Why Is Everyone Whining About Taxes?

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The Economist published its annual graph showing total taxes as a percent of G.D.P. for a large number of rich countries.

Not surprisingly, there’s little year-to-year change — and the U.S. is near the bottom. We are a low-tax country; our average tax rate, counting all taxes, hovers above 30 percent.

Why do we hear so many more complaints about high taxes than I hear in the European Union, where taxes are a much higher percentage of G.D.P.? It’s hard to believe our governments are less efficient than European governments — and that we’re getting less bang for the buck than Europeans get bang for their tax euros.

And it certainly is not the case that our taxes are structured so that the average person pays the top rate: The top federal marginal tax rate kicks in much farther up the income distribution in the U.S. than in European countries.

So what is it?

After all, Joe the plumber pays far lower taxes than Josef or José the European plumber does, so why should Joe’s fellow citizens have any sympathy for him?

One economic answer to this question is that we all expect to become rich and don’t want to have very high taxes on our expected large incomes. Yet today, income mobility is no greater in the U.S. than in Europe, so our expectations do not seem rational.

What’s the answer? Are we more selfish than Europeans? Are our governments less efficient?

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  1. Adam Keith says:

    Maybe the Europeans need to get on board with lower taxes. Then maybe their unemployment will drop and production will rise.

    I don’t think it has anything to do with mobility, and everything to do with us wanted to spend the money we earn, not have it taken up by government for worthless pork projects of greedy politicians on both sides of the aisle.

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  2. Eric Wilson says:

    I’m not sure that’s a good argument about why we should accept our current tax system. That like saying “I know we are poking you with a stick every day. In Europe they poke you every hour! What are you complaining about?”

    Either way, I’m getting poked with a stick:)

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  3. Jayson Virissimo says:

    “What’s the answer? Are we more selfish than Europeans? Are our governments less efficient?” -Daniel Hamermesh

    Your post reminded me of of this quote:

    “Need” now means wanting someone else’s money. “Greed” means wanting to keep your own. “Compassion” is when a politician arranges the transfer.”

    -Joseph Sobran

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  4. Jim says:

    I think you nailed it with the “we all expect to become rich and don’t want to have to have very high taxes on our expected large incomes.”

    I know a number of people that think that -just like housing prices- their income will ALWAYS go up. Their heros are people that are already rich. That is what they aspire to. To be rich.

    Also- during election cycles Republicans always seem to trot out the “No New Taxes” or “Lower Taxes” mantra so that is also why you are hearing more “whining”. Heaven forbid we become like some place in Europe!

    After next week it will be over.

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  5. Steve says:

    By the time the government squanders a fortune on the military, the DEA, farm subsidies, ineffective border patrols, corporate welfare and “security” spending that only benefits the rich, the average American is actually paying far more than the average European. Health care alone is more than half the actual difference. Better education is easily worth more than the remainder.

    I’d complain too but the truth is, the biggest whiners are the scum who benefit the most from all the government waste described above. That’s why the Republicans corner the rural, religious, racist and wealthy votes.

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  6. francis K.j. says:

    Riot is an impulsive action.It is mostly done by emotional reasons than material.It’s an irrational reaction.It’s a collective and hysterical behavior expressed to bring out a hidden and suppressed feeling.It’s normally a spontaneous collective reaction which take place when something emotionally attached is forcibly taken or when one feels totally deprived of something fundamental for survival.Lastly it is not caused by ego but deprivation.

    It’s not caused by greed but need and helplessness.

    Wall street victims are not emotionally vulnerable types.

    Psychological analysis of wall street guys done by me shows that they are high in their ego so they would rather die than go for rioting.

    As for ordinary tax payers it takes time for people understand or experience the full implication of wall street crisis and its post events. More ever it is seldom people attribute one reason for all the problems.When they do that it is riot then.May be outlets like NYt website give enough space to bring out all potential rioting emotions.

    I think the most vulnerable of America is also matured enough to understand uselessness of riots.Democracy gives ample opportunities to express one’s views and feelings.

    I think Sudhir has done a good job of throwing an impending scenario for public debate, in the process the scenario will be out of thinking even for potential riot thinkers.

    As for wall street becoming riot target as an insider of club mentality games and greed are inevitable for human growth , decay and resurrection. If one wall street falls man build another type of wall street.Yet a club member never blames the club even if he loses all including his wife and children.

    Francis K.J

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  7. TWinter says:

    This is comparing apples and oranges. In Europe, where the taxes are higher, medical care is included as a government service. Add what Americans pay for health insurance to what we pay in taxes, and the difference between Europe and this country evaporates.

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  8. caveat bettor says:

    Besides the apples-to-oranges comparison given treatment of healthcare costs, as pointed out by TWinter, defense costs should also be adjusted for as well. The US typically spends about 4% of GDP on defense. Western Europe and Canada, not so much, and the US subsidizes the defense of her allies in the context of treaty obligations and forward basing and force projection allocations (which also create additional jobs there). How many jobs here are created by foreign military treaty obligations?

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