More regressive taxes on the way
To the Editor;
Taxed enough already? Well, yes and no. In our last letters we discussed taxes levied by the State of Maine. About 50 percent of their revenue comes from regressive sales taxes and another 40 percent comes from (very) mildly progressive income taxes (the rest from licenses and other taxes).
The current proposed budget would dump even more regressive taxes on working people. Under the rubric of “broadening the tax base” and making Maine more congenial for “job creators”, working people are about to get thrown under the bus yet again.
Another way to think about taxes is to consider how we pay them and what we get for them, especially in comparison to other advanced countries. As all of us know, in this country, in Maine, we pay taxes at three levels — Local (mostly property taxes), State (mostly sales and income taxes), and National (mostly payroll and income taxes). At the local level we get schools, streets, utilities and protection (police, fire, streets, etc.). At the state level we get schools, health care (Medicaid, Mental Health, elder care, etc.), parts of the social safety net, and roads. At the national level we get health care (Medicare, Medicaid, Research), pensions (Social Security and other pensions), a big chunk of the social safety net, and a giant military.
How does this compare to other “first world” countries?
The truth is that in a modern, democratic, market economy, people all over the world today demand, decent health care, education and pension systems. Nobody starves. We also demand decent transportation and communications systems, a breathable (and drinkable) environment and other infrastructure, all with some measure of protection and safety.
The OECD (Organization for Economic Cooperation and Development) is an organization where 34 democracies with market economies work with each other, ostensibly to promote economic growth and prosperity. Among the statistics they keep are those related to total tax burden as a share of gross domestic product. Their most recent ranking of these 34 countries puts Denmark at the top with their taxes comprising half of their GDP! Mexico is at the bottom with about 15 percent of their GDP going to taxes. The average of all of the 34 OECD countries is 34 percent. Where does the U.S. rank? We rank 31st . Taxes, local state and federal combined, come to 26 percent of U.S. GDP, ahead of only South Korea, Chile and Mexico.
For the average of all of the “first world” countries, this means that people chip in a little over a third of their total gross domestic product. In our country, we manage to chip in only a little over a quarter of our gross domestic product. Relative to other advanced countries then, we under tax by approximately $1.5 trillion. I think about what that might buy us. For a measly $70 billion we could provide free college education for all of our college students. For another 1 percent of GDP ($200 billion per year), our roads, bridges, water and sewer systems would be in tip top shape. The list goes on…
But, but, we say! We already pay too much in taxes! Depends on who we ask. That’s almost certainly true for working people and for poor people. If we look back in our history we find that wealthy folks and large corporations get off relatively lightly today. If corporations and wealthy people paid the same share of taxes that they did 50 years ago (when the economy grew at twice the rate as it does today) we’d have that extra $1.5 trillion available.
This skewing of the tax burden has not been accidental. Our leaders (of both parties), have made many deliberate policy choices over the last 40 years to create the mess we find ourselves in today. We can fix this.
When the World Economic Forum did their annual “happiness survey” of the world’s countries, which countries came out on top? Denmark (50 percent tax rate), Iceland and Norway (about 38 percent tax rate). If they pay so much more in taxes, how come they are happier? Maybe there are some lessons there.
More on that later. As always, contact me anytime at chrism@roadrunner.com
Chris Maas
Dover-Foxcroft