Politics

Happy tax day, Americans: though Europeans get more for their money

Article published on April 15, 2010
Article published on April 15, 2010
There is a perception that the poor Europeans are overtaxed serfs. But a closer look reveals that this is a myth that prevents Americans from understanding the vast shortcomings of our own system; 15 April is the day that income tax returns are due in the States

Most Americans seem to regard 15 April - the day that income tax returns are due - as a recurring tragedy akin to a biblical plague. Particularly in 2010, with US government deficits soaring, everyone from the teabaggers to Fox News and Senate Republicans are sounding the alarm about a return to 'big government'. Recently former New York mayor Rudy Giuliani even stated that president Barack Obama was moving us towards - gasp - European socialism. Europe frequently plays the punching bag role during these moments because there is a perception that the poor Europeans are overtaxed serfs. But this is a myth that prevents Americans from understanding the vast shortcomings of our own system.

The Swedish example?

A few years ago, an American acquaintance who lives in Sweden told me that, quite by chance, he and his Swedish wife ended up sharing a limousine to the theatre district in New York City with a southern US senator and his wife. The politician, a conservative, anti-tax democrat, asked swaggeringly commented about 'all those taxes the Swedes pay.' To which my acquaintance replied: 'The problem with Americans and taxes is that we get nothing for them,' explaining about the comprehensive level of services and benefits that Swedes receive. The rest of the ride was unsurprisingly quiet.

'The problem with Americans and taxes is that we get nothing for them'

The fact is, in return for their taxes, Europeans receive a generous support system for families and individuals for which Americans must pay exorbitantly, out-of-pocket, if they are to receive it at all. That includes quality healthcare for every single person in return for a modest amount deducted from their paychecks. The average cost is about half of what Americans pay, even as various studies show that Europeans achieve healthier results. While 47 million Americans don't have any health insurance at all, many who do pay escalating premiums and deductibles. But that's not all. In return for their taxes, Europeans also are receiving affordable childcare, a decent retirement pension, free or inexpensive university education, job retraining, paid sick leave, paid parental leave, ample vacations, affordable housing, senior care, efficient mass transportation and more.

Europe: same tax paid, but more supports

Friends have told me they are saving nearly a hundred thousand dollars for their children's college education, and most young Americans graduate with tens of thousands of dollars in debt. But European children attend for free or nearly so (depending on the country). Childcare in the US costs over $12, 000 annually for a family with two children. In Europe it cost about one-sixth that amount, and the quality is far superior. Millions of Americans are stuffing as much as possible into their IRAs and 401(k)s because social security provides only about half the retirement income needed. But the more generous European retirement system provides about 75 - 85% (depending on the country) of retirement income. Either way, you pay.

Americans' private spending on old-age care is nearly three times higher per capita than in Europe because Americans must self-finance a significant share of their own senior care. Americans also tend to pay more in local and state taxes, as well as in property taxes. Americans also pay hidden taxes, such as $300 billion annually in federal tax breaks to businesses that provide health benefits to their employees. When you sum up the total balance sheet, it turns out that Americans pay out just as much as Europeans - but we receive a lot less for our money. Unfortunately these sorts of complexities are not calculated into simplistic analyses like Forbes' annual tax misery index, a 'study' which shows European nations as the most miserable and the low-tax United States as happy as a clam - right next to Indonesia, Malaysia and the Philippines. In this economically competitive age, increasingly these kinds of services are necessary to ensure healthy, happy and productive families and workers. Unless you are a member of congress, which of course provide European-level support for its members and their families. That's something to keep in mind on 15 April. Happy Tax Day.

Steven Hill is the author of the recently published 'Europe's Promise: Why the European Way is the Best Hope in an Insecure Age' and director of the Political Reform Program for the New America Foundation

Images: main ©@superamit/ courtesy of Flickr, founder of Photojojo