what you pay its what you get. Good point and your insight is what is missing from the so called tax debate. Kids getting meals and free tuition bad, subsidizing bankers 30 million salaries good.

  21. Hugh

    There are three issues. First, are the taxes which are levied well spent? Answer: Yes and no, we live in a kleptocracy. Most tax revenues which can be looted are. A few, like the FICA which pays for Social Security, still benefit ordinary Americans. This largely explains why Social Security is currently under attack.

    Second, are tax rates fair? Answer: No, at the federal level, tax rates on corporations and the rich are ridiculously low. Worse, unlike most Americans whose income is known to the government through W-2s or something similar and consequently have little leeway in what they pay in income tax, the rich and corporations can hide and redefine large amounts of their income and so effectively pay even less in tax than the already absurdly low official rates would indicate.

    State income taxes are based on the income declared on the federal forms and so the underpayment of federal taxes by the rich and corporations is transmitted to the state level. Corporations can receive tax subsidies from states to locate their activities in them. Both the rich and corporations can tax shop for states with the lowest rates. At the local level, property taxes depend both on rate which can be low and assessment which can be manipulated. In any case, these monies often are kept within the local community and go to pay for good schools in well-to-do communities.

    Meanwhile for most Americans, the same limitations they have on their federal forms are likewise transmitted to the state income tax. Also at both the state and local level, other taxes (most notably sales taxes)and hidden taxes like user fees (we should not forget those: tolls, driver’s license fees, various fees charged on your utilities, etc.) are highly regressive in nature.

    Also regressive in nature are federal and state gas taxes as well as, because of its caps on income, the FICA or payroll tax.

    Third, who pays the taxes? Answer: In terms of federal income taxes (as opposed to the FICA), it is the rich, even with their low rates and their ability to hide their income. Nor is this a good thing, or poetic justice, because it is an indication of just how extreme the wealth inequality in our country has become. Moreover, this wealth inequality is being made permanent, increasing, and, through low estate taxes, hereditary.

    The rich also pay some unofficial taxes in terms of lobbying fees, campaign contributions, and a system of think tank/lobbying firm welfare for various politicians and government funtionaries, but we need to keep in mind that in exchange for these they get control of the most powerful government on the planet and not only their tax receipts but those of all Americans to use and more often abuse.

    1. yojimbo

      Without proper estate tax, the natural law of compound interest guarantees a tiny fraction of “aristocrats” will control virtually everything over time. America is sadly in the express lane in this regard.
      As for corporate lobbying, it has obviously been successful since the proportion of total taxes collected from corps vs people has absolutely collapsed the last few decades.
      Big oil has never really paid any tax. But finance takes the cake. $80-100mm a year of lobbying buys them $20 trillion bailouts plus the right to rape and pillage at will.

    2. nonclassical

      Hugh,

      towit, Shaxson shows in “Treasure Islands” that roughly 1/2 of U.S. corporate
      profits AND taxes are shipped to offshore “secrecy jurisdicitons” (“banks”), as “investment $$$$”…then through still other “secrecy jurisdiction”, etc, etc, ad infinitum, finally returning to corporations as “borrowing” which is then written off against….TAXES…

      ..the “Meyer Lansky” manipulation….(“Hyman Roth”-”Godfather”)

    3. mytwosenseworth

      I think the biggest issue is how collected revenue is spent. You can argue about rates, payroll deuctions, W-2′s, income sheltering etc. etc. all day long. But the fact remains the rich (“1%”) do pay most of the taxes in absolute dollars.

      What I also find interesting is that nearly half the U.S. population is subsidized, through various programs, to the point of paying no effective federal income tax. Yes there are those who definitely need help, but the conception of poverty has been ameliorated to the point that it no longer resembles “Third World” destitution in any shape or form.

      My problem with the “rich v poor” arguments is that, in this era of coddling and permissiveness, is that being on the bottom rung really ain’t THAT bad (if you take a global view). Besides creating a permanent underclass, as many impoverished will seek the path of least resistance and be content with their lot in life, as human nature would predict.

      Such a model will eventually be unsustainable, as the population swells and our resources become more limited if you project into the distant future. So, ironically, a segment of the lower economic level will predictably be condemned to this caste as if its an inherited trait. Even unemployment benefits are stretching into years of payments.

      Speaking of inheritance taxes I think that unless an estate is extremely huge, it is a socialistic intrusion on rewards that were fairly gained and taxed. Taxes should only kick in on estates worth $10 M or even higher. But, as I said, rich peoples’ assets need to reflect worth that has been fairly gained and taxed.

      1. Mr. Jack M. Hoff

        Ha 2cents…. Thanks for the good laugh in the morning. You must have clipped that right out of the Koch Bros Playbook huh? Its actually so stupid its not worth refuting.

        1. mytwosenseworth

          Keep living in your bubble of fantasy…that’s what your fragile view of the world is buddy.

  22. rps

    What is the percentage of US taxes paid toward military expenditures per country? That’s the key question. How many of these countries depend on the USA’s military operations….

    Look at wikipedia: SIPRI Yearbook 2012 – World’s top 15 military spenders and SIPRI military expenditure database.

    United States $689,591,000,000 (GDP) 4.7%
    European Union $272,484,800,000 (GDP) 1.7%
    United Kingdom 57,875,000,000 2.6%
    Italy 31,946,000,000 1.7%
    Netherlands $ 10,945,000,000 ” 1.4%
    Norway 7,083,000,000 ” 1.5%
    Denmark 4,588,000,000 ” 1.4%
    etc…..

    Heck, we’re not even talking about Defense related expenditures such as: Homeland Security, FBI counterterrorism and other shadow spook organisms, Veteran’s Affairs, NASA satelites, International Affairs, Interest incurred on War Debt, Energy Dept. and so on…..

    Imagine
    Imagine there’s no countries
    It isn’t hard to do
    Nothing to kill or die for
    And no religion too
    Imagine all the people
    Living life in peace…

    1. yojimbo

      War and profit seem the be America’s raison d’etre. America has been engaged in perpetual war for over a century and the primary purpose seems to be profit from war itself as well as making the world safe for American rentiers.
      Americans are so blind that they accept endless wars, including those against abstract concepts such as drugs and terror. They are numb to even this absurdity.
      90%+ of retired generals go on to work for suppliers and many of these guys are even sitting on procurement committees.
      The bailout of the Wall Street mob was part of this war strategy. Citi, GS, etc. should be viewed as commercial aircraft carriers whose purpose is to preserve and extend American hegemony.
      Personally I think of the America as the Death Star and POTUS as Darth Vader.

      1. nonclassical

        yoji,

        shown here: http://www.amazon.com/Racket-Profit-That-Fuels-Warfare/dp/1481978551/ref=sr_1_2?s=books&ie=UTF8&qid=1365718236&sr=1-2&keywords=war+is+a+racket+smedley+butler

        “War Is a Racket is written by the most decorated American soldier in U.S. history, Major General Smedley D. Butler. Butler frankly discusses from his experience as a career military officer how business interests commercially start and benefit from warfare. After his retirement from the Marine Corps, Gen. Butler made a nationwide tour giving his speech “War is a Racket.” The speech was so well-received that he wrote a longer version as this book with the same title which helped popularize his message. Lowell Thomas praised Butler’s “moral as well as physical courage” in telling the truth about war profiteering. This message has never been more relevant, as we see the war racket in full swing in recent history like never before in endless perpetual wars, i. e. Iraq and Afghanistan, and elsewhere.”

        and here: http://www.amazon.com/Plot-Seize-White-House-Conspiracy/dp/1602390363/ref=sr_1_1?s=books&ie=UTF8&qid=1365721280&sr=1-1&keywords=the+plot+to+seize+the+white+house+by+jules+archer

        “Most people will be shocked to learn that in 1933 a cabal of wealthy industrialists—in league with groups like the K.K.K. and the American Liberty League—planned to overthrow the U.S. government in a fascist coup. Their plan was to turn discontented veterans into American “brown shirts,” depose F.D.R., and stop the New Deal. They clandestinely asked Medal of Honor recipient and Marine Major General Smedley Darlington Butler to become the first American Caesar. He, though, was a true patriot and revealed the plot to journalists and to Congress. In a time when a sitting President has invoked national security to circumvent constitutional checks and balances, this episode puts the spotlight on attacks upon our democracy and the individual courage needed to repel them.”

    2. Bill Smith

      Be sumthin’ if we figured out being the World’s Cop costs money.

      And then the Imperialists decided to charge the proles for it.

  23. tongorad

    I thought the deal was that from an MMT perspective, our government doesn’t have to earn or aquire the dollars it spends, and that spending precedes taxation, and not the other way around.

    1. Hugh

      MMT is, as its name suggests, primarily a monetary theory. It has some useful things to say about how fiat money functions, but it is not a theory of the economy and it is almost always poorly explained by its practitioners.

      Money does not equal resources. It equals access to resources. Fiat money can change the distribution of this access. It does not create, or destroy, resources. Nor is fiat money the only way (through spending and taxation) that the distribution of resources can be changed. This can also be done through legislation and regulation.

      I personally take a resources and social purpose approach to the economy. Ultimately, it comes down to creating the society we want to live in. This defines our social purposes. We match these up against the resources we have to accomplish them, and we use taxing and spending (along with legislation and regulation) to effect the necessary distributions of our society’s resources for these purposes. Money is both a medium and a scorecard for those distributions. Fiat allows more latitude in how those distributions are executed, but it, and MMT, are and only should be regarded as mechanisms of bookkeeping.

      1. Lambert Strether

        The sectoral balances approach (a big part of MMT, and increasingly penetrating the mainstream) is in fact a “mechanism of book keeping.” I don’t know what a “theory of the economy” is, and in any case I find “no true Scotsman” arguments jejune, and so will avoid its onset here. Suffice to say that MMT deals with stocks and flows as well as sectoral balances, and so is more than a mechanism of bookkeeping. As far as “its name suggests,” MMTers have often regretted the name, but it’s out in the world, now. No doubt Marx would regret “dialectical materialism,” Keynes Keynsianism, etc. As far as “primarily a monetary theory,” those who have read the widely available literature are well aware that MMT focuses on the operational realities of how money is created. If there is to be an argument about “primarily,” I will file that in advance under jejune as well.

        1. Bill Smith

          Except that “sectoral balances” is just an attempt by MMTers to re-brand the Keynesian concept of “counter-cyclical fiscal policy” as some novel new thing the MMTers invented.

        2. Hugh

          A good example of the doctrinal nature of MMT and what turns so many away from it. No one outside MMT can debate MMT because only those who accept it know what it is (even though their interpretations are often inconsistent) and MMTers assume that accepting MMT is a necessary condition to understanding it.

      2. Calgacus

        Hugh:MMT is, as its name suggests, primarily a monetary theory. It has some useful things to say about how fiat money functions, but it is not a theory of the economy and it is almost always poorly explained by its practitioners.

        Money does not equal resources. It equals access to resources. Fiat money can change the distribution of this access. It does not create, or destroy, resources.

        Very wrong. This is very major, fundamental point. Money is not so simply associated to “resources”. Your point of view is close to the classical (not neoclassical) economists, and shares the same problems (and virtues). Money is abstract credit/debt relations. The whole task of a monetary economy as a whole is to associate it with, embody it by resources in the end. Not ab initio, which is the commodity theory category mistake.

        For government and any other spending CAN create or destroy resources in your sense. We have monetary production economies. Money is not neutral, ever. Money, credit – the financial really do exist. Resources, “real” goods and services – a doughnut, a haircut are real, fundamentally based on labor. A good theory of the economy focuses equally on BOTH of these very different but very real topics, and does not reduce one to the other, and that is what MMT does. Since widespread errors treat money, credit, finance so crazily, so wrongly, a major focus is on that, so this, the “resources and social purposes” half of things can be left sometimes in the background, except when the JG is considered, which is the key system to rationally unite the two.

        I personally take a resources and social purpose approach to the economy. Ultimately, it comes down to creating the society we want to live in. This defines our social purposes. We match these up against the resources we have to accomplish them, and we use taxing and spending (along with legislation and regulation) to effect the necessary distributions of our society’s resources for these purposes. Money is both a medium and a scorecard for those distributions. Fiat allows more latitude in how those distributions are executed, but it, and MMT, are and only should be regarded as mechanisms of bookkeeping.

        But bookkeeping of what? Bookkeeping of credit, in addition to the “real”. Money is a form of credit, of debt. Modern production is impossible without the division of labor. A fundamental observation is that credit is logically necessary to any division of labor, even between Robinson Crusoe & Friday. Credit (and its developed form) money are in there from the very beginning. Not a tacked-on afterthought. Much more than a mere distribution tool, and not really a medium of exchange, but a fundamental way that human beings look at economies, at the world, and something absolutely necessary to their organization, to production.

        1. Hugh

          “The whole task of a monetary economy as a whole is to associate it with, embody it by resources in the end. Not ab initio, which is the commodity theory category mistake.”

          And that in a nutshell is why MMT will always remain a marginal theory. Money first, reality second.

          Of course, resources can be used to create other resources. That is, in fact, what I was saying. How else do you think we can go from the society we have to the society we want? But it is resources and how they are distributed which create resources, not money.

          A point I note in what you wrote is that nowhere do you address social purpose, at any level: economic or monetary. That absence is a neoliberal element I find in modern economics generally, not just MMT. As I have written before, it is precisely the scission of money and the economy from their social purpose (creating the society we want to have) that allows for the accumulation of great wealth whatever the cost to society or measures such as efficiency, productivity, and GDP (all of which can be high even in a very sick society) to be treated as goods in themselves.

          1. Calgacus

            C:“The whole task of a monetary economy as a whole is to associate it [money, credit, finance] with, embody it by resources in the end. Not ab initio, which is the commodity theory category mistake.”

            H:And that in a nutshell is why MMT will always remain a marginal theory. Money first, reality second. No, money AND “reality”. Think about BOTH and their relations. Don’t illegitimately identify them (commodity theories which are jest plain crazy-wrong) or ignore or belittle one or the other. Understand them both & how a monetary production economy relates them. Without that, social purposes will not be achievable, and hardly conceivable.

            But it is resources and how they are distributed which create resources, not money.No, no, no. Case 1: You have a good business idea, a better mousetrap, and are a somehow acceptable member of the capitalist class. You go to a bank, get MONEY & become rich by benefiting society with your idea. Case 2: The same, but you are somehow not acceptable. No MONEY & you and society suffer. Money, finance counts. Not just “resources.” Money is not something tacked on at the end as a medium of exchange or a mechanism of distribution, but inextricably – dare I say dialectically? – interlinked at every stage with the “real” “resources” and production.

            All MMT & good/great economists: Marx, Veblen, Keynes, Dillard, Wray say is: think about BOTH!: Money/credit AND resources/real goods & services/labor. Don’t confuse them or discard one. They are BOTH important.

            Do coal beds & iron ore magically jump together and smelt themselves into steel? Or do human beings have to divide their labor, using the concepts of money, credit and finance, to organize themselves to make final products out of resources?

            A point I note in what you wrote is that nowhere do you address social purpose, at any level: economic or monetary. That absence is a neoliberal element I find in modern economics generally, not just MMT. Neither do you, here, really, Hugh. And for the same reason, which is not that either of us or our theories are neoliberal . We are writing short, focused, blog comments, not learned treatises covering everything we might like to say.:-)

            As I have written before, it is precisely the scission of money and the economy from their social purpose (creating the society we want to have) that allows for the accumulation of great wealth whatever the cost to society or measures such as efficiency, productivity, and GDP (all of which can be high even in a very sick society) to be treated as goods in themselves. I equally deplore the scission of money & purpose. But belittling the importance of, not formally understanding, something very, very real to any human being in a modern society – money, credit, finance is a scission of money from the economy and (social) purpose.

    1. Nathanael

      Because anyone who’s sufficiently dishonest and fraudulent can get a tax exemption — the IRS has thrown up its hands and lets anyone be tax-exempt, provided the “anyone” is willing to lie repeatedly on forms and in court.

      For more impressive examples, look at the Catholic and Mormon churches, which illegally issue political pronouncements from the pulpit but retain their tax exemptions. Or the Church of Scientology, which is basically a for-profit money-making scheme.

    2. Massinissa

      I think its because the NRA claims to be working for the ‘public good’ or some such nonsense.

      Im not really a gun control fellow, I dont give a damn one way or the other actually, but the NRA’s antics often end up pissing me off somehow…

      1. Nathanael

        For reference, there’s a legal distinction between the “NRA” and the “NRA-ILA”.

        The NRA proper does things like gun safety classes, while also propagandizing its members. (I joined for the very substantial discount on gun safety classes, since nobody else offers them. I don’t read the offensive propaganda. The leadership has managed to rewrite the NRA charter to make it very difficult for the rank and file to remove the leadership; they’re completely anti-democratic and frankly evil.)

        The NRA-ILA exists *strictly* as a money-funnelling lobbying organization.

        Of course Wayne LaPierre and the other lunatics who have taken over the NRA proceed to use NRA dues to shill for the NRA-ILA in the NRA magazine, and generally maintain no real separation, but they did do some legal work to try to appear compliant.

    3. Yves Smith Post author

      There are two types of tax exempt organizations: 501 (c) (3) and 501 (c) (4).

      3s are charitable and cultural. Think of delivering food to old people, SPCA, Red Cross, museums. Donations to them are tax exempt AND they are not taxed.

      4s are social welfare. NC could be a 4. They are out for social change. Donations to them are not tax exempt but they are not taxed.

  24. Henry

    Well,wait a minute. I am not an economist, but my understanding of fiat regimes (post Bretton Woods, in our case) is that taxes pay for nothing whatsoever. Users of the currency (state and local gov’ts) need to levy taxes to earn currency, but not the monopoly sovereign issuer. Why would they need to tax (remove) the currency which they issue in the first place to pay for something? In fiat regimes, the taxes serve to establish the legal tender, to ward off inflation in cases of already having achieved full employment (hardly our situation) and to distribute income (a political question). So if we have dated infrastructure it is certainly not because our taxes are low but rather because the deficit is too low, and at the same time because the government chooses to spend instead on empire building and in handing money over to Wall St. too-big-to-fail institutions.

    1. Elisabeth Spenser

      Is this similar to the point Rodger Malcolm Mitchell makes above? Sorry for the naive questions, all– I am trying to learn. Thanks.

    2. Nathanael

      “In fiat regimes, the taxes serve to establish the legal tender, to ward off inflation in cases of already having achieved full employment (hardly our situation) and to distribute income (a political question). ”

      Correct. And the current problem is that taxes are used to redistribute income from the working and disabled poor and middle class, to the lazy rich.

      This is just *evil*.

      In order to use taxes to redistribute income from the lazy rich to everyone else, we have to raise taxes on the lazy rich. And we have to raise them A LOT.

  25. jabre

    Federal + SS + Medicare + Sales + Property is greater than 55% for me and I am NOT a top one percenter.

    The point that is trying to be presented is that we should simply accept a higher burden. It is justified.

    BS – as pointed out by many of the comments there is significant disparity of the burden across the taxpayer base and efficacy of distribution of the tax revenue. Until you have a concambinant remedy to these issues I, personally, will not blindly accept increases.

    The chances of the Repulicat party addressing this by remedying all of the loopholes (subsidies) to special interests – zero.

    1. jrs

      At a certain point raising the rate while every deduction on the books is left in, just makes the tax code more unfair. Those able to take lots of deductions win even bigger than they are already winning, those who aren’t lose even bigger than they are already losing.

      1. Nathanael

        The biggest break on the books is the discounted rate for dividends and capital gains. Work for your money? Pay 45%+.

        Sit back and collect checks while doing nothing? Pay a maximum of 15%.

        This is the first, most critical tax break for rentiers, and it must be ended.

  26. Yugandhar

    I live in NYC. Did you forget to add the 3.5% NYCiti Tax. Did you forget to add the 8-9% sales tax on that 100-32.5%? I as a citizen for my taxes would expect public transporation nothing more. I can take care of my kids education, I can take of my health and how I eat. I don’t need a war to be waged for my gas. They provide me nothing for my taxes. Do some thing that is worthful with taxes. I will pay 50%.

    Thanks

  27. Joe

    [Ad hominem] I pay well over 50% in taxes, plenty for your damn infrastructure. This post does not even come CLOSE to factoring in all the taxes people pay. And why is socialist Europe ALWAYS the standard when deciding if we are overtaxed? As if Washington is starved of money and if they could only get a little more they would pour it into “infrastructure”. [Ad hominem]

    1. Nathanael

      What’s going on in the US is that the poor are taxed heavily, while the rich pay extremely low taxes.

      Obviously, this means the government collects unreasonably low amounts of taxes, because *the poor don’t have money, the rich do*.

    2. Yves Smith Post author

      The plural of anecdote is not data. You clearly missed that Romney paid less than 15% of his income in Federal taxes, and state wouldn’t bring it up to 20%. Plenty of examples of the uber-rich paying well below 20% in Federal income taxes.

  28. AmorFati

    [sigh] Yet another attempt to justify higher taxes by measuring tax revenue as a percentage of GDP. But this is simply a bad metric, especially when (as now) so much of the GDP has been generated by massive deficit spending. The massive borrowing required to fund the deficit spending can be viewed, in significant part, as a borrowing against the future tax revenues that will be required to pay down the debt. Measuring (debt enhanced) GDP against CURRENT tax revenues impermissibly allows one to take advantage of all of the current benefits this debt has brought forward into current GDP while ignoring the increased tax costs associated with that debt. No wonder Democrats love this metric! It allows them to ignore all of the tax costs associated with government debt, while enjoying all of the current benefits generated by that debt!

    A much better metric would measure government tax revenues as a percentage of government spending. See:

    http://policyinterns.com/2012/05/08/tax-revenue-as-a-percentage-of-gdp-a-flawed-metric/

    1. Nathanael

      Much better to justify high tax rates on the rich by pointing out that during our era of PROSPERITY, the Eisenhower era, the top income tax rate was upwards of 90%.

      And yes, there were loopholes, but even using all of them, the effective top tax rate on dividends, capital gains, and other trust-fund-baby inherited-rich income was upwards of 45%. Which is higher than the current top rate of 15%. Yes, that’s FIFTEEN percent. ONE-THIRD what it was in the prosperous Eisenhower era.

      The fact is that we need to go back to taxing unearned, undeserved income at sensible levels. It is the path to prosperity and it always has been: countries which have low taxes on the obscenely rich and low taxes on unearned income are POOR and have BAD GOVERNMENT, while countries which tax the hell out of the CEO/Board of Directors class are RICH and have GOOD GOVERNMENT.

      This is not a coincidence — this is a matter of preventing rich and powerful looters from getting rich enough to buy the government. During the 50s, the high tax rates on the obscenely rich made it impossible for the obscenely rich to buy Congress. Now, the low tax rates mean that they can buy Congress. The result is what you see.

      1. AmorFati

        Like so many who pine for the brief post-WWII period when the U.S. had much much higher tax rates, you completely ignore the massive rise in global “tax competition” that has occurred since then, which makes a return to similarly high rates today a practical impossibility. The fact is that immediately after WWII the super-rich were essentially “trapped” in the U.S., in that they had very few other realistic options in which to live or do business. Europe and Japan were rebuilding, the “Asian Tigers” (e.g., Singapore) had yet to emerge, and very few of today’s notorious island tax havens (e.g., Cayman Islands) had been developed. By contrast, the super-rich of today have MANY realistic options as far as where to live or to do business, and many of these locales offer enticingly low (or even no) tax rates specifically for the purpose of encouraging the super-rich to move there or to establish businesses there. Plus, it is much easier these days to shift “paper-profits” to these low-tax locales. So many who argue we should re-introduce super-high tax rates today utterly fail to take tax competition into account.

        Tax competition is arguably why the EU’s original aim of establishing a 45% corporate tax rate has utterly failed. Today, the average EU corporate tax rate is around 25%, and in practice tax treaties reduce this even further.

        Tax competition is why the UK’s 1970s effort to tax the super rich failed. That’s why the Rolling Stones recorded Exile on Main Street in France – they were “tax exiles”.

        Tax competition is why efforts by the current Socialist government in France to impose super-high tax rates has been a disaster. They completely ignored tax competition and tried to establish a 62.5% capital gains tax rate. This capital gains tax rate is so much higher than ANY other developed country that France has had to sharply backtrack on its original aims. When you argue in favor of high tax rates on unearned income, have you considered the high-tax experiment in France that is unfolding right now? Have you compared the high tax rates you want to the rates imposed by most other developed nations? You can be sure that the super-rich will certainly make such a comparison.

        In sum, you can forget about ever being able to collect taxes on the rich at anything close to the super-high post-WWII rates. It CANNOT HAPPEN in today’s world. Right or wrong, that’s just the reality.

        1. Nathanael

          The Nordic countries continue to have Eisenhower-high tax levels today.

          Now, what you say about tax competition is correct…. as far as it goes. But you haven’t gone far enough.

          There’s no reason we need to allow companies to move to a different country. None at all! We can prevent it by using what are known in economics as “capital controls”.

          It used to be that to send large sums of money abroad, bring large sums of money from abroad, invest in foreign companies, be a foreigner investing in companies here, etc….. you had to get government permission, and had to prove that what you were doing was for the good of the country.

          If you’re doing it for the purposes of paying lower taxes, the government can Just Say No. It really can. It Just Says No when Americans try to invest in Iran.

          Now, you will say that they could do what the Rolling Stones did and abandon the US entirely. *Well, they can’t*.

          The US is still the world’s biggest market. The US does not have to grant licenses to import! The US does not have to grant licenses to operate! Those can both be made conditional on paying your US taxes.

          This is the antithesis of free trade. And it’s what you have to do in order to stop the obscenely rich from abusing the system.

          1. Nathanael

            (tl/dr version):

            YES, YOU CAN implement Eisenhower-era tax rates.

            You have to actually prohibit the obscenely rich from removing their money from the country, and actually prohibit corporations from outsourcing.

            However, the government genuinely DOES HAVE THE POWER to do these things.

    2. Nathanael

      Oh, and your proposed metric (tax revenue / spending) is asinine and idiotic, because it doesn’t account for the business cycle. It’s a stupid Randian propaganda piece. Get a goddamn clue.

      1. AmorFati

        Whatever. The taxes-as-percentage-of-gdp metric described in the chart is still a bad metric.

  29. Ouroboros

    I was wondering why this post got so many comments. Somebody left the door ajar and somehow a clot of spoiled decrepit old entitled white male Randian sociopaths got in. Where do they come from? Hopefully they’ll all have moved on to somewhere else tomorrow. The relentless stupid is annoying.

    1. Massinissa

      They will be gone tomorrow… If theres no articles about taxation. Articles like this attract their ilk like flies to feces unfortunately.

  30. Steve Roberts

    “Any wonder why our infrastructure is crumbling and our educational attainment is falling?”

    Education is a state funded program. Most people say they are over taxed at the FEDERAL level and not the state and local level. I’m very happy to pay state and city taxes because I think I’m actually getting something for my money.

    1. jrs

      True and true, I vote for those state taxes, they are ok (but not low!). The Federal government would probably spend it on homeland security goons or domestic drones. Well, whose to say they wouldn’t?

  31. skippy

    Libertarianism is the ultimate expression of Monotheism… the head is now truly…. a part… of the ass…. a singularity of thunkit!

    skippy… 7 billionish incoherent (imperfect information) Gawds is a scary thought.

  32. RichardB

    Proposition 13 taught us Californians that you don’t care how much the politicians spend as long as you think you aren’t paying much for it. Learn from us. Ditch the income tax. Substitute a small rake from every electronic money movement. Believe that your favorite government program is someone else’s lookout. It’s all good.

  33. The Dork of Cork.

    Taxes pay interest on the national debt.

    No need for private banks to make the money.

    A state can pay for stuff in its own political / economic hinterland via greenbacks although taxes are needed to give the medium value.

    This will however deglobalize trade.

  34. Bruce

    Not when memory serves to validate a +90% marginal income tax rate as recently as the REPUBLICAN 1950s!

  35. Kevin Schmidt

    In relation to the wealthy elite, the average American tax payer does pay too much taxes, while the wealthy elite pay too little taxes, that is when they pay any taxes at all.

  36. Anthony Rago

    Taxes are for the needs of society. That is fine. If corporations paid taxes (they pay little to none) and the wealthy paid at a rate – let us say in the Reagan years – we were to stop all war and use the resources where they should go – then taxes wouldn’t really be a problem. As it stands, the poor get entitlement programs set-up to mostly keep them where they are now. The bulk of the best resources are to be found in wealthy neighborhoods – even though most of these people don’t work for a living but get their income from capital gains which is taxed way below taxes on wages and salaries. None of this is fair, none of this will utilize taxes in order to educate the poor into at least middle class status. In the meantime, the middle class is raped and we shift all the wealth to – you guessed it – the wealthiest.

Comments are closed.