I have always wondered if the taxes people pay correlate with the availability of social and economic programs and safety nets, not to mention the military programs that protect them. This idea comes in light of the notion that Europeans are highly taxed compared to their American counterparts, but they seem to have access to free (or almost free) education and health care while the US provides neither. The Europeans live and work at a more leisurely pace than Americans and they have the comfort of knowing that their government has put safety nets in case a disaster. The Europeans do a lot to ensure that all their citizens have comparable opportunities, and thus you are less likely to see a huge gap between the poor and the rich. Perhaps the lack of incentive to excel has stifled entrepreneurship and innovation in Europe to some extent. In fact, Europe has historically high unemployment rates than the US and the size of government there is significantly larger than that of the US. In a recent survey(which I don't intend to locate at this time), a large number of French youngster aspired to get a government job and keep it for the rest of their lives while that number was in the 25% range for Americans. Nicolas Sarkozy is pursuing reforms to uproot these socialist tendencies and make France a more competitive nation in the world stage.
In general, the US appears more capitalistic while the Europeans are relatively more socialistic. In terms of the political divides ithe US, the so called tax-and-spend democrats have more ideals while republicans fight for smaller government and openly capitalistic modes. As a result, the democrats social/economic plans appeal to the poor and ideological liberals while the republicans thrive on the support of the rich and social conservatives. The democrats have historically taxed higher and spent more on government social and economic programs while republicans have had a tendency to cut taxes and strengthening the military at the expense of social programs.
The real question is, do tax rates have significant correlation with access to social services? For that, I looked at the average income and corporate tax rates in the US and compared them with that of other developed countries. I also examined the tax revenue as a % of GDP.
INCOME AND CORPORATE TAX RATES::
The graph below (Courtesy of Wikipedia) indicates that the US personal income tax rates are one of the lowest amongst developed nations while the corporate taxes are the 2nd highest behind Japan and slightly ahead of Germany. Let me take a breath and ponder this observation. Somehow, countries like the US, Japan and Germany who have a large base of multinational companies can afford to charge large corporate tax rates while other nations tax personal incomes more. Going back to the question of tax rates and access to social services, it appears most Europeans get taxed 40%-50% on their personal income and thus they have every right to expect more services from their government. For the US, that average personal income tax rate is about 28%. It would be interesting to see what % of the US tax revenue comes from corporate vs. personal incomes.
TAX REVENUE AS A % OF GDP::
I believe this statistic correlates highly with the "size of government". Countries that tax highly, but provide a larger set of services to their citizens will be high up on this list and those that don't will be lower. Not surprisingly, Scandinavian countries with the most socialistic tendencies have a "big" government while countries like the US leave much of their economy in the hands of the people and the free market. I am delighted to see the match between my intuition on this matter and the realities shown in the graph.
MILITARY SPENDING AS A % OF GDP::
OK, may be Americans should not expect as much from their government as their European counterparts, but still the whole crisis with extremely high cost of higher education and health care in the US puts the government's role, or the lack thereof, into question. A government is supposed to take care of the well-being of its people, not only through the military and police, but other basic services like education and health care. The US government, however, has largely ignored the latter two for the former. The US military budget is by far the highest in the world and that is expected from the lone superpower. However, what is somewhat disturbing is that its military spending as a % of the GDP (~4%) is also immensely higher than any other developed nation. One could argue that it is comparable to the next closest superpower, China, which also spends about 4% of its GDP on the military. I guess it is not as bad as I initially thought, but one must remember that this statistic is excluding some $200 billion/year being spent in Iraq and Afghanistan. If that $200 billion/year is included, the US military would be about 6% of GDP which would be the highest amongst developed nations. The map below indicates military spending as a % of GDP and the actual data is provided by CIA.
My simple conclusion is, while Americans should not expect as much from their government as the highly taxed Europeans do, they should pressure their government into putting more of its military spending/waste towards things that matter like education and health care. Or at least end the war in Iraq and channel that money into peaceful
Can someone get me the data of military spending as a % of tax revenue? That number for the US would be 20% and 30% excluding and including the cost of the war in Iraq. Sure the role of capitalist government might be to protect its people from foreign invasions, but that is awfully high for peace time in my humble, layman opinions.
Other Stats at:
http://www.oecd.org/document/60/0,2340,en_2649_34533_1942460_1_1_1_1,00.html
http://en.wikipedia.org/wiki/Income_tax_in_the_United_States
http://en.wikipedia.org/wiki/Tax_rates_around_the_world
http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP
In general, the US appears more capitalistic while the Europeans are relatively more socialistic. In terms of the political divides ithe US, the so called tax-and-spend democrats have more ideals while republicans fight for smaller government and openly capitalistic modes. As a result, the democrats social/economic plans appeal to the poor and ideological liberals while the republicans thrive on the support of the rich and social conservatives. The democrats have historically taxed higher and spent more on government social and economic programs while republicans have had a tendency to cut taxes and strengthening the military at the expense of social programs.
The real question is, do tax rates have significant correlation with access to social services? For that, I looked at the average income and corporate tax rates in the US and compared them with that of other developed countries. I also examined the tax revenue as a % of GDP.
INCOME AND CORPORATE TAX RATES::
The graph below (Courtesy of Wikipedia) indicates that the US personal income tax rates are one of the lowest amongst developed nations while the corporate taxes are the 2nd highest behind Japan and slightly ahead of Germany. Let me take a breath and ponder this observation. Somehow, countries like the US, Japan and Germany who have a large base of multinational companies can afford to charge large corporate tax rates while other nations tax personal incomes more. Going back to the question of tax rates and access to social services, it appears most Europeans get taxed 40%-50% on their personal income and thus they have every right to expect more services from their government. For the US, that average personal income tax rate is about 28%. It would be interesting to see what % of the US tax revenue comes from corporate vs. personal incomes.
TAX REVENUE AS A % OF GDP::I believe this statistic correlates highly with the "size of government". Countries that tax highly, but provide a larger set of services to their citizens will be high up on this list and those that don't will be lower. Not surprisingly, Scandinavian countries with the most socialistic tendencies have a "big" government while countries like the US leave much of their economy in the hands of the people and the free market. I am delighted to see the match between my intuition on this matter and the realities shown in the graph.
| # | Country | Tax in % of GDP (2005) |
|---|---|---|
| 1 |  Sweden | 51.3 |
| 2 |  Denmark | 50.3 |
| 3 |  Belgium | 45.5 |
| 4 |  Norway | 44.3 |
| 5 |  France | 44.0 |
| 6 |  Finland | 43.9 |
| 7 |  Iceland | 42.4 |
| 8 |  Austria | 42.0 |
| 9 |  Italy | 40.6 |
| 10 |  Slovenia | 40.5 |
| 11 |  Germany | 38.8 |
| 12 |  Hungary | 38.5 |
| 13-14 |  Luxembourg | 38.2 |
| 13-14 |  The Netherlands | 38.2 |
| 15 |  United Kingdom | 37.0 |
| 16 |  New Zealand | 36.6 |
| 17 |  Czech Republic | 36.3 |
| 18 |  Spain | 35.6 |
| 19 |  Bulgaria | 35.9 |
| 20 |  Cyprus | 35.6 |
| 21-22 |  Malta | 35.3 |
| 21-22 |  Portugal | 35.3 |
| 23 |  Poland | 34.2 |
| 24 |  Canada | 33.5 |
| 25 |  Turkey | 32.3 |
| 26 |  Estonia | 30.9 |
| 27-28 |  Australia | 30.9[2] |
| 27-28 |  Ireland | 30.8 |
| 29 |  Switzerland | 30.0 |
| 30 |  Latvia | 29.4 |
| 31 |  Slovakia | 29.3 |
| 32 |  Lithuania | 28.9 |
| 33 |  Romania | 27.3 |
| 34 |  United States | 26.8 |
| 35 |  South Korea | 25.5[2] |
| 36 |  Mexico | 19.9 |
MILITARY SPENDING AS A % OF GDP::
OK, may be Americans should not expect as much from their government as their European counterparts, but still the whole crisis with extremely high cost of higher education and health care in the US puts the government's role, or the lack thereof, into question. A government is supposed to take care of the well-being of its people, not only through the military and police, but other basic services like education and health care. The US government, however, has largely ignored the latter two for the former. The US military budget is by far the highest in the world and that is expected from the lone superpower. However, what is somewhat disturbing is that its military spending as a % of the GDP (~4%) is also immensely higher than any other developed nation. One could argue that it is comparable to the next closest superpower, China, which also spends about 4% of its GDP on the military. I guess it is not as bad as I initially thought, but one must remember that this statistic is excluding some $200 billion/year being spent in Iraq and Afghanistan. If that $200 billion/year is included, the US military would be about 6% of GDP which would be the highest amongst developed nations. The map below indicates military spending as a % of GDP and the actual data is provided by CIA.
My simple conclusion is, while Americans should not expect as much from their government as the highly taxed Europeans do, they should pressure their government into putting more of its military spending/waste towards things that matter like education and health care. Or at least end the war in Iraq and channel that money into peacefulCan someone get me the data of military spending as a % of tax revenue? That number for the US would be 20% and 30% excluding and including the cost of the war in Iraq. Sure the role of capitalist government might be to protect its people from foreign invasions, but that is awfully high for peace time in my humble, layman opinions.
Other Stats at:
http://www.oecd.org/document/60/0,2340,en_2649_34533_1942460_1_1_1_1,00.html
http://en.wikipedia.org/wiki/Income_tax_in_the_United_States
http://en.wikipedia.org/wiki/Tax_rates_around_the_world
http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP
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