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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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