I write this as a tax-payer but not a voter. I write this cautiously, because politics and tax are touchy subjects. But I’m part confused and part riled-up by the discussions about tax in the US.
In the past weeks, there have been so many discussions about the US’ un-balanced budget: how to raise income or reduce spending – and if to reduce spending, where? how? All the discussions about reducing spending seem to get complicated and aggressive really quickly; but it seems that discussions about raising the country’s income are mooted before they even begin. It seems to suggest “raising taxes” is to commit political suicide.
And that’s the part that confuses me. As someone who has lived, worked and paid taxes in more than one country and who has relatives living, working and paying taxes all over the world… this is how I see it.
If we lived in Belgium and and earned the modest-but-liveable amount we do here, our tax rate would be about 40%, and sales tax is 21%.
If we lived in Australia, we would be paying more than 40% in tax – but it is a social welfare state and health care costs are built into that. Sales tax is 10%.
If we lived in Qatar, we would be paying no income tax, but then we would be living in a Muslim country in the middle of the desert where it’s hot enough to fry an egg on the ground at 8am in the morning. The oil money basically has to pay people to live there 🙂
If we lived in South Africa, we would be paying well over 40% of our income in taxes. AND every shopping trip, every trip to the doctor, every bank fee, every paint-job or plumber fee etc ALSO has a further 14% VAT (a government value-added-tax) added. For this, we would get no health care, the roads are going to potholes, there are daily stories about the length and breadth of corruption in law enforcement, and we would get the option of public schools that technically are paid for by the government, but in reality are mind-blowingly expensive. While we were in South Africa, a friend shared with me that the monthly cost of sending their kid to the public primary (elementary) school (35 kids per class) would be more than $200 per month. Not much bang for your buck, taxes wise.
But we live in none of those places. We live in the US. We pay 9% in state taxes on sales, and last year we had a little over 20% of our income deducted for state and federal taxes… but at the end of the tax year we got nearly three-quarters of that back as a tax refund.
So we pay an effective tax rate of less than 8% – and for this we get a country where if you dial 911, someone shows up within minutes to help you, and no-one asks for a bribe while they’re there. The roads are repaired. The public schools keep class sizes small and, at least where we live, excellently staffed. A few years back we were struggling to make ends meet and we qualified for some social support which helped pay for pregnancy and birth costs. The government websites work, and their information is regularly updated. When you apply for a passport, it arrives in LESS time than the already-short time they promised it would arrive in.
The way I see it, the little we contribute to social security, state and federal taxes, we pay GLADLY. We have been here for seven years now and I still can’t believe how incredible the public services in the States are. For what we get – we think the taxes are unbelievably low.
And so when I hear about a country with a budget in crisis, my thought is: “never mind the rich people…. raise MY taxes. Seven years down the line, we remain amazed at how much we get for (relatively) so little.”