Taxation is the lifeblood of a modern liberal democracy. It is the one policy area without which nearly all of the other functions and aspects of the state would not be possible. Yet in the face of this reality, many Americans continue to believe that they can receive the goods and services provided by a modern regulatory, administrative, social-welfare state with low taxes and limited government. Many politicians and everyday Americans have even perpetuated the myth that they are “overtaxed” compared to the citizens of other advanced, industrialized nations.
Despite these claims, there is little comparative empirical evidence to support the fable of the “overtaxed American.” Even a cursory examination of well-known statistics shows that the United States is a stark outlier in how little it taxes its citizens. Not only is the United States well behind other advanced countries in the total amount of taxes raised as a portion of national income; more conspicuously, the United States is one of the few industrialized nations without a national consumption tax such as a value-added tax (VAT).