Surprise, Surprise! Folks in Highly Taxed Countries Are Happier Than Americans!

07/11/2011 11:16 am ET | Updated Sep 10, 2011

After the OECD created the Better Life Index to discern which are the happiest countries in the world an organization known as 24-7 Wall St. cherry-picked the list to narrow down those countries with the highest economic stability. Most likely, says MSNBC, "the happiest people in the developed world get loads of social services without having to work too hard." Or maybe these lucky folks not only don't have to pay for these services, more of them actually have jobs.

With the exception of Canada and Israel, every country on 24-7 Wall St.'s list features a much higher top income tax rate than ours -- currently 35% -- and a value-added, or VAT, tax. What's more, despite the fact that the Tea Party regards high taxes as job killers, all these countries also feature lower unemployment rates than that of the U.S. Below are graphs of seven of the nine "happiest countries," along with their top tax rates and VAT taxes compared to the U.S.

Highly Taxed Countries Actually Employ More People


As even conservative commentator David Frum admits, Americans may hate taxes but even the right wingnuts will raise hell if someone dares mess with the benefits these taxes provide, like Medicare, as evidenced by the recent Democratic Congressional victory in upstate New York. As Frum put it, Rep. Paul Ryan's crazy plan to "privatize" Medicare would result in senior citizens "paying two-thirds of their health coverage out of pocket by 2030" according to the Congressional Budget Office.

When you think about it, when it comes to "net worth" Americans are likely the poorest in the advanced world. Why? Because many life necessities that are subsidized by rich taxpayers in other countries are mostly paid out of pocket by Americans. From college education to health care to retirement, we bankroll more of these costs than any of our peers.

American companies also get tax deductions which deprive the government of revenue. According to David Leonhardt of the New York Times, employer deductions for health care and 401(k) contributions alone cost the government more than $316 billion a year.

As for potential revenues generated by a VAT, an Urban-Brookings Tax Policy Center paper released last year concluded that a VAT of only 5% on most purchased items would produce $258.6 billion in revenues in 2012, erasing a big chunk of our $1.3 trillion deficit. The question is why are we tip-toeing around a VAT of only 5%? Five of the seven "happy" countries in the graphs have VATs of 25% or more.

Instead of just whining about our federal deficits, we ought to calculate how big a VAT or higher income taxes are needed to address our personal deficits that, among other things, result in Americans footing most of the bill for a college education. My goal would be to raise enough taxes to quadruple individual Pell Grants from around $5,000 a year -- covering only about one fourth of the cost of a state college and one-eighth of the tab at a private university.

Wonder why tax increases on the top bracket aren't even on the political table? As I've pointed out before, it's Grover Norquist's hijacking of Congress. As Bloomberg BusinessWeek put it, 233 of the 240 House Republicans and 40 of the 47 Republican senators have signed Norquist's so-called Taxpayer Protection Pledge.

The good news is that progressives are finally mobilizing their base to demand higher taxes on the rich so that everybody else will prosper. As Huffington Post reporter Michael McAuliff observed last week, a poll commissioned by and the Progressive Change Campaign Committee found that 80% of voters in the following swing states: Ohio, Missouri, Montana and Minnesota back raising taxes on folks making more than $1 million. Hear that, Michele Bachmann?

Majority Leader Harry Reid has called for a vote on doing so and the liberal groups sent out a blast email asking members to contact their senators to back the resolution. If you agree, I'd urge you to do the same.