Americans Are Big Babies About Taxes

Americans Are Big Babies About Taxes

Americans Are Big Babies About Taxes

A blog about business, finance, and economics.
Sept. 8 2010 8:55 AM

Americans Are Big Babies About Taxes

National Public Radio aired half a good story this morning: A young couple living in Stratford, Conn., opened up their financial books to a reporter and obsessively documented all the taxes that they pay . Not just the big, obvious taxes like income and property tax, but the smaller, obscure ones: car tax, booze tax, county tax on cell phone use, etc. Anyone listening, I think, could sympathize with the man of the household, Mr. Milkove, who said of his exercise: "I wouldn't recommend it. You wasted an evening, and it just ticks you off." And the comment from an expert that NPR consulted also seems undeniable: "People get very frustrated at taxes that are relatively small compared to big taxes."

So, OK, no one likes paying taxes of any kind. But when you add up all the annoying payments, the total taxes the Milkoves shell out, as a percentage of their income, is 24.1 percent. Even within the narrow context of the NPR story, that's not much; it's actually significantly below the Tax Foundation's estimate of a national average, which is 28 percent. (At a minimum, this suggests that NPR could have had a juicier story with a different family.)

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Obviously, individual mileage will vary, but as a reasonably well-paid New York City resident who's also lived and paid taxes abroad, I look on those tax rates as enviably low. I've not done the full data dive, but I guarantee the comparable figure in my household would be upward of 45 percent. On the federal level, this means that I am subsidizing the Milkoves, who actually own things that I don't, like cars and a house.

Does that bother me? Well, it's hardly a thrill. But the fact remains that most of the developed world pays a much higher tax rate than the Milkoves or the average American. You wouldn't know it from the NPR story, but the Organization for Economic Cooperation and Development has been collecting this data in 30 countries for years , and consistently the United States comes out near the bottom of the tax burden chart. If the Milkoves lived in the average OECD country, they'd be paying more than 30 percent of their income in taxes, and in several European countries it would be more than 40 percent.

Yes, I know there are a thousand reasons to hate the American tax system: its complexity, its unfairness, the wasteful or counterproductive ways the money is spent. But can we please get some context for all the whining about the burden being too high? 

James Ledbetter is the editor of Inc. and the host of Panoply’s podcast Inc. Uncensored.