Posted by: theoptimisticconservative | April 17, 2010

The Way to Argue About Taxes

Doctor Zero, CK MacLeod, and Mark Steyn have all weighed in on the topic of income taxes, and with respect to their exceptional skills in argumentation and communication, I think they’ve all skirted the important issue.  There is an especially useful way to discuss income taxes – and taxes in general – and it’s to make these two points:

1.  Virtually all the tax-induced ills we suffer today were ushered in with the percentage-based, payroll-deducted income tax.

2.  What we pay for the cost of government – all taxes and regulation – is putting a substantial bite on our standard of living and economic prospects today.

The percentage-based income tax has been by far the greatest accelerator of big government in the United States.  This is because it guarantees government a vast steady income independent of the government’s policies or plans to spend the money.  Payroll deduction, meanwhile, makes employers the tax collectors, and eliminates key elements of the natural “friction” that used to attend the collection of taxes.  Your income taxes are collected from you without any exertion, decision, or conscious act of compliance on your part.  You don’t even have to go buy something, as you do to pay sales tax or property tax.  You just have to be doing what most people want to do anyway:  working for your daily bread and the roof over your head.

The percentage-based income tax is also the readiest conceivable source of economic invidiousness.  Its original institution was based on the argument that the richest 1% ought to have a special responsibility to subsidize the government that gave them law and order.  But the tax’s reach quickly spread to the entire working population, and we have been merrily bashing each other over the percentage by which people are taxed ever since.  It isn’t actually necessary to run things the way we do today; we’re not in a closed-loop system from which there can be no voluntary exit.  But the institution we have serves as a perpetual agitation machine, keeping us riled up against each other as if there is no alternative.

Leftists get agitated if Congress wants to lighten the load on higher-income taxpayers, who are the principal source of investment to create new business.  Rightists see systemic moral portents in the shifting of the federal tax load to higher-income earners, particularly when 47% of earners pay no federal income tax.  Some segments of the population figure single people without dependents should pay more of the taxes; the single filers themselves point out, with justification, that they use a lot less of the public services than family households do, and why should their tax load be effectively heavier?

Moreover, it becomes illegal to not report income to the government.  Think about that for a minute.  Why should it be?  Why should government, or you or I, know what anyone’s income is – other than the incomes of government employees?  What valid purpose of government is served by pursuing that information?  Can you see how the destructive political purposes of agitators are served by our current system, without achieving any legitimate goal of governance?  Consider that if government didn’t account for everyone’s income as if knowing it were a public entitlement, we would have a much harder time mentally classifying ourselves in the politically divisive manner we are now so accustomed to.

There is no option of finding the perfect, universally despised constituency on which to inflict all the taxes with minimum economic impact.  This is a fantasy people too often unconsciously harbor.  But there is an option of lightening the load on everyone by having the government spend, and regulate, less.  What government is spending that could and should be cut is a separate topic for another time.  The second main point above – that taxes, spending, and regulation are undermining our standard of living – is what I want to address here.

Average Americans, according to the Tax Foundation, worked to pay taxes to the government until 9 April this year.  That includes taxes of all kinds and at all levels.  But it’s also just an average.  Higher-income earners work for the government longer.

Furthermore, this calculation considers only outright taxes – additional, explicit levies – and not the costs of regulation that are incorporated in the prices we pay for goods and services.  So, for example, the Tax Foundation includes the federal and state gasoline taxes in its reckoning, but not the cost to the consumer of our national and state policies that prevent drilling, and refinery upgrades – measures that would increase the global supply of gasoline and push its price downward.  The tax calculation also doesn’t consider the cost of refining fuel to specific mixtures to meet local and seasonal emission mandates.  Spring is a time when gas prices always go up because refineries are shifting to seasonal (warm-weather) mixtures.

We may be all for these requirements because they help keep auto emissions under control, but being in favor of them doesn’t make them cost-free.  This rule applies to every kind of regulation, mandate, and entitlement.  Everything government taxes or regulates becomes more expensive.  Over time, new technology and economies of scale may counter the upward pressure of government intervention on prices, but government’s pressure is always upward.

Here is one way of looking at the concepts I’m talking about here.  There was a time, when I was on active duty, that I was paying as much in federal taxes (not state, just federal: FITW and FICA) as the amount of my mortgage payment each month.  This was the case for most of my last 10 years on active duty.  The state taxes and real property taxes were on top of that.  Then there were the 8% or so sales taxes, but also the fact that everything I bought was priced higher because of employer taxes and fees, employer mandates, worker entitlements, and a host of other federal and state regulations.  What this did in my life, as it does for all of us, is put a lower lid on what I could afford than my income by itself would have dictated.

That is inherently the effect of taxes and regulation, of course, and some of both are always necessary.  But a whole lot of people now can either save, or pay their rent and buy health insurance.  They can’t do both.  There are also a lot of people who can either pay rent or buy health insurance, but not both.  And the point to take away is that the constraint on them is not imposed by nature or uncontrollable circumstance:  it’s imposed largely by the actions of government.

This hits America’s younger workers the hardest, at least right now.  People in their 20s and early 30s are finding it harder and harder to live on their own, because the cost of living has been constrained to increase beyond their entry point.  We are rapidly reaching the point at which the weight of government on all of us is great enough to genuinely interfere with our options.  There are people today who, if they never get relief from the cost of government, may not be able to buy homes because they’ll never be able to save a downpayment.

This is emphatically not the same thing as people in a less-regulated, less-taxed economy going for a lifetime unable to purchase a home.  That condition wasn’t caused by government.  Today’s condition is.  That is the travesty of it.

Our level of social cooperation, professional differentiation, economies of scale, and enablement through technology has advanced to the point in 2010 that far more people today should be able to live with some level of ease on what they earn, and save and invest at the same time.  It takes considerably less human effort just to feed ourselves now than it took 100 years ago.  There is nothing wrong with expectations rising.  There is a great deal wrong, however, with government claiming first dibs on the product of our labor to the extent that we end up having substantially less than we are actually working for – particularly in terms of economic and financial choice.

If the average American hadn’t had to work until 9 April to pay taxes, he could afford to buy his own health insurance much better. Indeed, if government didn’t levy various constraints on health insurance, it would cost a lot less to begin with. More people would be able to stay in the homes that are being foreclosed, if every transaction we all concluded weren’t subject to both taxes and regulation.  More could have bought in the first place without being overextended.  More people would still have their jobs today.  Young people would have an easier time breaking into the work force.  More people would save more, if they started working for themselves earlier in the year.  Seriously, why should government make our labor worth less to us – arbitrarily – at the level of interference it has currently achieved?  Why should it go for more?

That is the way to talk about taxes.

Cross-posted at Hot Air.


  1. […] post by theoptimisticconservative and software by Elliott Back Comments […]

  2. Haiti has exactly the tax-system you seem to be positing, and we all know how desirable that country has been to live in (even before the recent sad geological events).

    Incidentally, income tax in its modern incarnation arose from the necessity of the British government to find sources of revenue other than excise duties to fund it’s 19th century wars. The problem with excise duties was that they were to a significant extent a tax on imports, and taxable international trade inclined to coincide with peacetime rather than wartime.

    All the nations that immigrants are clamouring to get into are high-tax countries. The ones they are trying to get out of are low tax ones. However, I suspect that you are ok with taxation as long as it’s for something which you like – like socialized healthcare for veterans and lots of new nukes and guns and prisons for folks you think it ok to “demonize”.

    Perhaps we should all take the same attitude as the far right and object to paying tax to fund any government spending we don’t like.

    And it also occurs to me that if we had a right not to reveal our income to the government, the people most likely to take advantage of this “right” and least likely to pay anything towards the services which support civilized living are not ordinary decent moderate Americans, but the fringe who decry taxation as theft, and their (exceedingly wealthy) cheerleaders in the right-wing media.

    • Yes you are right ! because taking 40% of 10$ per month of 90% of the population in my country will magically transform it in 10 000 $ !

      Our evil Uberich, who dare to make up to 5000$ for families of up to 8 individuals, should give up 70% of their income so the small business will be transformed in glorious and mighty wealth !

      You failure is that the US have high incomes despite of taxes and NOT because of them

      Poor countries problem is not the lack of 90% tax rates or 150% withholding taxes, but simply that their government fail to fulfil their basic function and guaranty a relative free markets and safety

      • Welcome, Samuel. My apologies that it took time to “approve” your first comment (admin requirement). All your comments will post automatically from now on.

        It IS pretty funny to argue that high taxation is the discriminator between economic success and economic failure.

        Economist Hernando de Soto has made a long study of this, and finds that the strongest correlation is between property law, law and order in general, and strong economic performance. The highest-performing countries economically have the most secure and equitable laws on property ownership, and are the most free from government bureaucracy and corruption.

  3. “As soon as the state takes upon itself the task of planning the whole economic life, the problem of the due station of the different individuals and groups must indeed inevitably become the central political problem. As the coercive power of the state will alone decide who is to have what, the only power worth having will be a share in the exercise of this directing power.” Hayek, Road to Serfdom , chapter: Who, Whom? Optimist, your argument assumes that a central government would actually value citizens having maximum ability to make their own decisions.

  4. “All the nations that immigrants are clamouring to get into are high-tax countries. The ones they are trying to get out of are low tax ones.”

    There we have it, Mr. Genius Peterwise, the only thing that’s keeping the third world from joining the elite is taxes! If the Ethiopians and Biafrans and Paraguayans wanted to raise their standard of living, all they would have to do, according to you, is institute a heavily progressive income tax. Or did I somehow misinterpret what you said?

    • No, actually, Chuck.

      All they would need to do is to do is stop squandering a large portion of their national wealth on their military; cut out the corruption that displaces wealth-creation, and then use some of the money saved and wealth created to finance the things which make a society civilized. Simple really.

      And of course you did indeed misinterpret what I said. And you did it on purpose.

      The services and social and physical infrastucture which underpin civilized society also underpin wealth-creation. That is why the most highly taxed nations on the planet are also the wealthiest and have the best quality of life. Wealth, community and the rule of law are what tends to support and nurture the freedoms we call liberal democracy, and visa versa. However, as you well know I am not making the silly argument that the more taxation the more wealth and freedom. The electorates of liberal democracies like the US, Canada, Australia & NZ, and the Western EU nations have each chosen their own individual balance between taxation and the necessity not to discourage wealth-creation. The fact is that irrespective of these differences in balance they all have infinitely more in common with each other than they have with, for example, Ethiopia or Paraguay. (Biafra is not a country. It is an area in south-eastern Nigeria).

      One thing occurs. The US is a civilized society. We do not leave accident victims at the side of the road if they are poor, undocumented, or have no health-insurance. Most people who are seriously ill DO get treatment – eventually. The money is still spent – even if it is often spent in ways which are least effective (because of delay) and most expensive (emergency rooms). That is why the entire row about the cost of healthcare reform is somewhat artificial. The money is being spent anyway, only it is currently being spent inefficiently and by way of direct taxpayer subsidy rather than via tax-payer subsidized insurance (leaving aside Medicare, Medicaid, and all the other socialized programmes for government employees and ex-employees). The real tax timebomb is not healthcare-reform but medical-inflation which is happening independently of how we finance our healthcare. The problem for the US tax payer is that medical inflation is running at a much higher rate in the US than in the other liberal democracies.

      All of this is not to say that we need to keep the government under constant scrutiny as to how it sends our money. Government elites and their favoured clients have a taste for spending and wasting other peoples’ money. Just look at the history of military priviledges, plans, programmes, and procurement if you need a particularly egregious example of abuse of taxpayers money. But that is not an argument against taxation, that taxation should be proportionate, or that those who wish to enjoy the benefits of the things provided by taxation should be allowed opt out of paying for services, infrastructure, or programmes that do not benefit them personally.

      • I disagree with you argument that taxes are the price we pay for civilization, ie the welfare state.

        So let me give you an example of country with high taxes, Extensive Welfare and a very compassionate and active government which is going bankrupt : Greece

        Yes Greece enjoyed for free, thanks to the good credit of the European Union, the whole range of Welfare, spending and taxes that other Western countries enjoy …. so why does this have not greated wealth ? Now that the bond market have discovered the farce, Greece is in deep trouble and can’t AFFORD the welfare.

        You see welfare is not what create wealth, it is something that you can afford when you get wealthy : Germany, France and the UK can afford the extensive welfare but little Greece got broke

        Then to counter the argument that all the taxation and welfare we see thorough the Western world is the paragon of civilization, we should consider the work of Walter Williams and Thomas Sowell on how welfare have destroyed the poor and minority in the US … if it is the paragon of civilization, how does it destroy it beneficiaries ?

        The same is occurring in the UK, were for the first time more than 50% of the babies will be born of single mothers … which means that there is a social meltdown … couple that with the Brits increasing anger towards immigrants, due to the same welfare and you don’t get a nice picture.

        So what made Western countries to the point of affording to have such a destruction force has welfare ? The answer is property rights, rule of law(criminal prosecution&internal security) and security from foreign invasion … any other aspect of government that you can cite is completely superfluous

        I was in fact very amused to see on American sites article lamenting about the monopoly of public schools, since in my country, despite lower economic standards, there are private schools for each pockets.

        There is no need for government provided Social security, education, health services, transportation, at least the US could afford a network of private roads by what I read, postal service, water distribution, electricity distribution, etc …

        I loved the bit about ”stopping to squander and agree” that you wrote, which seems to implies some form of democracy … well some countries have tried and it worked horribly, like in Zimbabwe : The democratic Majority elected Mugabe, who tend proceeded to use this power to take away the property of farmers … with the only justification that they are white….

        While reaching democracy in Zimbabwe was nice, respecting property rights, rule of law would is essential. In fact jurisdictions who are technically under tyranny, such has Hong Kong and Singapore, do very well despite the lack of democracy … and have lower flat taxes than the Western block

        Like Hayek would had said : There is nothing more dangerous than an elected assembly with unlimited powers

      • “All they would need to do is to do is stop squandering a large portion of their national wealth on their military; cut out the corruption that displaces wealth-creation, and then use some of the money saved and wealth created to finance the things which make a society civilized. Simple really.”

        Oh so simple. Unfortunately for your argument, it is the most wealthy countries that also squander the largest portions of their national wealth on the military. Mexico, for instance, probably couldn’t save much by scrapping their fleet of aircraft carriers. You are evidently of the opinion that coerced redistribution of wealth through government is a precursor of civilized society. There’s no relationship between the two. The previously mentioned Mexicans, kept relatively impoverished by an enlightened yet corrupt elite, consider their own society to be in no way inferior to that of their northern neighbors. World history is littered with oppressive regimes that placed their own survival, using theft and mismanagement, over the triumph of the human spirit.

  5. Haiti’s problem is not her tax-system but a society that allows corruption and fails to uphold and inculcate certain values; such as personal responsibility and individual accountability, the importance of familial and national obligations, education, thrift, the work ethic and respect for the law.

    Britain is an exemplar of what an income tax used to support socialism leads too, societal collapse. A road they are well on their way down.

    All the nations that immigrants are clamoring to get into built up the infrastructural wealth that yields a high standard of living, during periods of being low-tax capitalist societies. The sole exception to this is the subsidized European economies.

    All high tax economies are slowly dying;

    And also;

    Nice attempt at a strawman attack. It’s not taxation to which the author objected, it is the ‘progressive income tax’ to which she objected.

    I actually agree that those with the most to gain would be most likely to take advantage had they not the obligation to reveal their income. Such as the left-wing media cheerleaders like George Soros…and most of Hollywood.

    Now, fulfill our expectations by “stumbling across the truth, picking yourself up and running along as if nothing has happened”.

    • GB — major apologies for the delay in this comment appearing. It got caught in the spam filter due to the multiple links, and I didn’t see it until today Note to self: scroll ALL the way down through the spam when weeding it out…

  6. OC, I think this starts to get at the heart of the issue. Another aspect of the income tax is that because of the mere fact of withholding, people lose sight of the actual costs of government. At the end of the year when they, or more likely their representative, does their tax return, the focus is on their tax refund, not the amount of taxes they’ve paid. Then they get a check from the feds or the state, and it’s as if this is some kind of government largesse. The fed is that kind old man who gives them money each year, when in fact, it’s their money to begin with.
    This only enhances the people’s impression of dependence on their government, when in fact, it’s the other way around.

    Very clever.

    Any government has no money except for what the people give them, or they borrow in their name. If their was some way to restore the connection between the people and their money, I think it would go a long way to resolve a lot of problems. I don’t think there is a snowball’s chance in hell of the government giving up on withholding though.


  8. That’s a great perspective J.E. And I agree – we should all look at taxes this way. And I fully agree that if we could make it so that we citizens pay our taxes directly to the govt rather than through payroll deductions, there would be much more resistance to rising tax rates. Maybe we could force the govt not to raise our taxes. Or, gee, lower them!

    Along somewhat separate lines, I read what I thought was a great idea – to require the govt to list on everyone’s Social Security statement a running total of what they’re “making” in SS benefits along with what they *would* be making if that money was invested in the stock market (perhaps a basic market indexed fund or something). Maybe people would start realizing that they’d be better off with *their* money invested in the stock market rather than giving it to the govt to squander. Maybe this would give some political momentum to finally reforming the SS system before it buries us. Which may have the added (main?) benefit of blissfully getting the govt out of the “retirement” business of the citizens. If not completely, then at least mostly.

  9. OC: I too agree with your point about the insidiousness of the payroll deduction. As someone who has for many years had to pay taxes quarterly, I can attest that one becomes acutely aware of how much the gov is taking, and how little one gets in return.

    Let me add this thought. Much of our taxation problem is that we have become obsessed with having “Federal” solutions to every conceivable problem, or discontent. Unfortunately, the Feds have so much money that they waste it, on dubious progams and on their own bureaucratic salaries.

    I believe that the reason for this deference to the Federal “solution” is a hold-over from the battle against racial discrimination of the 60’s. Racism at the state and local government level, particularly in the South, made most of my Yuppie generation extremely skeptical of state and local government and overly-enamoured of anything Federal.

    Please don’t misunderstand me. I completely agree that Federal intervention — particularly by Federal District Court judges — was needed to deal with the scourge of segregation. But, those days are long over. And, in any event, the solution of Federal intervention was misapplied to problems that had nothing to do with racial issues. This was one of many mistakes of the late, and unlamented, Great Society.

    Now to my point: if we would only properly limit and reduce Federal taxation, we would have the money available so that states and localities could, if they wanted, increase their taxes, to pay for those services that they thought were important. Instead, the Federal taxing system, over which the citizens have no control, has destroyed the ability of states and localities to tax — which state and local taxation is one of the few areas where citizens can, and do, express their preferences.

  10. Hi Samuel,

    Social welfare is only one component of the civilization we as a society decide to fund with our tax-money. We also fund defence, law and order, a lot of infrastructure, healthcare for the old, poor and government employees (including military), cushy pensions for the latter, and a chunk of infrastructure. And of course, the apparatus of government itself.

    Greece has one of the lowest tax-burdens within the EU (And due to widespread tolerance of tax-evasion in Greece the rate is even lower in reality than on paper). Greece also has among the least generous health and welfare regimes within the EU. It is predictably one of the poorest EU nations – on a par with the so-called “New-Europeans” of central and eastern Europe. Greek per-capita income is not much more than half of the higher taxed “old European” nations like France, germany, the Benelux, and UK. The latter have real disposable incomes similar to ours. Greece is more akin to Turkey Louisiana and Mexico. In any case the rich high tax nations of “old Europe” are bailing out the Greeks by underwriting her soverign debt.

    The only western nation with a higher percentage of children born out of wedlock than in the UK is our own dear US. However, the UK stats also include the growing number of stable families of partners who choose not to marry. Much more significantly, we in the US also lead the world in teenage pregnancies. I don’t know what point you intended to make but nations such as France and Germany have a much lower rate of teenage pregnancy than ours (Or the UK’s) – they also lag far behind us in abortion rates.
    Whatever anger exists in the UK about immigration it pales into comparison when compared to the viciousness of the commentary coming from the far-right here on the same subject. In fact the anti-immigrant UKIP and BNP will not win as much as one seat in the forthcoming UK elections and will between them do well to get 5% of the vote

    Property rights in Western Europe are every bit as protected as in the US, as is the rule of law. I thought I had made the point that the rule of law is also a fundamental prerequisite of western democracy.

    I am always very careful to use the term “Liberal” or “western” democracy” to describe the sort of polity that exists in the US, UK, France, Germany etc. This term connotes not just an elected leadership but the rule of law, and a certain set of basic shared social values. Zimbawe, Iraq, India, Israel, Russia etc. may have elections. But they don’t observe the rule of law as we understand it, or share many of our core values. Neither, of course, does a small vocal and extreme minority in the US.

    As far as taxation is concerned, the people in liberal democracies are sovereign and determine the fiscal balance through the political process. Unless you take the extreme (classical anarchist’s) view that all taxation is theft and that all government is oppression, the only real debate is the fiscal balance.

    Unfortunately, the debate in this blog is frequently grounded on nothing more noble or principled than ‘taxation is OK as long as it is for something that I benefit from or agree with’.

    Regards PW

    • Dear Peter Wise,

      Not that I doubt your words, but I had a look at the Heritage Foundation index of Economic freedom and listen to a Cato pod-cast with a Greek journalist, the fact I collect are :
      1-Greece have not a low tax Burden – 34.4 percent is the overall burden

      2-Government spending is not low – In the most recent year, government spending equaled 44.0 percent of GDP

      3-the government subsidizes agricultural production, distorting the prices of agricultural products. It also can set a ceiling on retail prices and regulates prices for pharmaceuticals, transportation, and energy while setting margins for wholesalers and retailers. They also enforce rigid labour laws – This confirms the account I had from the Cato pod-cast, that the Greek Government is a bloated fully interventionist government, and that every one is assured couchy pensions and jobs for life

      So this doesn’t really support your assertion that Greece is broken because they spent less on welfare and didn’t tax enough … In term of percentage of GDP the Greece would do better than the US if the Taxing, Spending and Borrowing was the solution.

      So I believe that this make my point that welfare is what broke Greece, so Welfare is a luxury not an essential part of civilization.
      Most Western countries have welfare because they can economically afford it, not because the welfare generate wealth … it is an expenditure right ?

      My point about single mothers in the UK was that this creates a lot of social problems, since those kids are more prone to a range of disturbing experience, but like someone said, this is because the Welfare subsidize single motherhood which explain why they get more of it. So in order words they are buying the next generation of likely delinquents and deranged kids by handing checks to single mothers (I know it sounds radical)

      I don’t understand why you gobble in the same basket the essential function of the government, rule of law, security and defence with the welfare … is it the only way to legitimize it ?

      Sure you said that the ”people is sovereign” but I don’t believe that whatever decision the majority decide to take is just by definition. There are inalienable rights that can’t be trample unto. Democracy without limits is simply mob rule. Violation of property rights by one person doesn’t become right because 10 000 have agreed to impose it on you. so such high level of taxation for non essential functions of government are indeed violation of property rights.

      What are not the essential function of government ? I would say all the range of Welfare, Education, Health Service, transport, research, art subsidies, farm subsidies.

      None of the above are the essential functions of government … sure you could have a point about infrastructure, but some country such has the US have a private sector that can finance and construct them. For other countries with low capital, if an infrastructure is to be constructed, it should be on user fees or a one time ”tax”.


      • Just to add some points:

        1- The idea that poor countries have low tax rates is a mix, they sometime have high Import Tariff even between poor countries, in Africa the average is 34 %. They also have burdensome Inflation tax, of sometime 10% per month, but you can evade this one by holding dollars. Then they can try to collect taxes from the view formal business that may open, with in some case tax of 25% …

        2- On the question of the sovereignty of the people: The ”people” is not sovereign, since it is not a person : it has no will, desires or action, so it can’t be responsible. Therefore someone who can’t be held responsible can’t be sovereign… this is just like corporations or society : they are just a way to recognise a group of people, but are not ”sovereign entities”.
        Sure the individuals that make the ”people” have the sovereignty to associate and work together has they wish but not to coerce others to take part. Due to this moral and practical limitation, the ”people” should limit their decision to essential aspects of government and work the others among groups that freely associate.

      • Dear Samuel,

        “Heritage” is an unreliable source for anything because it doesn’t do original research. Instead, it dines al-a-carte on other people’s stats and cobbles up something it styles “Index of Freedom” which reflects its particular (far-right) prejudices. Eurostat does the basic research by way of independent universities and publishes the data and methodology. You can check these figures online.

        The correct statistics are as follows (per “Taxation Trends in European Taxation”, published by Eurostat)

        1. The overall (direct and indirect) average tax take in the EU is a tad under 40%.

        2. The Danish are the highest taxed at a whopping 49.1%. Romania is lowest at 28.6%. Greece is 6th lowest of the EU at 31.4%. It is well under the statistical median. The only lower taxed member-states are some of the “New” Europeans from the former USSR satelites. Needless to say, Romania is almost at the bottom of the table.

        3. Generally, with the notable exception of Ireland, the national percentile tax-take tracks national per-capita income (PCI).

        4. Denmark, the third richest EU country has the highest marginal income tax rate at 59%.

        5. Greece is the second poorest nation in terms of per capita GDP and PCI of the “old” EU states at 14th place out of the EU 25. Only the “new” EU countries of the former Soviet block and Malta are poorer

        6. High tax Luxembourg (richest nation on the planet) and Norway are the richest EU nations by PCI. (Medium tax Ireland used to be in third place but has dropped down the scale because of the cost of bailing out its crisis stricken banks).

        7. Greece has the same agricultural subsidies as every other EU nation. Agricultural subsidy is an EU, not a member-state function. The overall level of EU agricultural subsidies are similar to the subsidies we in the US give to our own farmers.

        8. All EU states regulate the price for pharmaceuticals by direct bargaining between their governments and the industry.

        9. I did not argue that welfare or taxation makes a country wealthy. I merely pointed out that the corollory (which is the contention of the far-right) is not born out by the facts.

        10. Greeks don’t “all have a job for life”. They have one of the higher unemployment rates in the EU.

        11. All EU countries (and the US) “hand cheques to single mothers”. Nobody is arguing that single motherhood – particularly single teenage motherhood – is socially desirable. In particular, the life-chances of children born to single mothers are poor in all western democracies. However, we and the UK seem to have far more of them. This would seem to suggest that there is some particular feature in US and UK society that is not shared by the other countries – rather than the payment of welfare – which encourages single motherhood.

        12. Did I ever argue that sovereignty of the people was the only thing that distinguishes western democracy? No I didn’t. I think I remember mentioning the “rule of law” (all persons are equal under the law) and “common core values” including the sanctity of private property. These common principles, including the separation of government powers, are embodied in the constitutional documents which delineate the organic law and basic rights in all western democracies.

        13. Legitimate taxation is what the people decide is legitimate by way of the constitutional and legislative process. More or less warfare or welfare is a matter of detail for legislation by the elected legislators.

        14. You are entitled to your opinion as to what is legitimate for government to spend our tax-money on and what are the essential functions of government. I and most other Americans have a different opinion. Viva democracy. (Even our Kind Host believes government spending on healthcare is ok as long as she is the beneficiary)

        15. You are free to go live in the woods and eat berries. However, if you involve yourself in a society or community you must obey its rules. Fortunately, we in the US decide these rules, not by diktat, but by the democratic legislative process and in accordance with our Constitution.

        Regards ,PW

      • @Peterwise:

        Since it is seems highly unlikely that this discussion will ever reach any significant conclusion.
        It was unfortunate that:

        1- we could neither have a serious discussion on whether or not High taxation produce wealth, or if welfare is the paragon of civilization or a luxury that certain countries can afford. I wish we could debate the Greek case, but I don’t have time to engage in a war of numbers

        2- nor debate the function of government and have a conversation about the limits and deficiency of democracy. It is interesting that by sugesting a kind of limited democracy, which is very similar to the Republic describe in your constitution, you insinuated that I advocate ”Dikta” …. so We must be either for unlimited Democracy or Sanguinary Totalitarian Dictatorship ?

        3-Live in the woods and eat berries ? Again it is interesting that no discussion can be carried without extreme caricature : You are for a legislative assembly with unlimited powers or primitivist anarchist nut …. I though that a serious conversation about positive and negative rights could be possible, the proper role of government or the benefice of a constitutional republic but looks like those outdated things doesn’t matter anymore .

        In completely unrelated news the EU have declared ”Overseas Vacation” an human right …. but I don’t want to adventure myself to question whether this kind of positive right is either justified, logical or simply insane since it would gain me the title of anarchist nut and Totalitarian sympathizer

        But it was still a pleasure anyway


  11. “The only western nation with a higher percentage of children born out of wedlock than in the UK is our own dear US.”

    Why do you suppose that would be? You don’t imagine that a social welfare system that PAYS young ladies to become mothers without the benefit of husbands would have anything to do with that, do you? Or, at the very least, removes the most serious economic repercussions from pre-marital sexual activity? But a society of fatherless children is probably the very kind of advanced civilization you’re advocating. And we members of the hoi polloi are cretins for objecting to our tax dollars being used in such a manner.

    • France, Germany, and the other nations of “old” Europe provide social-welfare for single mothers in much the same manner as does the US. The real interesting question is why the former societies have such lower rates of indigent single motherhood. And it can’t be because of aborton because those allegedly apostate societies also have much lower abortion rates than the preachy church-going US.
      Perhaps its because we have ditched the value system in which people see themselves members of a moral community.

  12. To borrow a term from car sales – the government has changed us into “payment buyers” for our income tax. It’s a lot easier to pull $100 per week out of a paycheck than to try to collect $5,000 at the end of the tax year. You see similar escalations in price in medical services when you start “pooling” the insurance resources rather than having to pay for the service out of your own pocket. By turning you into a payment buyer, the salesman (government) can get you to pay a higher price than you normally would.

  13. Oh dear me, Samuel,

    I am just going to have to increase your pleasure.

    The EU has declared no such right. You have confused yourself again by half understanding the stuff you read.

    The EU Treaties enshrine what are known as the “four freedoms”. These are the basic rights which underpin the economic union comprising the 25 member-states. One of these rights is the right of a national of one member state to work, or seek work, in another member-state (And to be treated as a national of the latter for the purpose of taxation and employment-rights and welfare. A second rignt is the “right of establishment” which gives the right to a corporation, trader or business, resident in one member-state to trade and establish itself in another. Again, the non-discrimination rule applies in relation to itself, and the goods and services it trades.

    As far as I’m aware, the citizens of all free nations (except persons who are lawfully incarcerated) are free to come and go from their own country.


    • It doesn’t look like this source is false :

      There is nothing out of the normal European idea that they can create right out of thin air and do whatever they want.

      The list of rights you have sent to me seems right, in the sense the cadre of a union of 25 welfare states. But still there is a giant elephant in the middle of the room : Positive Rights.

      Positive rights are Benefits, ie you are entitled to stuff or services, but for all practical purpose we know that those stuff don’t fall from the sky but will be taken from someone else …. lets see some example : Right to work and to housing

      But I feel lazy I feel that this is going nowhere

      • Read it again, Sam.

        The words “could”, “if”, “proposed” etc. should provide you with a clue. Even though the notoriously anti-EU London Times (It’s owned by Fox News owner, Rupert Murdock) tries to make it appear otherwise, it is only a proposal by one (very left of centre) politician. Like most of this guy’s proposals it has a snowball’s chance in hell of passing the EU legislative process and making it into Community law.

        By the way, a number of EU member-states (as distinct from the EU itself) have subsidized internal public transport schemes for their pensioners.

  14. The economic Shangri-La that is “Europe” just keeps being revealed as a government scheme to pillage the populace and entrench the public sector: “Belt tightening in the private sector led to 61,000 less people being employed by companies in the final quarter of 2009. Increased state spending in the same period meant there were 7,000 more civil servants.

    Take pay. Average total pay, including bonuses, in the private sector in February was £451 a week. Excluding bonuses it was £418 a week. But in the public sector the corresponding figures were £462 a week and £459 a week. While you recover from that shock, I’m going to have to inform you that in the three months to February, total private sector pay rose 1.8pc on a year earlier. In the public sector, pay rose an inflation-busting 3.7pc. Strip out bonuses and the figures are even worse. Private sector wages rose 0.9pc, while state workers enjoyed pay rises of 3.9pc.

    Not only do figures such as these explode the myth that public sector pay is lower than private sector pay (an argument used to justify ludicrous increases for town hall and healthcare bureaucrats) but reveal just what a raw deal taxpayers are getting when you consider productivity.

    In recent years, private sector productivity has risen 20pc while public sector productivity has fallen 3pc, something the business leaders supporting a reversal of Labour’s National Insurance hike pointed out.

    It’s not just taxpayers who are getting a raw deal but the economy as a whole. We have created an unproductive and overpaid public sector which now accounts for 52pc of the economy. The private sector simply can’t afford to support it, and the Government, with a £167bn deficit, certainly can’t. The party’s over for the public sector. ”

  15. no denying that the UK (one of the lower taxed EU nations) has suffered severely as a result of the Reagan/Thatcher era financial deregulation coming home to rooste.

    As for the article you dredged up from the Daily Telegraph….

    The UK is in election mode and the Tory lead in the polls is rapidly vanishing. Expect more of these types of stories from the panicking Tory press as the election nears.

    Facts are that UK taxation is about 35% and the budget deficit approximately 7% (Structurally lower, but this figure includes once-off bank-recapitalization borrowings ths year). Do the math. On the above figures 52% public sector is nonsense. Eurostat suggests a figure nearer 40%. France and Germany (who are effectively bailing out low-tax Greece are back in growth and suffered far less than the UK or US because of their more tightly regulated financial sectors (80% mortgages are the max in these countries). And the world is much more complex than simplistic ‘low productivity public sector and high-productivity private enterprize. German BMW is a European world-beater. So is French EDF which exports cheap nuclear electricity all accross Europe and is at the forefront of the contractors currently engaged in bringing the antiquated (private-enterprize) US electricity transmission system up to Western European standards and into the infotec age.

    Public sector equivalent pay is generally higher for similar type employment in the US too because of the perks that public sector workers enjoy (You will get the picture if you price free healthcare, big pensions, and right to retire years before private workers into public salaries)

    And by the way, why do you so hate and resent the Europeans? They don’t hate Americans.

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