Don’t hate Tax Day
Nevertheless, it’s easy for the anti-tax venom to get out of hand, and under President Donald J. Trump, American antipathy toward tax collection is clearly on the upswing, fueled in no small part by the president’s own example. It was President Trump, after all, who as a candidate famously referred to his own efforts at tax-avoidance as making him “smart” and refused (still refuses, in fact) to disclose his tax returns in a break from presidential tradition. Those aren’t the actions of someone who is proud to help pay for the military or infrastructure or public education or police and fire protection or the thousands of other benefits provided by tax dollars at the federal, state and local levels.
So that begs a question: Do Americans pay too much in taxes? Polls have traditionally shown a split in public opinion, with most Republicans believing they do and most Democrats thinking they don’t. It gets even more complicated when tax “fairness” is part of the equation with
But here’s an important fact that often gets lost on Tax Day: How does the United States compare to other nations when it comes to taxes? The simple answer is that we pay less in taxes than most industrialized nations and, in many cases, substantially less than countries against which we compete economically. So if taxes are such a hindrance to the economy or to quality of life, what’s up with that?
First, the facts. There are various measures of tax burden, but it’s generally best to look at overall tax payments instead of just income taxes or federal taxes, as nations have vastly different ways of taxing their citizenry. In a recent analysis by the
Should we be happy about that? Maybe, but maybe not. Having a lower tax rate than Germany, France, Italy, Sweden and so forth means we might have more money in our collective pockets, but we aren’t really ahead if, as a result, we are denied government services that might make our lives better (and perhaps longer). Health care is one example. The average life expectancy in the U.S. is 79.8 years, which sounds great until you see the full list and realize we are ranked 42nd in the world for life expectancy, bested by the majority of developed countries.
Granted, that’s just one measure. But even a generous assessment of U.S. quality of life, like last month’s U.S. News and World Report’s
President Trump has spoken often of tax reform as a top priority to improve U.S. economic performance. Alas, merely reducing the overall corporate tax (which accounts for a shrinking share of tax revenues anyway) or cutting tax rates for the wealthiest Americans isn’t going to help. If lower tax rates were the secret of success, then people and businesses would be fleeing to Sark, a tiny Channel Island that has no income tax but only 600 residents. It allows no cars and still uses horse-drawn vehicles. Ah, the sweet smell of success.
If, on the other hand, the point is to fix the tax code, removing unnecessary impediments to growth, simplifying the filing process, incentivizing savings or helping reduce the deficit, then it would absolutely be worthwhile. Such reforms wouldn’t necessarily mean Americans ended up collectively paying less in taxes. In fact, it might require the opposite. But it could bring about a smarter, fairer tax system — and a better quality of life — that leaves us cursing a little less on Tax Day.