Tuesday, June 21, 2011

Our Diminished Return On Investment For Our Taxes

In The New York Times Blog, Enonomix, "Are Taxes High or Low? A Further Look" Bruce Bartlett writes:
Nevertheless, it is clear that federal taxes have not been rising and are, at least in historical terms, lower for most taxpayers than they have been since the 1960s. Those who assert that taxes are rising or are at confiscatory levels simply do not know what they are talking about.
I find it startling that economists and the media in their discussions about tax rates fail to consider and discuss what the tax paying public gets in return for its payments to and investments in government and whether the return on our taxes has decreased, increased or remain the same over the years.

In the years after WWII, our taxes invested in a strong and well-equipped armed forces for our perceived protection against a WWIII. American's taxes built an interstate highway system and supported scientific research, including manned and unmanned space satellites and a man on the moon. Taxes funded the GI Bill for veteran's college education and business start-ups. Additionally, our money funded college and technical school loans and scholarships for anyone who enrolled.

The government used our money to attempt to eradicate poverty, child malnutrition, to provide free and affordable healthcare for the poor, for children and for seniors, and to provide a quality k-12 education for all children.

Tax paying Americans saw their taxes as investments in America's future and prosperity.

What Do We Get For Our Taxes Now

We have a military that is in distant parts of the world with unclear objectives and unclear links to America's safety. We have an armed forces that we fund that is doing the work that Europeans and others should be doing and paying for themselves.

Our government run k-12 school system is atrocious, expensive and unaccountable to anyone.

Government healthcare costs have exploded to the point where the continue viability of Medicare and other government health programs are uncertain. Uncontrolled, above inflation rates, cost increases are one of the major reasons.

The US infrastructure, its roads, tunnels and bridges, are rapidly deteriorating, and major new projects are just dreams on drawing boards and in politicians' speeches.

For a while in the 1950s and the decades after, American's perceived and were promised a decent return for their money paid into government through taxes and fees.

Today, more people probably see government spending and its necessary taxes as incapable of providing a positive and fair investment value to the country. People see how government education has failed, how government reimbursed health care costs have spiraled out of control. Most people would say education and other government services are inferior today than they were decades ago.

Need A Benchmark Of The Value Of Government Benefits And Services.

To have a sensible discussion about tax rates and tax levels, we need a measure of the value of the return the public gets for its tax dollars.

If I spent $2 in inflation adjusted dollars for a pint, 16 ounces, of ice cream 20 years ago, and today, I spend the same amount, $2 in inflation adjusted dollars, but get 12 ounces instead of the previous 16 ounces, is it useful to look only at what I spent? Don't we have to also consider what I get back for my money? The same is true for taxes. Looking at only the amount of tax, rates or revenue, without considering what the country and its residents get for that money is an incomplete and thoroughly misleading analysis.

Until there is a measure of the value of government services, benefits, and spending to use to judge the value and benefit of taxes, discussions about tax rates are incomplete.

If part of the public perceives it will get back benefits of lower value than it used to from government tax dollars, that part of the public will be against tax increases. Likewise, if part of the public sees value to government spending, that part of the public will favor more taxes.

It would be extremely helpful for discussions about tax rates to have some objective measure of the value of the return that US residents get for their tax dollars.


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