There is something to be said for universal health care systems.

When my son developed a rash on an Italian vacation in Liguria last month, the pharmacist showed me to the doctor downstairs, who diagnosed the problem at no charge and sent me off with a handshake and a joke about a daughter in med school at the University of California, San Diego.

Italy may be in a funk, with a shrinking economy and a high unemployment rate, but the United States can learn a lot from it, and not just about the benefits of public health care. Italians live longer. Their poverty rate is much lower than ours. If they lose their jobs or suffer some other misfortune, they can turn to a more generous social safety net.

Every developed country aspires to provide a better life for its people. The United States, among the richest of all, fails in important ways. It has the highest poverty and the highest infant mortality among developed nations. We provide among the least generous unemployment benefits in the industrial world. Not long ago one of the most educated countries in the world, the United States is slipping behind.

The reason is not difficult to figure out: rich though we are, we can’t afford the policies needed to improve our record. The politicians in Washington all know that we face a long-term fiscal crisis. By 2020, 70 million Americans are expected to be on Social Security, up from 45 million in 2000. The ranks on Medicare will swell to 64 million, up from 40 million in 2000. Virtually every economist knows that just maintaining Medicare and Medicaid benefits will require raising taxes on the middle class.

But though the nation’s fiscal challenge has taken center stage in the presidential election campaign, raising more taxes from American families remains stubbornly off the table.

President Obama is willing to accept higher taxes on families earning over $250,000 a year. But he is going nowhere near higher taxes on the middle class. And Mitt Romney and his vice-presidential pick, Paul Ryan, are moving decidedly in the opposite direction. Not only do they want to extend indefinitely the tax cuts passed by President George W. Bush, but they are also calling for a piñata of additional ones, and would cut social spending in return.

Citizens of most industrial countries have demanded more public services as they have become richer. And they have been by and large willing to pay more taxes to finance them. Since 1965, tax revenue raised by governments in the developed world have risen to 34 percent of their gross domestic product from 25 percent, on average.

The big exception has been the United States. In 1965, taxes collected by federal, state and municipal governments amounted to 24.7 percent of the nation’s output. In 2010, they amounted to 24.8 percent. Excluding Chile and Mexico, the United States raises less tax revenue, as a share of the economy, than every other industrial country.

No wonder we can’t afford to keep more children alive. In 2007, the most recent year for which figures are available, the United States government spent about 16 percent of its output on social programs — things like public health, food and housing for the poor. In Italy, that figure was 25 percent.

American policy makers justify our choice for low taxes with the claim that they foster economic growth. But the evidence is, at best, mixed. Since 1980, income per person has grown roughly the same across developed nations, about 300 percent, according to the International Monetary Fund. It has grown a little faster in the United States than in the European Union and Canada, but slower than in higher tax countries like Japan, Norway and Sweden.

To a large extent, this is because we have chosen a tax system that raises relatively little revenue and inflicts maximum economic harm. Every other industrial country has a national consumption tax, which can be used to raise a lot of money without distorting people’s economic incentives. The United States, by contrast, relies mostly on taxes on labor and capital that damp people’s drive to work and invest, putting a drag on economic growth. And the tax code is riddled with preferences and loopholes that further distort people’s economic behavior.

It is tempting to blame the administration of George W. Bush for the tax shortfall. At the end of the administration of President Bill Clinton, tax revenue reached almost 30 percent of the nation’s economic output. The federal government ran a budget surplus. The Bush tax cuts sharply reduced the federal tax collection. Then the Great Recession further eroded tax revenue. And, of course, nobody wants to raise taxes in the middle of an economic downturn.

Yet Americans’ aversion to taxes runs deeper. We’ve been collecting less in taxes than other rich countries at least since the early 1970s, relative to size of the economy. But according to Gallup, only three times since the 1950s have more Americans said their taxes were “about right” than said they were “too high.” Scholars have resorted to cultural traits to explain our reluctance to pay for our government.

Alberto Alesina, an Italian-born economist at Harvard, contrasts American individualism rooted in the belief that effort brings success with Europeans’ belief in state redistribution — born of Europe’s long history of inherited wealth. Americans who think they have a fair shot at striking it rich vote against high taxes on their expected future wealth. Europeans who believe wealth is mostly a matter of luck and connections are less resistant to paying taxes for collective welfare.

Support for taxes also depends on how the money is spent. In Italy and throughout Western Europe, every time a voter goes to the doctor, he or she sees taxes at work.

By contrast, the ethnic, linguistic and cultural diversity of the United States can sap support for government redistribution. Ten years ago, the sociologist William Julius Wilson wrote that American whites rebelled against welfare because they saw it as using their hard-earned taxes to give blacks “medical and legal services that many of them could not afford for their own families.” In more homogeneous European countries, taxpayers may be more willing to pay for social programs because recipients are similar to themselves.

Where does this leave American society? Many conservatives in the Tea Party movement believe the government is already too big. Mr. Romney and most Republicans in Congress have even signed a formal pledge not to raise income taxes. Will no administration ever again dare raise taxes on the middle class?

It may not be impossible for the American political system to accept the case for a bigger government, with higher taxes and better public services. Ronald Reagan, George H. W. Bush and Mr. Clinton passed tax increases to address budget deficits.

Bruce Bartlett, a tax expert who worked in the administrations of Mr. Reagan and the elder Mr. Bush, says he believes that the deteriorating budget outlook will ultimately persuade the political class. “We need a few more years in which conservatives try to deal with the problem solely through spending,” he said. “We need to travel down this road a few more years and then people will recognize it is futile.”

There are tentative signs that Americans may become more willing to give money to Uncle Sam. Two of the three times that more Americans said their taxes were “about right” than “too high” have occurred since 2009. And the economic crisis might even increase support for government action.

The economists Paola Giuliano of the University of California, Los Angeles, and Antonio Spilimbergo of the International Monetary Fund found that Americans who experienced economic shocks tended to become more supportive of government redistribution, especially when the shock came in their late teens or early 20s.

When elections are decided by today’s 18- to 25-year-olds, perhaps the American debate over taxes will come to resemble that in the rest of the world.

The American government won't tax the middle class.

Canadian government(s) meanwhile can't seem to tax anything but the middle class.

Sometimes I wish I had your problems Bart.

The secrets of Canada's world-leading middle-class success
DOUG SAUNDERS From Saturday's Globe and Mail August 4, 2007 at 12:00 AM EDT

LONDON — This long weekend, as Canadian highways fill with lakeside-bound cars and airports with resort-bound families, it is hard to believe that we are anything but a middle-class nation.

After years of full employment and impressive economic growth, you'd think the entire country had been elevated into the secure world of home ownership, retirement savings and weekends on the dock. There's some truth to this vision – but it's a lot stranger than you'd think.

The middle class, around the world, is in trouble. As my articles from India in the past two weeks have shown, poor countries are seeing stunning growth without producing the sort of big, sustainable middle class that leads to peace and long-term stability. There are too many barriers to prevent people from leaving poverty.

But what about countries such as ours, which have had big middle classes for decades? Here, we see a surprising version of the same effect – with notable exceptions. A comprehensive look at the workings of the world's middle class has just been published by Steven Pressman, an economist at Monmouth University in New Jersey. In his The Decline of the Middle Class: An International Perspective, Canada plays a fascinating role.

From 1980 to 2000, a period of explosive economic growth and expanding wealth, most major Western nations actually saw their middle classes shrink in size. The middle-income ranks (earning 75 to 125 per cent of the median income) in Britain shrank by 4.5 percentage points; in Sweden by 7.1 points; and in the U.S. by 2.4 points. These numbers represent tens of millions of people.

Were all these people disappearing from the middle class because they got rich? Or had they failed to find a place on the economic escalator and slipped to the ground floor?

“There was both upward and downward mobility,” Mr. Pressman told me, “but downward mobility exceeded upward mobility by around two to one.”

But there are exceptions to this trend. Switzerland's and Germany's middle classes stayed roughly the same size. And two countries – Norway and Canada –saw their middle classes grow substantially. In Canada, it grew to 37 per cent of the population from 33 per cent, the equivalent of a whole mid-sized province joining the station-wagon brigade, moving Canada into the league of Scandinavian nations in the size of its middle class.

Some of this came from wealthier Canadians being humbled: During the same 20 years, the upper class shrank by 1.9 percentage points, to 33.3 per cent of the population. But more came from poor families moving up. Canada is a middle-class success story, especially compared with the slouching United States. But the story doesn't end there.

Mr. Pressman set out to learn what is making the middle class collapse in many countries but expand in others. Some have attributed these changes to an aging population, the number of working women or divorce rates. He used statistical methods to remove age and gender from the picture, but the patterns remained the same.

Then he looked at unemployment: Were countries with rising employment rates experiencing a growing middle class? Nope. Britain has far lower unemployment than Canada, but a shrinking middle class: “While jobs were being added, households were not moving into the middle class.” In the Netherlands, unemployment fell dramatically, but the middle class declined.

Then Mr. Pressman took his data and subtracted everything except salary and wage earnings. That is, he looked at what would be happening if people lived off only the money paid by their employers.

Suddenly, everything changed. Canada's great middle-class boom turned into an enormous decline: If people were forced to live off their earnings alone, our middle class would have shrunk by a staggering six percentage points. The same was true in Germany. In Britain, the middle class would have contracted even more dramatically.

What had Mr. Pressman subtracted? In short, government: All the handouts, tax benefits, subsidies and rebates that transfer money into middle-class pockets (not including pensions). Without government help, Canada's middle class would be endangered.

In a modern economy, Mr. Pressman told me, “I am not sure that the middle class can be self-sustaining. It seems to require active government policies. The market tends to produce great inequalities in income; these inequalities seem greater in a global economy.” Contrary to earlier economic belief, the countries that are most competitive in a globalized economy are those with the most robust tax-and-spend programs. But they have to be aimed at the right places.

Many Canadian families wouldn't be middle-class if it weren't for government handouts. One key example is the thousands of dollars that Ottawa reimburses parents for child-care expenses each year: Without it, many women wouldn't be able to work, so their families would be deprived of one income and may slide into the lower-class bracket. Tax-funded aid for education savings, first-time home buying, retirement savings plans and medical coverage add up: If you gave up all these breaks, would you still be in the middle class?

I compared these findings to information on the money governments actually spend on different classes and got a surprising result: The countries doing well are the ones that don't just help out the middle class, but do so at the expense of the poor.

Canada hands a comparatively paltry 22 per cent of its spending to the poorest three-10ths of the population and a generous 64 per cent to the middle four-10ths, according to the Organization for Economic Co-operation and Development. Germany, one of the few other countries with a non-shrinking middle, gives only 22.3 per cent to the poor.

Compare that with Britain, whose Labour government spent the 1990s changing social programs so that the money went to the poor rather than the middle class; in Britain today, 34.7 per cent of social spending goes to the lowest-income third –and yet the British middle class has shrunk. In Sweden, where almost 30 per cent of spending goes to the poor, the middle class was clobbered.

(An exception is Norway, which spends a record-breaking 43.8 per cent on its poorest third and saw middle-class gains even bigger than Canada's. But Norway's economy consists largely of oil revenues, allowing taxes and spending levels that, in other countries, would probably destroy the very economy that makes the welfare state possible.)

However, countries that saw middle-class gains also tend to be ones that don't tax the poor heavily. Sweden, surprisingly, does. Canada doesn't. Arguably, governments gain more by making middle-class life easier than by simply aiding the poor. The poorest third are doing a lot better now than they did 20 years ago; unlike the middle class, they saw formidable income gains. But not enough to shift many of them into the secure middle.

It may be that traditional welfare-state programs do more to keep people in poverty than to guide them out – a criticism that has been levelled from both the left and the right. Or perhaps there's a new sub-class of “precarious” casual workers, who never are quite poor enough to qualify for welfare or prosperous enough to earn the state benefits of the comfortable middle. Such workers, key to our new national wealth, could be in serious trouble.

Herein lies the paradox of the modern middle class: Its existence is reliant on a thriving and open market economy, but its size and sustainability are equally dependent on the tax-and-spend mechanisms of the modern welfare state – which, it turns out, are even more important in globalized, high-competition economies.

The countries that are doing best are those that spend serious money on cultivating and maintaining a middle class. Many poor countries, despite having developed booming economies during the past 15 years, fail to join the middle-class club because they can't afford to erect government-supported stepladders to success. And countries such as Canada, which can and do spend that money, have done the best at surviving the social turmoil of our age.

The Globe And Mail 2007

The American government won't tax the middle class.

Oh, yeah. Raise taxes in a downward trending economy. That'll work just fine. By the way, comparing the USA to EU-subsidized Italy is apples and oranges. Let the EU subsidize the US so we can afford the kind of welfare state that Italy has and then we can talk.

The big exception has been the United States. In 1965, taxes collected by federal, state and municipal governments amounted to 24.7 percent of the nation’s output. In 2010, they amounted to 24.8 percent. Excluding Chile and Mexico, the United States raises less tax revenue, as a share of the economy, than every other industrial country.

...

Yet Americans’ aversion to taxes runs deeper. We’ve been collecting less in taxes than other rich countries at least since the early 1970s, relative to size of the economy.

That may be true for some, but when it comes to my middle class household far more leaves in taxes than comes back in terms of Government benefits. For example, the article mentions federal government reimbursing Canadian parents "thousands" of dollars worth of daycare expenses as a huge example of the government subsidy to the middle class.

Just one question, where the hell in Canada is this happening?

Cause I sure as hell am not getting signifigantly reimbursed on daycare expenses here in Ontario. Are they talking about the UCCB? The hundred bucks a month? Daycare here is 35 dollars a day per child. The CCTB? Those numbers are worse than the UCCB, for me anyway.

Whoopty fukin do.

A taxpayer is allowed to deduct in computing income for a taxation year an
amount paid as or on account of child care expenses incurred for services
rendered in the year. The deduction is limited to:

- a maximum of $10,000 per year for each eligible child in respect of whom
the taxpayer may claim the disability tax credit for the year;

- a maximum of $7,000 per year for each other eligible child who is under 7
years of age at the end of the year; and

The GOP want the Obama tax cuts for the middle class to expire but they want even deeper tax cuts for the wealthy that would go far beyond what the Bush cuts did.

Democratic Governor Martin O’Malley and the legislators have lowered the definition of “rich” from the arbitrary $250,000 established by President Obama, to $100,000 for individuals and $150,000 for couples filing jointly. Maryland residents will now be slapped with a new tax on top of already high state and local taxes, tying the state’s new state-local tax bracket, according to the Washington Post, with that of “…the District’s for fourth-highest in the nation.” Especially in the expensive Maryland suburb of Washington, D.C., incomes of $100,000 and $150,000 are barely middle class.

The latest estate agency figures have shown large numbers of France's most well-heeled families selling up and moving to neighbouring countries.

Many are fleeing a proposed new higher tax rate of 75 per cent on all earnings over one million euros. (£780,000)

The previous top tax bracket of 41 per cent on earnings over 72,000 euros is also set to increase to 45 per cent.

Sotheby's Realty, the estate agent arm of the British auction house, said its French offices sold more than 100 properties over 1.7 million euros between April and June this year - a marked increase on the same period in 2011.

Sadly the nation that most needs a federal GST would shoot any candidate that even suggested it.

Don't be mean to me today, gawdammit. I have pants on right now and I don't like it even one little bit.

PS: Hey, speaking of ideas that don't work, you've had 12+ years of record low taxes in your country.

Yet your unemployment rates remain abyssmal. Looks like the job creators, the earners, the entrepreneurs, the masters of the universe, and the rest of your godlike business class that mooks like you fall on your knees in front of to blindly worship haven't been keeping up their end of the deal in the low-taxes = growth/jobs formula. But that assumes the richlings ever had any intention at all of living up to their part of the bargain, which most of them probably never ever did in the first place.