Big government is expensive
Let’s talk about tax rates this week. According to the Tax Foundation, a nonprofit organization that studies such things as tax rates, taking into account all of our phase-outs, deductions and credits, the highest tax rate any United States individual could pay today would be 39.76%. That puts us at number 21 on the worldwide tax rate list and places us below the average worldwide highest rate of 42.95%. Currently, there are eight countries with a highest tax rate at or above 50%. This dubious list is led by Denmark at 59.74%, followed by Sweden at 56.60%, France at 55.85%, Belgium at 53.50%, the Netherlands at 52.00%, Finland at 50.90%, Austria at 50% and Japan at 50%.
What most of these countries have in common is that, for the most part, they practice what is called a European brand of socialism. They have socialized medicine from the cradle to the grave. Their business environment is highly regulated by the government, making it more difficult to start a business. The government has entitlement programs in place to help citizens in need. These are all good things. The government is charged with taking care of the populace and it takes its role seriously.
To argue against having medical coverage in place that will take care of a person from the cradle to the grave makes the arguer sound like a lunatic. The government has regulations in place to make sure people starting a business have the best chance for success while simultaneously protecting those people already in business. Who can think that is a bad thing?
When people get beat up by the economy like we are getting beat up in Michigan today, why shouldn’t the government have safety net programs in place to protect people? Today, that sounds pretty good to most of us. And therein is the problem.
The government doing more for us sounds pretty darned good to most of us. It is very enticing. The government will do more for us and it will take its role seriously. However, it comes at a cost and that cost is called higher tax rates.
I’m not prepared to argue that one of those costs could also be a loss of some of our freedom. The Squire would probably like me to stick to taxes a little more as it is, so I will stick to taxes—39.76% will not pay for socialized medicine, 39.76% will not pay for a government that will more regulate our businesses, and 39.76% will not pay for a government that has all types of entitlement programs in place.
In Denmark, it takes a 59.74% tax rate. In Sweden, it takes a 56.60% tax rate. In France, it takes a 55.85% tax rate. In Belgium, it takes a 53.50% tax rate. In the Netherlands, it takes a 52% tax rate. In Finland, it takes a 50.90% tax rate. In Austria, it takes a 50% tax rate. In Japan, it takes a 50% tax rate.
I wonder how far up the list we will climb before we attain our own brand of socialism. Since the United States always does things bigger and better, I wouldn’t be surprised that we might even end up at the top of the list.
I don’t think we all fully understand where our government is heading. It’s very seductive, but it’s expensive. Big government is expensive. Stimulating the economy, regulating the automobile business, regulating the banking business, regulating the mortgage business, and regulating the financial services industry took a trillion and a half dollars last year all by itself. Check that—it took a trillion and a half dollars more than the government took in. Implementing health insurance reform and regulating all of those insurance companies will take another trillion dollars according to the Congressional Budget Office. Hiring 16,000 Internal Revenue Service agents isn’t cheap. Oh, by the way, the trillion dollars is a trillion dollars more than the government will take in and if you think the trillion dollars will cover the bill, you will probably enjoy Alice in Wonderland also.
Well, I will get off the soap box now. But the truth is that we are heading for higher taxes in the not-so-distant future. In my mind, it’s a foregone conclusion. It’s just a matter of how far up the Tax Foundation’s worldwide tax rate ladder we climb. Twenty years from now, these years, tax-wise, might just be considered the good old days of taxes. This is Jerry Coon signing off.
Jerry Coon is an Enrolled Agent. Action Tax Service is located on Northland Drive in Rockford. Contact Jerry at Action’s website at www.actiontaxservice.com.