Is 28% of GDP too much to pay in taxes?

I always find these people who think that taxes are too high – no matter what the rate or percentage is - to be such bores. And more than just the I-don't-wanna-share, run-of-the-mill kind of bores, although that certainly plays a role, but really, fundamentally uninteresting, nonthoughtful (to make up a word) people.

Paying some taxes is worth it to me because I know that I'm paying people to help keep children from sleeping in the streets. I'm paying the government to build roads that don't charge me a toll for driving on them. I'm paying doctors and nurses to care for men and women who served our nation in the military. I'm paying caregivers to keep mentally incapacitated people from roaming the streets harming themselves or others. The fact that I'm also paying for obscenely bloated military budgets and pharmaceutical companies' overpriced Medicare medications and farmers to grow crops that no one will eat bugs the crap out of me, but the response has to be more transparency and more understanding of what we are really getting for our money, not some trite “taxes are too high” talking point.

It actually really bothers me that this former teammate of Justin's wants lower taxes so that he can consume, save and invest more. I am grateful that I don't live in his community, since I would find it very difficult to live in a group of people who believe that a society's paramount duty to its members is to maximize the amount an individual can consume, save or invest. I view a functioning society as a community of people who voluntarily share risks and rewards with the overall goal of most, if not all, people being better off together. Sometimes, that means - gasp - that I have to contribute to the pot. But sometimes it also means that I get to pull from the pot, since I'm the one who needs some help. From day to day, you never know where you're going to be, and I prefer to hedge my bets.

And no, I am not a communist. I am a registered Republican.

In the Bible I think it says that 10% is what we should give in charity alone, that is, the number you should contribute to help the less fortunate. I think Islam has a similar amount.

Then if you add infrastructure and services, it doesn't seem unlikely that it would be pushed up to almost one-third. A lot of socialist countries have much higher tax burdens, but a much higher level of services, especially health care.

your former soccer teammate is obviously not terribly bright if he thinks that "taxes have a huge effect on what we can spend on other big ticket items". Since the overwhelming majority of "big ticket items" are bought on credit, the only real determinant is the availability of credit, and interest rates.

I mean, you understand the economy --- why don't you diabuse your acquaintances of this kind of magical thinking?

Paul,

What would you suggest that I use to repay the debt for the big ticket items?

Frizzy Mama,

I thought saving and investing were good and responsible things to do. How many times have you heard people complain about the low savings rate in this country?

All,

Government is a taxpayer funded monopoly. Monopolies deliver goods and services at higher prices, lower quantity and the quality is usually not as good. The government is inherently wasteful and we should be judicious in what we ask it to do.

Consumption, savings and investment fuel the private sector economy which is the engine that generates the taxes to fund our government.

We have the largest economy in the world. Taking 28% out for taxes is a huge amount of money. We are not guaranteed to maintain our position in the world. Go to where Justin grew up in the Bay Area and watch the ships come in full and leave empty. How much more competitive could we be with China and other countries if we didn't put as large a government burden on our companies and citizens?

"What would you suggest that I use to repay the debt for the big ticket items? "

the point is that how much you take home after taxes is not what determines whether you can afford to buy a "big ticket item". Its how much debt you already have, what your credit rating is, and what interest rates are. Under Bush's tax cuts, the average american family got back less than $500 in 2006 (less than $10/week)-- and that is with the "major" reductions in marginal tax rates. The only people that would be able to afford "more big ticket items" are people in the upper income tiers who already have enough to buy all the "big ticket items" they NEED.

Now, maybe you're one of those rich greedheads who wants to be able to replace his SUV every year, but can only do it every two years "because of taxes". If so, shut up and suck it up, because there are too many working poor and lower middle class families who need government services to survive -- and you demand for lower taxes is simply pathetic and disgusting.

"Government is a taxpayer funded monopoly. Monopolies deliver goods and services at higher prices, lower quantity and the quality is usually not as good."

The difference between government and a monopoly is that one if for profit and the other is not.

"The government is inherently wasteful and we should be judicious in what we ask it to do."

The government is good at some things and bad at others, and for that reason we should be judicious about what we ask it to do. Private healthcare in the US is a largely private enterprise, and yet US healthcare consumers pay twice what other countries with government run health care do for a basically equal outcome.

Large organizations of all types private or public, are wasteful. Ask anyone at any mega-corps anywhere in the world.

"Consumption, savings and investment fuel the private sector economy which is the engine that generates the taxes to fund our government."

Futhermore, it is the government that makes our modern economy possible. Why don't stock markets pop up in countries that don't have the rule of law? Why do we find that the stock market runs better when proper regulations are in place? If we are careful about what we ask our government to do, then the amount we spend getting it done is simply what it costs. (Not saying that there isn't any waste, just disputing that 28% is *simply* *too* *much*.)

"We have the largest economy in the world. Taking 28% out for taxes is a huge amount of money."

Well, one reason we have the largest economy in the world is that there are a lot of people here. 28% is 28% and the actual number in dollars is somewhat beside the point.

"We are not guaranteed to maintain our position in the world. Go to where Justin grew up in the Bay Area and watch the ships come in full and leave empty. How much more competitive could we be with China and other countries if we didn't put as large a government burden on our companies and citizens?"

To "compete" with China, we either have to accept their labor and environmental standards, or they have to accept ours. I don't think it is reasonable to ask people to suddenly start living as if they are in a develping nation. (I'm guessing that you might be in one of the occupations that can't be off-shored and which is otherwise protected from globalization by our anti-free-trade immigration policies.)

Paul,

You might very well consider me rich. Every democrat in congress does. I don't think I am but I would like to be one day and I hope the same for you.

Going back to my original post. My wife (who also works) and I are paying the taxes. The taxes are by far our largest expense, exceeding mortgage, food and a few other things combined. I have not even included the 9% sales tax we pay here. We are carrying our weight and then some.

My point is that there is a cost to society in taking a large chunk out of the economy via taxes. Consumer spending (2/3rds of the economy) does go back to the ability to pay whether you pay cash or take out a loan. I think we would be doing our society, including the working poor and lower middle class, more good if the government took less of our money so we could decide for ourselves how it is best spent or invested. Do you really want me to tell you that you already have enough to buy what you need? Where does that end?

You have assumed that I drive an SUV. I drive an old midsized car that gets 30mpg on the highway. It's paid for and costs less to operate. Am I greedy for not wanting to pay the oil companies and the car companies more? How is objecting to tax rates any different?

Perhaps you think of SUVs as inefficient gas hogs that are a terrible waste of resources. That's pretty close to my view of the way government spends our money.

Hey Soccer Bore, exactly what do you think you would get if you had that 28% more? Your suggestion is that more in your pocket means more you can spend, save, etc. And who would you buy from? Corporations? Who would inevitably raise prices because consumers can spend more for less?
How exactly does that 28% back in your pocket cover expanding needs such as infrastructure, police, education, etc. We grow as a country by leaps and bounds, at what point does it make sense to cut back on what we pay in taxes when there are so many more people in need....like the millions of uninsured?

When does it make more sense to have Congress focus on balancing the budget, on what it subsidizes or not, Frizzy Mama made some great points about that. I do think we've reached a threshold with how much is spent, but we should press more on where that money is going. It's so easy for us to complain about what goes out, but are we doing enough to look at where its all going. Unfortunately, for an informed country, we just aren't as informed about the budget and the expenditures as we should be.

"How exactly does that 28% back in your pocket cover expanding needs such as infrastructure, police, education, etc."

listen, its obvious that Bore doesn't care if poor elderly people freeze to death in the winter because they can't afford to heat their homes as long as his tax burden is reduced. This guy is obviously in the top tax brackets, and one would assume that he would be grateful for the opportunities this nation has given him (and as Justin's chart shows, government has been collecting in the vicinity of 28% of GDP for the last 40 years -- and he's been benefitting from government spending his entire life.

But now that he's making the big bucks, its time to cut taxes, and throw old people out into the streets.

Now, you and I both know that he's going to come back and say "I don't want to have the elderly eating out of dumpsters" but people like him never show how spending can be reduced sufficiently to lower taxes (without throwing grandma out into the streets.) Its just "lower my taxes" -- without any thought on what would have to be cut to do so.

I think you guys are being a bit uncharitable to Mr. Soccer. I'm sure he doesn't want people to freeze on the streets. He most likely expects that no one else does either and that private charity will prevent it.

I think the "worst" you could say about him, short of an ad hominim attack, is that you think he is unrealistic about the economy and government spending.

"I think you guys are being a bit uncharitable to Mr. Soccer. I'm sure he doesn't want people to freeze on the streets. He most likely expects that no one else does either and that private charity will prevent it."

I'm sure he doesn't WANT people to freeze to death, but its obviously a risk he's willing to take in order for him to indulge himself in ways that the vast majority of Americans can only dream about.

Wow, I must be some kind of so and so.

If we focus on growing the economy we can have higher government revenues to pay for the items you have listed above while taking a lower percentage of GDP in taxes. It all depends on growing the pie. It's the higher volume, lower margin approach.

On foreign competition, I am in domestic heavy industry and face direct competition from countries like China. I don't want to see us lower our standards to their's. What I have seen are companies that want to purchase here but go overseas once the gap in prices becomes too great to pass up. You may find it odd, but I still believe in free trade.

I have often wondered how much we needed to close the price gap in order to keep the business in this country. They don't move it for just a small percentage. There has to be a big savings to justify the hastle. I've wondered how much of that price gap is due to excessive regulations, tax compliance, 15% withholding taxes, high corporate tax rates, etc. The people who really get hurt by these lost jobs are the working poor and lower middle class workers.

A lot of R+D spending could probably only have started up in government projects, many in defense, and then used in the private sector. A couple examples are computers and GPS. Without a good R+D base, the GDP would probably stagnate.

Is it really possible for private spending, private industry to really provide all the jobs that we need? Look how persistent unemployment was in the 30's and it wasn't until the war years that it went down. Look at what you had for percent of workers in government employment before and after WW2 and I think it would really be hard to make the case that government employment is not necessary. Industry can become very efficient, and if there is not an expansion of services to take up the slack, severe unemployment can be the result. Industry can produce much more than there are workers who can buy them, if everyone is working in manufacturing.

Another example is higher education, which greatly increases the expectation of higher earnings, and is publicly funded by states and the federal government (loans and grants). I think it would greatly affect GDP if this support was not there, and was left to the individual alone.

It's typical for people who have a large income to forget about the public services that had a part in making that possible. My sister and her husband have six figure incomes at a public university, and they complain about their taxes too. I just don't say anything, because it's obvious that they believe their own merit is the sole cause. Also, there are methods of saving, retirement plans, etc. that more well paid people can max out on , so I don't really feel too sorry for them. We should be more concerned about the numbers of children that are now members of income levels low enough to qualify for EITC.

And "wood turtle" carries the day over the tax curmedgeon and the name callers.

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