[lbo-talk] public and private taxation in US

[Wojtek Sokolowski]

> Any comparisons are difficult because of the so-called "third party
> government" or government delegating its functions to private parties.
> Therefore, what is purchased with tax dollars in Europe (health care,
> education, transportation etc,) - in the US is purchased by a
> combination of tax dollars and private premiums (which from economic
> point of view are taxes i.e. payments for collective goods).  So to
> compare the actual rate of taxation (=total payments for collective
> goods). We should add all kinds of private premiums (insurance, cost
of
> education, transactions costs of car ownership, and various other
> transactions costs associated with private financing of public goods)
> that an average US-ers must pay to receive the level of service
> comparable to that in Western Europe.

Following my earlier insights, I compiled a very rough estimation of the
actual level of taxation, public and private, as a percent of the total
personal income, using the National Income and Product Accounts data
(http://www.bea.gov/).

For the year 2002, these figures are:
- personal income (PI) $8,912 bn
- personal current taxes $1,044 (or 11.7% of PI)
- private "taxes" i.e. payments due to government underproduction of
public goods: 

    $2,576 bn (or 28.9% of PI)
- total taxation $1,044+$2,576 = $3,623 (or 40.6% of PI)

Payments due to government underproduction of public goods are personal
consumption expenses (paid to private parties) incurred to cover public
goods that in other developed countries are paid for by public taxes,
such as health care, education, transportation, housing, culture
subsidies etc.  I made those estimation based on NIPA table 2.5.5
(http://www.bea.gov) showing personal consumption expenditures by type
of expenditures.

I assumed that expenditures for medical care ($1,437 bn) and education
($188 bn) are 90% due to government underproduction of public good in
that area (i.e. 90% of those personal consumption expenditures would
have been saved, if the government provided adequate public health care
and public education).

I also assumed that for owned housing ($822 bn), user-operated transport
($823 bn), and life insurance ($95 bn) - 50% is due to government
underproduction of public goods.

I also added $199 bn paid in interests as "private taxation."

Wojtek