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Mid-April Draws Out US Tax Bashers, Blue Dog Dems

Mid-April is surely one of the favorite times of the year for Republicans, Tea Party members and their covert allies, the Blue Dog Democrats. Much as they hate to pay taxes, they love the opportunity to remind hard-pressed Americans about their steep taxes and their evil consequences. One of their familiar chords is Europe as the land of high taxes and sluggish growth. The only problem with this tale is that the European experience raises a whole set of ethical and economic issues U.S. tax bashers may not want to face.

Steven Hill's recent book, "Europe's Promise," carefully examines taxation in Europe. For starters, he reminds us that measuring the level of taxation in not perfectly straightforward. Forbes Magazine compares high-tax, "miserable" Europe with the low-tax U.S. Forbes relies on the top marginal income tax rate, 52 percent in the Netherlands, for instance, with the top U.S. rate of 35 percent. But as Hill points out, the Dutch rate already includes its social security contribution.

In addition, in the U.S. there are state, local, and real estate taxes, which bring the U.S. figure close to the European. I would also add that the U.S. tendency to raise so much revenue at the state and local level often ends up disproportionately hurting poor and working-class people. States competing for businesses engage in a zero sum competition with other states via low income and corporate taxes and heavy use of sales taxes.

Discussions of tax misery also often fail to probe the question of just what is a tax. Many of us take a deep breath when we write that one large check to the state or the feds in April. How many of us, however, closely scrutinize those monthly phone, cable, cell phone, utility and Internet bills? And how about car registration and annual fees for hunting and clamming licenses? These all add up, and their impact is regressive, hitting working-class residents harder than the wealthy.

Both U.S. and European taxes, properly measured, are high, but for different reasons. Europeans fund a set of generous programs that better prepare its workers for the instabilities of a global economy. These include health care as well as pensions, broad unemployment compensation, college education and job retraining.

The U.S. welfare state, never as comprehensive as the European even during the height of the New Deal, is even more shriveled today. Conservatives would even go after Social Security; yet the out-of-control driver of U.S. tax policy is the Pentagon and the wars in Iraq and Afghanistan. The U.S. spends more than 4 percent of its GNP on the military, as compared to less than 2 percent in Europe. The contrast is even sharper when interest on previous war debts, expenditures on the CIA, NSA, and Homeland Security are included.

Yet even with regard to the military, the U.S. shirks one of its major social responsibilities. If one were looking for an unfunded liability that may indeed bankrupt us, those wars would be a good place to start. The U.S. is already neglecting the plight of its physically and emotionally scarred veterans of this conflict. Complete default on the services owed these men and women is far more likely than default on government bonds.

Although the U.S. and Europe do take a substantial portion of citizens' income, high taxation is seldom the game-changing political issue in Europe. I suspect that many Europeans feel they are getting value for their taxes and also have more of a sense of national if not European- wide solidarity. More democratic political systems with ample opportunity for third parties and more diverse media blunt "taxation without representation" arguments.

In addition, in the U.S., a notion of "rugged individualism" often leads to an odd willingness to pay higher private insurance premiums than the lower taxes that would support a more generous and efficient health care system for everyone. The rhetoric of war buttresses our sense of exceptionalism and go-it-alone faith. Nonetheless, when tax time rolls around, even war is an abstraction. There is all too little in most residents' day-to-day experience to connect quality of life to the taxes they pay.

Welcome to the tea party!

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