What if we've been wrong about taxes and prosperity?

Today, Mr. Maven made a comment in passing: “For all those people who worry so damn much about so-called ‘socialism’ being bad for the country, I’d like them to make a couple little trips. One north and then one south. Canada. Then Mexico. Tell us which one is the worse for having ‘socialism’ or the lack of it and a no-holds barred ‘free market’.”

Americans are so emotionally invested in the bag and baggage of the mere word ‘socialism’ that they can’t even think straight, or rationally about it anymore. It’s a sad hold-over from the 1930’s and the fear that the average joe and jane - beaten down to standing in the bread lines by foolishness on Wall Street - might rise up and do something about it.

First of all, you would think that we could have a conversation about how Socialism does obviously work quite well in many different situations without confusing it with Totalitarianism or Communism. The three terms are just not interchangeable. Secondly, there are rather wide spectrums within what we casually refer to a Socialism. Compared to the United States, Canada is rather Socialist, although it’s tough to really conflate that with Marxism - at least any time I’ve visited our neighbor to the north.

Let’s just say that when I refer to Socialist countries or systems, I’m talking about Canada, Norway, Sweden, France, Germany  …. you know, those kinda places. The places that Americans like to go vacation in, where the food is good, the scenery is beautiful and the cars are fast. You know, the countries suffering under a huge Marxist tax load, stifled business opportunities, everybody on the dole, the nanny state. Makes you wonder why so many Americans want to go visit.

I digress. These are referred to as Democratic Socialist countries. It’s an important distinction.

But anyhow, the conventional wisdom has been that under the European ‘Socialist’ system, entrepreneurial instincts are withered and gray. There’s no innovation or initiative because if you’re successful, then you’ll just have to give it all back to the nanny state. Of course, that view relies on the ‘logic’ that people only work for the money. Despite the fact that study after study says that people work, strive and achieve for reasons other than money. Money is a nice perk, but personal satisfaction and drive seems to have a lot to do with it.

The GOP/Tea Party would like us to simply take it all on face value that the inevitable crushing tax burden that would result from the U. S. moving a few inches closer to a Democratic Socialist model would surely spell the end of life as we know it. That’s what the GOP deals in. All or nothing. Black and white. Good and evil. Too bad the real world isn’t like that. But this is the kind of thingJohn Boehner and Mitch McConnell are trying to sell back in Washington and across the country right now, especially as it becomes more obvious that we need more tax revenue to keep this thing afloat.

The United States has some of the lowest tax rates in the developed world. If low tax rates were the answer to everything, we should be leading the prosperity parade. Guess what? The other countries that have bit the big recession weenie and tanked - Ireland, Iceland and the fav of the Libertarian Cato Institute, Estonia (current unemployment rate of 16%) - were also low tax havens. Hmmmm. Higher tax bastions seem to be doing rather well, thank you. Smokin’ in fact. I refer you to Canada,  Denmark, Sweden, Norway and Belgium. There’s apparently no solid statistical evidence to prove a correlation between tax rates and prosperity.

You almost have to laugh at the anguish and hand-wringing that the GOP/TeaParty exhibits when the subject of health care reform, banking regulation and such come up. They start to froth at the mouth and blather about “creeping secular socialism”. Huh? Obama’s plans would make a very small ripple in the adult Socialist pool. They’re sort of like somebody referring to Chop Suey as authentic Chinese food. Not.

Americans can’t get their heads wrapped around the fact that other people in other countries don’t look at taxes like we do. We start from the premise that taxes are a burden and therefore evil. Other people, in obviously successful countries, think of them as an exchange for services rendered - even an investment in themselves. They want their money’s worth of course, but they wouldn’t dream of doing away with them.

In the end, this inability to have rational discussions - sans the almost religiously emotional temperature of any discussion about raising taxes - is going to bite us again, again and again here in the United States.

We could have the best of all worlds here, with our ‘get up and grab on to the merry go round’ ability to be more than our parents, more than our station in life would have predicted. Americans have more of that entrepreneurial drive than any other country. We invented it. We just have to begin to understand that taxes are the other part of the equation that finances how fast we get around to the brass ring.

The Norwegians understand this. Read the following article “Start-ups Say Ja To Socialism” from senior Inc. writer, Max Chafkin. It might just challenge some of your deeply held beliefs about what taxes do, and don’t do.

Then, by all means, get back to me with a reasoned argument about how taxes will sink our economy.

-maven