One miserably cold morning, with temperatures down into the single digits, I passed by a city crew digging up the street to repair a frozen water line. I was glad to be in my warm car and as a public employee myself I appreciated their service. But that’s not a feeling all Americans share. As a nation founded on the reframe, “No taxation without representation,” many of our fellow Americans have a disdain for government and the services our taxes pay for.
All of the universal health care plans currently being discussed, including the one I present in my book, the one proposed by Senator Bernie Sanders, and the one now being promoted by the Congressional Medicare-for-All Caucus depend on multiple sources of revenues including new taxes. That’s one reason, I believe, that universal health care in the U.S. has been so difficult to achieve – American skepticism (if not downright rejection) of big government and taxes.
The United States has a capitalist economy. When we want to purchase a tangible item such as a new smartphone or a service, such as having someone prepare our taxes, we use money in a variety of forms. We may pay with cash, by check (which is backed by cash), or by credit. Credit allows us to purchase expensive items when we don’t have enough cash, with the understanding that we’ll replay the full loan amount plus additional money (interest) for the privilege of using someone else’s money (the loaner; typically a bank or credit card company). The value of the exchange of goods and services that occur in this country each year is called the gross domestic produce (GDP), which was around $21.5 trillion. Of that, 18.5% of GDP went for health care; about $3.5 trillion.
Paying for things directly with cash on hand or by borrowing over time is the way we acquire goods and services through the private sector. With the exception of gift giving and donations, someone is not going to give you a tangible item or provide you with a service unless he or she is compensated. The basic premise of capitalism is that in addition to exchanging money for goods and services, the entity providing those goods and services does so at a cost to the user/payer; i.e. profit. Profit is money earned above the actual costs to produce and sell goods and services. Consequently, the actual cost for goods and services are typically less than what they sell for.
There is another way to obtain goods and services, other than with cash or on credit, and that is when we obtain things through government entities, by paying fees and taxes. The primary difference between private and public sector organizations is that governments operate as not-for-profit entities. If they do accrue excess money, then the money must be used for authorized expenditures or returned to taxpayers as a refund.
Governments, from small towns to the federal government use a variety of taxes to raise revenues. There is the payroll tax which is taken from your paycheck each time you’re paid, the annual income tax, which is based primarily on payroll taxes, taxes on interest you earn from savings accounts and investments, sales taxes, food taxes, real estate taxes, and property taxes on such items as automobiles and boats. On your paycheck you’ll also notice an item listed as FICA, for Federal Insurance Contributions Act, which is the tax that helps pay for Social Security and Medicare. And its not just individuals who pay these taxes, as employers also pay the same taxes.
You can understand why Americans feel taxes are a burden. Of course, when we compare our tax burden to that of other countries it isn’t all that bad. According to the Tax Policy Center, taxes in the U.S. were 26% of GDP compared to 33% in most other developed countries. The Center found that taxes on personal income and business profits were higher in the U.S. than in other developed countries, but Americans pay far less in sales taxes than citizens in other countries. U.S. taxes are also skewed in favor of wealthy individuals and large corporations. As I point out in my book, over my lifetime the tax rate for individuals in my tax bracket has decreased from around 19% of earnings (in the 1970s) to about 12%. But the top marginal tax rate for millionaires has gone down from around 90% to 37% (which, BTW, is a contributor to the national deficit). Worse, when taxes were cut in 2017, corporate tax loopholes were supposed to be closed, but weren’t. Consequently, some corporations pay no taxes at all!
Finally, it’s not just about the money; it’s also about what you get for the money. When you buy a new car, you know exactly what you got in terms of size, comfort, power, and gas mileage. But when you pay your local taxes, the results aren’t always as visible or tangible. Sure, your city might report that it repaved 20 miles of roads last year, but if you don’t drive on those streets, you may not think you got your money’s worth from the taxes you paid. If your children are grown, you probably don’t care that much that your city provides recreational facilities such as basketball courts and Little League baseball fields. And how many of us think about the quality of the water we drink even though it’s our taxes that pay for water treatment?
As taxpayers, we should have a better understanding of how
our taxes are generated and used (a good place to start is at a city council
meeting) and as advocates for universal health care we need to understand how
taxes can be used to guarantee all Americans have access to affordable health
 https://www.taxpolicycenter.org/briefing-book/how-do-us-taxes-compare-internationally. This study was based on 2015 data. The income tax burden on individuals and businesses is probably much less as a result of the 2017 tax cuts.