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There are taxes, and then there are taxes

David Atkins points out that the effective tax rate in the U.S. is the third lowest in the developed world. He is taking issue with the right wingers who are constantly bemoaning our high taxes, and, in that sense, his rebuttal is spot on. But in a larger sense, I think the jury is still out, as it really depends on how you define taxes.

I'd argue that you have to add in tax equivalents; everything from ATM fees to debit card charges to drug prices inflated by absurd patent protections. Any payment necessitated by positive government action or, in many cases, government inaction, that allows a private actor to impose an economic rent on the country at large should be considered a tax, regardless of the pocket in which it lands. Debit card charges are a good example; each time a debit card is used a bank imposes a charge easily 100 times higher than its processing cost. That is a tax on merchant and consumer alike. The fed sets the rate that can be charged, and the charge it imposed, which just received the backing of a very corporate friendly circuit court, was very bank friendly. That is the functional equivalent of a tax. I count government inaction as well, though I'm sure many would disagree. The folks scraping money out of the economy by doing nothing other than gaming the stock market are imposing a rent on the rest of us that could easily be prevented if the government stepped up to the plate and did its job.

Where would the U.S. be if the costs of all those tax equivalents were computed and added to the mix? My guess is that we would rise significantly in the rankings. Our drug costs alone, the product, as Dean Baker has endlessly pointed out, of economic rents, would have to move us up several notches. Maybe not to number one, but my guess is that the citizens of number one (Denmark) get way more bang for their overall tax buck (including any economic rents they are forced to pay) than do we. That, of course, is the larger point. Generally speaking, we get something in return for the money we pay to the government , but we get nothing in return for the tribute we pay to the banks and other actors that benefit from the tax equivalents we are forced to pay.

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