Why Aren't Taxes Higher in the US and Can They Be Lowered?

Often, discussions about taxes in the United States revolve around the perception that taxes are not excessively high, despite occasional debates on their necessity and efficiency. In reality, the total tax burden in the United States ranks around 35th among 38 OECD countries (Organisation for Economic Co-operation and Development). This ranking suggests that, by global standards, the U.S. tax system is relatively moderate.

Interestingly, while the tax burden may not be the primary issue, the perception of high taxes and the desire for lower taxes persists. This discrepancy exists in large part because many Americans expect government services and benefits without fully recognizing the cost. Consequently, the challenge lies in distinguishing between the need for taxation and the demand for low taxes, which can often be at odds.

Limited Control Over High-Tax Policies

The political landscape in the United States poses significant challenges to implementing higher tax policies. The rich possess considerable influence over Congress, and thus, there is limited political will to tax the wealthy more heavily. This dynamic further complicates efforts to raise taxes, as critical spending areas such as healthcare often remain underfunded, leading to disparities and suboptimal outcomes.

Taxes and Purchasing Power

Another factor contributing to the perception of low taxes is the seemingly unchanging cost of living. As prices rise, purchasing power diminishes, and workers often feel the squeeze. Unions, in response to this pressure, lobby for higher wages, leading to a cycle of inflation. This cycle means that increased wages eventually translate into higher prices and services, effectively negating the initial efforts.

Spending versus Taxation

To address the issue of perceived low taxes, reducing government spending rather than increasing taxation is often proposed as a solution. By cutting unnecessary programs and welfare, the government could reallocate funds and provide more efficient services. It is essential to critically examine the budget, identify inefficient or unnecessary expenditures, and prioritize spending on areas that directly impact the quality of life.

International Comparisons

International comparisons further highlight the relative moderate nature of U.S. taxes. Countries with higher taxes face the challenge of potential excessive taxation, which can lead to economic inefficiencies and even decreased investment. Conversely, the U.S. has not experienced significant tax cuts in decades due to the delicate balance between economic stability and fiscal responsibility.

Moreover, the U.S. tax system is designed to support a robust capitalistic framework, which inherently brings about income inequality. To counter this, the government continually introduces regulatory measures to monitor and control financial activities, ensuring that all forms of earnings contribute to the broader economic ecosystem.

Looking at other countries, it is evident that the dependency on debt creation is a common feature of modern fiscal policies. Debt is created to ensure that wages are paid, and taxes are a mechanism to repay this debt. However, if the working class earns faster than the government can take, new tax strategies are employed to maintain fiscal balance and prevent inflation.

For example, targeting cryptocurrency and other unreported sources of income (like the unlicensed drug trade) becomes a priority, as these sectors operate beyond the tax system's reach. While the government portrays a concern for public health and well-being, the primary focus remains on ensuring a steady revenue stream to support existing programs and services.

Concluding Thoughts

Overall, the issue of taxes in the U.S. is multifaceted and involves a balance between maintaining a robust economy and providing equitable and efficient public services. The debate over tax levels is not simply about numbers, but about how society values different forms of investment in its future. By examining the interplay between government spending, taxation, and economic realities, stakeholders can work towards a more informed and balanced discussion.