Enough About High Taxes! Let's Talk About Massive Spending!



So Tax Day has come and gone, except for all of us who have filed extensions or are figuring out how to amend dashed-off returns.

It's useful to document how much we pay in taxes but it's always worth remembering that government spending is only loosely related to how much money a government takes in. For example, in 2009, the United States's tax burden at all levels of government came to just 23.3 percent of GDP. The average for all OECD (or "developed") countries was 33.6 percent.

But as Milton Friedman liked to remind people, the cost of government is best measured not simply by tax levels but by spending levels. And here the data tells a damning story of profligacy. In 2009, OECD data show that the United States came in slightly below average for "general government expenditures as a percentage of GDP." However, when you break that down on a per-capita basis (as is done on the right), a different picture emerges. The U.S. is suddenly among the biggest spenders, shelling out almost $20,000 per person (in 2009 dollars).

Here is something upon which stimulatarians and fiscal hawks might agree: We cannot accurately price the cost of government if we are buying today's services on a super discount. That tank—or mortgage deduction—you're happy to pick up at a 40 percent discount may not seem so necessary if it was actually selling at retail.

Read more here.

NEXT: A.M. Links: Almost 300 Missing After South Korea Ferry Capsizes, Census Bureau Changes May Obscure Impact of Obamacare, O'Reilly Thinks Conservatives Won't Watch Colbert on The Late Show

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Pick your poison: the tax and spend party or the spend and spend party.

  2. But, but, but GDP depends on government spending! There’s no opportunity cost! It’s magic!

    1. this is basically the point i was trying (poorly) to make

    2. Multipliers

  3. OT: So there is this bullshit small study that casual use of pot may produce “changes” in the brains of users. Usual tripe anti-pot bullshit sponsored by NIDA, but check out the reaction of the Yahoo News readers to this study. I kept reading and I couldn’t find anyone who bought it. My point: I think polls are vastly underestimating support for full nation-wide legalization. Check out how these Yahoo News commenters just go off on the study and NIDA’s attempts to manipulate public opinion on this issue:…..53073.html

  4. “…the United States came in slightly below average for “general government expenditures as a percentage of GDP.”

    I never understood why spending as a percentage of GDP was considered a good measure of government profligacy, since government spending is a component of GDP (if I’m not mistaken). So, ceterus paribus, if government spending increases, the metric won’t reflect any change.

    In addition, the metric intuitively does not pass muster. It implies that as your economy grows, government spending should increase. Why would that be the case? If everyone is more productive, it follows that government spending is allowed to increase? I don’t see the connection.

    1. Would it not be interesting to take two countries with the same GDP and then see that for the first nation 90% of that GDP is government spending, for the second only 10% is government spending? I think I would rather be living in the second.

    2. So, ceterus paribus, if government spending increases, the metric won’t reflect any change.

      That is not true.

      If the rest of GDP is $100 and government spending raises from $25 to $50, the ratio of government spending to GDP will increase from 25% to 40%.

      1. “If total GDP is $100…”

      2. If the total is $100, and government spending has increased to $50 of that $100, how is that not 50% of GDP?

        Sure, if the private sector stays flat at $75, and government spending increases to $50, then $50 is 40% of $125.

        1. Sure, if the private sector stays flat at $75

          That was the meaning I took from ceterus paribus in the statement I was responding to.

          Either way, the metric of government spending to GDP will reflect increases in government spending out of pace with the growth of spending in the rest of the economy.

        2. My wording was poor. I should have said if GDP starts out at $100 with $25 of it from government, and the government increases its spending to $50 while GDP from other sources remains at $75, …

  5. I keep reflecting that when I get my bonus, or any other payment, I basically multiply the gross by .6 to know what I’m going to get to keep. And I’m within pennies, generally.

    I can add state sales tax (and local when I was in OH), plus any “fees” that are more like “penaltaxes”, and I get myself perilously close to “they’re taking HALF of my goddamned paycheck at one level of gummint or another. HALF!!!!1111onedyoneeleventy!”

    WTF is wrong with me? I should be protesting in the streets!

    /lazy and scared?

    1. But you get roads. And traffic lights. And the fire department. It’s practically a bargain!

      1. And a department to administer those things and about a million others.


  6. I thought it interesting that our per capita expenditures were higher than all of the PIGS borrow and spend countries.

  7. So how about we have no deductions and next year every person gets a bill from the government for $20,000. We handle our expenditures like that for all years going foward and see how that impacts elections.

    1. Implement that and the “No, fuck you, cut spending” party will when the next election in a landslide.

  8. A classic picture of where Progressive insanity leads is place of Greece in that chart. Broke Greece still spends above average per capita. Sheesh.

  9. “No, fuck you, cut spending.”

  10. “We’ll have fun, fun, fun, ’til Daddy takes the T-bird credit card away!”

  11. “Your tax cut is depriving the starving of food!”

    1. Precisely. Taking less is giving. Giving less is taking.

  12. For example, in 2009, the United States’s tax burden at all levels of government came to just 23.3 percent of GDP.

    This does not include state and local taxes many of which European nations do not have.

  13. I, for one, will be submitting my resume to the Ministry of Window Breaking.

Please to post comments

Comments are closed.