It could have been worse. Indeed, It should have been worse.
I’m talking about the tax bite Uncle Sam just took out of my bank account. It was simply too damn small at a time when America is trying to shrink its breathtakingly high budget deficit — and deliver the level of services that citizens expect of a first-rate nation.
Disclosure: I was lucky enough to be born to a successful businessman, now deceased. I’m among the financially favored whom President Obama singled out for a tax increase last week.
It’s about time.
The notion that higher taxes for the most fortunate among us would stifle individual initiative does not compute. I’m old enough to remember that in the early postwar years the top marginal tax rate was in the (gasp!) 90-percent range. Those years were pretty prosperous.
So, too, were the years spanned by Bill Clinton’s time as president. When he took office in 1993, the top tax rate was down to 31 percent and the government, then as now, was living beyond its means. He soon raised that rate to 39.6 percent, helping to produce the longest unbroken period of economic growth in our history, as well as budget surpluses in the final years of his administration. (President Obama wants to restore the top bracket to the Clinton level from the current 35 percent.)
From a political standpoint, Mr. Obama was wise not to propose raising taxes for the middle class. The deficit is so large, however, that deep spending cuts, while also necessary, won’t be enough to close it. For that to happen, nearly everyone will to have to pay higher taxes.
I can hear the screaming now, but it so happens we Americans have been getting off relatively easily. How so?
According to data cited by the Washington, D.C.-based group Citizens for Tax Justice, or CTJ, the combined taxes imposed on individuals and businesses by federal, state and local governments in the United States are among the lowest in the developed world.
Take that, tea partiers!
The group referenced a study by the Organization for Economic Cooperation and Development, which found that in 2008 the U.S. ranked 25th among the 27 nations surveyed for total tax burden as a percentage of gross domestic product, or GDP. Only Turkey and Mexico ranked lower.
What accounts for the low ranking by the U.S. is the comparatively small portion of its GDP represented by collections from social insurance and payroll taxes, sales taxes and corporate income taxes. America ranked in the middle as far as personal income tax burden, although collections from it fell from 12.2 percent of the nation’s GDP in 2000 to 9.6 percent in 2008, reflecting the disastrous George W. Bush-backed tax cuts.
You can see all this by visiting the home page of the website ctj.org. Click on the two-headed arrow to the right of “Recent Reports” and scroll down to the report titled “United States Remains One of the Least Taxed Industrial Countries.” But let’s get back to George W. Bush.
He liked to defend his deficit-inducing tax cuts by telling Americans, “You can spend your money better than the government can spend its money.” Give me a break.
Does he really think enough civic-minded Americans could band together to raise money privately to build an interstate highway system, create the world’s biggest military machine or finance universal health insurance coverage (Medicare) for the elderly? Governments exist to do things we can’t do ourselves.
Sure, we all know there’s a lot of unnecessary government spending, although there are probably as many definitions of “unnecessary” as there are interest groups. What often gets overlooked is the unnecessary private spending by upper-income folks like me of money that might be put to better use in the government’s hands.
More aid for public schools, children’s health insurance or high-speed rail, anyone?
So much must be done if America is to stay both competitive and compassionate. We can’t afford not to have higher taxes. As
George W. once famously said in an altogether different context, “Bring them on.”
Mr. Henry is a frequent contributor to The Suffolk Times. He lives in Orient and New York.