By Steven Hill
OPINION Most Americans seem to regard April 15 — the day income tax returns are due — as a recurring tragedy akin to a biblical plague. Europe frequently plays the punching bag role during these moments because there is a perception that the poor Europeans are overtaxed serfs.
But a closer look reveals that this is a myth that prevents Americans from understanding the vast shortcomings of our own system.
The fact is, in return for their taxes, Europeans receive a generous support system for families and individuals that Americans must pay for exorbitantly, out-of-pocket, if we are to receive it at all. That includes high-quality health care for every single citizen, the average cost of which is about half what Americans pay, even as various studies show that Europeans achieve healthier results.
But that’s not all. In return for their taxes, Europeans also receive affordable childcare, a decent retirement pension, free or inexpensive university education, job retraining, paid sick leave, paid parental leave, ample vacations, affordable housing, senior care, efficient mass transportation, and more. To receive the same level of benefits as Europeans, most Americans fork out a ton of money in out-of-pocket payments, in addition to our taxes.
For example, while 47 million Americans have no health insurance, many who do pay escalating premiums and deductibles. Anthem Blue Cross of California announced that its premiums will increase by up to 40 percent. But all Europeans receive health care in return for a modest amount deducted from their paychecks.
Friends have told me they are saving nearly $100,000 for their children’s college education, and most young Americans graduate with tens of thousands of dollars in debt. But European children attend for free or nearly so (depending on the country).
Childcare in the U.S. costs over $12,000 annually for a family with two children; in Europe, it costs about one-sixth that amount, and the quality is far superior. Millions of Americans are stuffing as much as possible into their IRAs and 401(k)s because Social Security provides only about half the retirement income needed. But the more generous European retirement system provides about 75 percent to 85 percent (depending on the country) of retirement income. Either way, you pay.
Americans’ private spending on old-age care is nearly three times higher per capita than in Europe because Americans must self-finance a significant share of their own senior care. Americans also tend to pay more in local and state taxes, as well as in property taxes. Americans also pay hidden taxes, such as $300 billion annually in federal tax breaks to businesses that provide health benefits to their employees.
That’s something to keep in mind as you pay your income taxes.
Steven Hill is the author of the recently published Europe’s Promise: Why the European Way is the Best Hope in an Insecure Age (www.EuropesPromise.org) and director of the Political Reform Program for the New America Foundation.