In November 2017, President Trump proclaimed that Americans “are the most heavily taxed people in the world.” As an applause line it was an instant winner, and the president has continued to use it ever since, to thunderous ovations.
Unsurprisingly, the president’s statement was inaccurate: In the 35-member Organization for Economic Cooperation and Development, the U.S. ranks 30th in the percentage of taxes its citizens pay. And in the European Union, only three countries pay less.
More than Trump’s assertion itself, though, it was the idea behind it that was wrong: that we can cut taxes, usually for the wealthiest 10 percent of taxpayers, and still have everything we want. We can cut taxes and have wonderful schools, gleaming roadways and a modern infrastructure. We can cut taxes and have low-cost, high-quality health care. We can cut taxes and have a clean, healthy environment. We can cut taxes and have affordable housing. We can do all these things — as long we cut taxes.
This idea was first proposed in the 1970s, and became a pillar of Ronald Reagan’s 1980 presidential campaign. The original theory was called “trickle-down,” but became known later as Reaganomics. The idea was that by cutting taxes for the wealthy, they would invest their gains in new businesses, innovation and jobs.
But they didn’t. Mostly, they kept the money. They spent it on themselves, or they invested it in ways that did nothing to aid the economy as a whole. Or they sent it to banking havens offshore. The majority failed to benefit at all. In fact, over time, the middle class had to pay more taxes to make up for the money the government wasn’t collecting from the wealthy. Under the second President Bush, this was called the alternative minimum tax.
While he was running against Reagan, the first President Bush rightly called Reaganomics “voodoo economics,” although this is probably disrespectful to voodoo. George H.W. Bush understood, as most wealthy people do, that it isn’t possible to get something for nothing. And yet for 40 years, we’ve followed this same failed economic theory down the rabbit hole.
Per capita gross domestic product in the United States is $60,200, according to an OECD report — less, in real terms, than in 1982. Americans pay, on average, roughly 30 percent in tax. At the same time, we pay an average of $10,200 per year per capita for health care, and the average college graduate finishing school in 2018 had roughly $30,000 in student debt. Tuition at a relatively inexpensive university in the United States, such as one of the SUNY schools, costs around $9,000. And commuting on the Long Island Rail Road from Wantagh to Penn station costs $3,060 a year.
Compared with other countries, all of these amenities are expensive, so we would expect them to be of the highest quality. In fact, our health care system isn’t the best in the world. We spend nearly twice as much per capita as our OECD allies, yet the U.S. ranks 45th in life expectancy and 54th in infant mortality, according to the CIA World Fact Book. Infant mortality is lower in Cuba, where electricity is rationed and the cars are antiques. Health care is free in Cuba, and state-run.
The LIRR isn’t one of the world’s great rail systems, despite the expense. In Vienna, an all-access pass, good for the entire year, costs $330. And in many European Union countries, universities are free. Even the elite, expensive universities of Oxford and Cambridge cost $13,200 per year. Tuition at Harvard or Stanford is nearly four times as much.
We have allowed ourselves to become victims of the myth that the free market is the most efficient system for delivering goods and services. Plainly, this isn’t true. Health care, public transportation and higher education are all significantly less expensive in the EU and other OECD countries and of equal or superior quality, despite being run by the state.
In Nassau County, we’ve begun talking honestly about our broken property assessment process. It’s time for similar honesty about taxation as a whole. We can’t continue to give ourselves away to the top 10 percent. They’ve had a tax holiday for 40 years, and now it’s time for them to pay up.
Timothy Denton is the editor of the Seaford and Wantagh Herald Citizens. Comments about this column? Tdenton@liherald.com.