In the middle of a series of articles titled “The High Cost of Low Taxes” for Moyers and Company, Josh Holland challenges the stigma of higher taxes and exposes the issue in its proper context. Whereas InternationalComparisons.org compares the United States to 11 of the top performing Organization for Economic Co-operation and Development (OECD) countries, Holland includes all 37 OECD countries for his series. Simultaneously dispelling myths and reconstructing the argument in the terms we should have been using all along, Holland evaluates whether the U.S.’ tax system is equitable, efficient, effective, or enough.
Holland raises the argument that we should be comparing how much we spend (publicly and privately) on social costs and what kind of “social netting” we get as the product for our expenditures. Noting that since the U.S. public and private sectors combined social spending is comparable to the OECD average (29% to 32%, respectively), U.S. quality of social netting should also be proportionate. However, this is hardly the case. In his second article, he tackles specifically the issue of health care, revealing through a World Health Organization report and a compilation of statistics at Bloomberg just how poorly the U.S. health care system performs (in many cases close to last and others dead last) compared to its most relevant peers. Here, then, is Holland’s reasoning: if we are paying nearly the same social costs, why is there such a discrepancy in the quality of the results?
The discrepancy begins in the imbalance between public and private spending on social costs. According to the statistics, OECD countries that delegate social spending to the public sector provide better social netting for its citizens. Health care, as established above, is one dynamic example of how the U.S. has been short-changed; the U.S. tax systems is yet another.
Americans’ heavy reliance on the private sector to provide social goods and services doesn’t only result in us paying a lot and getting a lot less for it, compared to other wealthy countries. It also makes the financing of our entire social welfare system far less fair. It’s a great deal for the wealthiest, and a huge rip-off for the rest of us.
Holland introduces his third installment with this remark and proceeds to discuss that the tax system is not only unequally weighted, but also that there are hidden implications. For example, federal taxes might seem more progressive, but the distribution of state taxes is the antithesis of progressive. In fact, the weight of taxes is nearly level, but the bottom-most quintile provides for 11.1% of state tax revenue. As the quintile groups ascend by earning, the percentage by which they’re taxed descends with the largest earning quintile being taxed 7.5%.
Still, even within the federal tax system, examples of regressive taxes thrive. Holland discloses that payroll taxes that provide for social security and Medicare are a flat tax with those making $20,000 a year paying 6.2% just like those who make up to $113,000.
We may deduct from Holland regarding social netting that those who need it and pay for it the most–whether by the unfair tax system or by out-of-pocket costs they can hardly afford–receive the least from it, especially when compared to the social nettings of the best performing OECD countries.
Holland has two more installments yet to come in the series to be published at billmoyers.com in the next few weeks.