Editor’s note: This op-ed by James H. Wilson, a resident of Strafford, first appeared in the Valley News.
I am interested at the litany of letters to this and other newspapers ranting about high taxes (lowest in the developed world) and preaching the supposed miracle of ever-smaller government. Having just paid my federal taxes (at an effective rate nearly 10 percent higher than Mitt Romney paid), I am happy to say that living in the United States is a bargain! Not perfect, but to pay less than 25 percent (federal) is a very good deal.
Particularly for those who live in the rather affluent Upper Valley, our prosperity depends on a strong government to protect our property rights, guarantee patents, promote research and development (think Internet, medical advances, space technology), and guarantee contracts. This is basic. People in many parts of the world, with “small governments,” would “kill” to have our court system, imperfect as it may seem at times. These protections do not come for free.
On a larger scale, without the national security we experience, our lives, particularly those who own property and have assets, would be in constant jeopardy and under threat.
Add the fact that the metaphorical elephant is not allowed to dump her 200 pounds of daily waste on my yard, the fact that we drink safe water and rarely have to worry about food and drugs not being safe are freedoms we take for granted, and ones that do not come for free.
Add the highways and other infrastructure, much of it in need of repair, and I am happy to pay. And Vermonters should be thankful for the National Weather Service and the aid that came our way after recent natural disasters.
And while public education faces huge challenges at all levels, our future as an economy depends on our putting ever more resources into public education at every level; failure to do so will result in an ever more divided society in the 21st century. Meeting these challenges will NOT occur if we starve government.
Had we had more diligent regulation of financial markets in the pre-2008 decade, most of us would be far better off and the outlook for young people would be much brighter. But the small government dogma and free-market idolatry that ruled for nearly 30 years proved to be a very narrow and short-sighted approach to public policy, except possibly for those at the very, very top. And it was the likes of AIG who, ironically, turned very quickly to the federal government for a financial rescue? Interesting.
Those of us over 65 enjoy the benefits of Social Security, the most successful anti-poverty insurance program in the world, and Medicare, possibly the “best bargain on the planet” (Simon Johnson). On average, each senior citizen receives over three times as much in benefits as he/she pays in Medicare payroll taxes. It’s simple economics: we should pay more for what is known to be an insurance program run at a very high level of efficiency and a benefit that virtually every citizen will enjoy.
All the above, and much more, I get for slightly more than 20 percent of my income. The rest is mine to spend as I wish. Amazing! It is my opinion that thoughtful people should get real, take stock of the incredible benefits and security we have in what Time reporter Bill Saporito calls “Club USA.” He’s got it right.
Yet, there are many things that I, an economist, do not fully comprehend about our taxes. How can taxes be considered so oppressive when, in the past year alone, the number of millionaires has increased by 240,000? This does not sound so very “confiscatory” to me. And while Corporate America will not be happy until the corporate tax rate is zero, at an average effective rate of 12 percent (half what I paid!), it is nearly the lowest in the developed world. What’s the beef? (In Germany, one of the most prosperous nations in the world, the effective rate is over 30 percent). And what I really do not get is why I pay just 15 percent on my legalized gambling winnings (stock market capital gains and dividends earned in the secondary market). It is one thing to incentivize real primary investments, but not the side-bets of the fortunate.
While I am an ardent believer in individual responsibility and initiative, I realize that in our highly interdependent and global economy, it’s not a level playing field, especially on Day One. I feel it is a privilege to share some of my good fortune with those who have not had the advantages I have experienced and who wish to have the opportunities to get ahead.
For those so enchanted with the mirage of “small government,” I suggest looking at life in Somalia and the Sudan. Consider what it would be like to own property, start a business, or safely raise a family in a country in which government barely exists.
Bottom line, free market capitalism is a wonderful engine of growth and prosperity, but it does not exist in a vacuum. Despite the rhetoric of the media and ideological-driven politicos, I urge thoughtful citizen to return to a pragmatic tradition that has been the hallmark of our approach to major problems in the past. (Think Lincoln, Theodore Roosevelt and Franklin Delano Roosevelt.) Do the small government ideologues in our community really want a society in which the likes of Exxon, BP, Wal-mart and Goldman Sachs are allowed to have unrestricted free rein?
To parallel the often-quoted remark by Winston Churchill about democracy, free-market economist John McMillan has written: “It (the market system) is the worst form of economy except for all the others that have been tried from time to time … We should cheer it because it solves some of the all-but-intractable problems … It generates wealth. It alleviates poverty. But it has its limits. There are things it cannot do. It does not necessarily do even what it is supposed to do; it works well only if it is well designed. Two cheers are enough!”
Oliver Wendell Holmes said it best: “I like to pay taxes. With them I buy civilization.” This is ”reality-based” economic thinking.
