Go to main HumbleDollar Forum page »
AUTHOR: R Quinn on 5/28/2025
My perception is Americans have become obsessed with taxes. They complain loudly about high taxes. Some vocal seniors don’t think they should pay property taxes or income taxes on Social Security or extra premiums for Medicare (not actually taxes).
There seems a general lack of understanding of what taxes provide. The tax collector has been vilified throughout history. Our Country was founded as the result of taxation.
Paul in Romans 13:1-7, explicitly mentions paying taxes: “This is also why you pay taxes, for the authorities are God’s servants, who give their full time to governing. Give everyone what you owe him: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honor, then honor.”
Making the connection between taxes and what they provide is often misunderstood. Take schools and teacher pay as an example. I’m not criticizing teachers, but I have been criticized because I say teachers are not underpaid all things considered.
Teachers typically receive community support for higher pay and benefits, but no connection is made that typically 50% of the property tax bill goes to schools and 50% of that is pay and benefits. Nor is it mentioned that the retirement benefits teachers typically receive are far better than any received by the taxpayers footing the bill. 90% of teachers have pensions. We simply don’t make such connections.
Taxes come in many forms, some income, some consumption or use based. For my money the most egregious tax is state lotteries because they target the lower income and less educated and thus are very regressive.
Many Europeans, particularly in Northern and Western Europe, tend to accept higher tax rates in exchange for comprehensive public services. These services often include universal healthcare, extensive social security, affordable education, robust public transportation, and generous parental leave.
The concept of a “social contract” is strong, where citizens pay taxes as a contribution to the community, expecting a fair return in public goods and services.
Surveys indicate that while a majority in some European countries (e.g., France, Germany) feel taxes are too high, this sentiment often changes when linked to cuts in government spending or increased public debt.
Do Americans see it that way? Not the most vocal ones anyway. I doubt Americans ever look at their real effective tax rate.
- Bottom 50%: Paid an average rate of about 3.7% in 2022.
- All Taxpayers (Average): Around 14% – 14.5% in recent years.
- Top 1%: Paid an average rate of about 23.1% – 26.1% in 2022.
Divide your taxes by your total income from all sources, taxable or not and multiply by 100 to see your real effective tax rate.
Americans complain loudly about their health insurance premiums. In 2024, the average annual health insurance premium for family coverage was around $25,572. Millions of Americans receive receive subsidies to help pay those premiums- from taxes or deficits. In other countries it’s all or mostly a community cost via taxes, but it’s still a cost.
Given federal spending is $2 trillion a year more than its income, I find it hard to conclude taxes are too high.
And before jumping on the unnecessary spending train, that ain’t the problem. It’s more like households with a desired lifestyle supported by credit cards.
QUINNSCOMMENTARY 
“And before jumping on the unnecessary spending train, that ain’t the problem. It’s more like households with a desired lifestyle supported by credit cards.”
Your advice to the household would be to cut their spending. But you don’t think this applies to to the government?
LikeLike
Raise taxes on the lower half of Americans. What could go wrong?
LikeLike
People complain because of the inherent unfairness in taxation. Yes, the lower half of American households contribute only 3% of income tax revenues. But, you need to split that into quintiles, so as to confirm that the lowest quintile actually has a negative income tax – receiving money from other taxpayers. The second quintile, from the twenty-first to the fortieth quintile, pay no income taxes.
Similarly, those with the lowest FICA wages also receive income and health coverage far, far in excess of their taxes.
The bottom line, as people become aware that the equity imposed by the allocation of burdens – equitable treatment is treating similarly situated people the same and differently situated people differently – where that doesn’t match their perception of “fairness” – treating me the way I think I should be treated – why is anyone surprised to think half of Americans believe they pay too much.
Where is the contribution by the lower half of taxpayers for their receipt of national defense, border security, and all other federal government programs funded by general revenues?
It is why I favor a flat rate income tax applied from the first dollar earned – in the same manner as FICA taxes.
And, of course, I favor scaling back the federal government to something much more resembling a federal government of limited, enumerated powers. We could cut the federal government in half and still not meet the federal government envisioned by the founders, and as embodied in our Constitution.
LikeLike