Why Is Everyone Whining About Taxes?
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?