Hillary Clinton: Low Marginal Tax Rates Lead to Terrorism

Did Secretary of State Hillary Clinton admit that Americans are overtaxed during her business leader roundtable in Lahore, Pakistan? The juxtaposition of quotes in this Pakistan Daily Times article -- the first part about the government's failure to locate al Qaeda leadership in Pakistan, the second about taxation -- seems to say that:

"Maybe that's the case; maybe they're not gettable. I don't know… As far as we know, they are in Pakistan," Clinton told senior Pakistani newspaper editors in Lahore, AFP reported. "The percentage of taxes on GDP (in Pakistan) is among the lowest in the world… We (the United States) tax everything that moves and doesn't move, and that's not what we see in Pakistan," she said.

Media Matters says Clinton's detractors are taking the quotes out of context, and cites an extended passage from a State Department transcript, which makes it clear that the secretary was not saying the United States taxes of all animal and mineral matter, but rather was imagining such a claim from a hypothetical Other:

But I think too that it is only fair to take a hard look internally about what Pakistan needs to do. And at the risk of maybe sounding undiplomatic, Pakistan has to have more internal investment in your public services and in your business opportunities. By any fair measure, for example, the percentage of taxes of GDP is among the lowest in the world. The United States, we tax ourselves, depending upon who is in power, somewhere between 16 and 23 percent of GDP, and right now, it usually hovers around the 20 percent. You're less than half of that.

And so at some point, when you ask for partnership, you have to ask what the equity state is that Pakistan itself is looking to make, because it is difficult to go to our taxpayers and say we consider Pakistan a strategic partner, we consider it a long-term friend and ally, we have supported it since its inception in 1947, we want to continue to do so, and have our taxpayers and our members of Congress say, well, we want to help those who help themselves, and we tax everything that moves and doesn't move, and that's not what we see happening in Pakistan.

A State Department video clip is inconclusive. The "gettable" line (and by the way, that should be "getatable") seems to have come in a press conference and the tax line seems to have come in an address. The two have been run together in news coverage, such as this BBC story, but they weren't part of a single argument.

But in context, the quote is even more revealing. Clinton's sentiment here is a variation on Oliver Wendell Holmes' claim that taxes are the price we pay for living in a civilization where imbeciles are involuntarily sterilized. Note that Clinton was not satisfied to make the legitimate suggestion that Pakistan reduce its consumption of U.S. aid. She also specified how the Pakistanis must achieve that goal, with a comparison that would sound chauvinistic coming from any foreign minister, but sounds especially so from one who represents the most powerful nation on earth. It's Clinton business to suggest that Pakistan get off the American tit, not to spell out how Pakistan does that.

In any event, it would be good to know what percentage of Americans agree with the sentiment. The United States and Pakistan are both former British holdings. When you consider all the variables of history and luck that made Pakistan's government dependent on American largesse rather than the other way around, does anybody think it's our higher tax rate that made the difference?