02 April 2010

'The Myth of Europe's High Taxes'

SIR – Thank you for enlightening us about health care. Were it not for your cogent arguments I would never have realised that what America needs are increased taxes, a massive expansion of the federal government, less personal responsibility, more price-fixing and hundreds of billions of dollars added to the deficit to finance one of the biggest entitlement programmes in our history. Now I better understand why our forefathers risked their lives to separate themselves from Britain. Letter to the editor of the Economist (subscription), Cary Alberstone, Camarillo, California, 31 March (my emphasis)

Mr Alberstone believes that Americans pay lower taxes than the British. But all is not as it seems:
Do Americans really pay fewer taxes than Europeans? Contrary to conventional wisdom, the answer surprisingly is: not really. That’s because in return for their taxes, Europeans – even those unemployed during these tough times – have access to a generous support system for families and individuals that most Americans can only imagine. That includes not only quality health care but also child care, a good retirement pension, inexpensive college education, job retraining, paid sick leave, paid parental leave (after a birth or to care for sick children), ample vacations, affordable housing, adequate senior care and more. In order to receive the same level of benefits as Europeans, most Americans have to fork out a lot of out-of-pocket payments, in addition to our taxes. These payments often are in the form of fees, surcharges, higher tuition, insurance premiums, co-payments and other hidden charges. Steven Hill, The Myth of Europe's High Taxes, OnTheCommons.org, 23 February
Any decent outcome-based policymaking process wouldn't be particularly interested in tax figures of the sort that mean so much to Mr Alberstone. It would instead be concerned with meaningful social outcomes and their total cost to society. More important than how public goods and services are paid for, is their efficiency and their cost to society as a whole.

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