With the passage of ObamaCare, we’ve taken another giant step towards Europeanizing America. Tragically, our history shows a steady trend in that direction, with government spending as a percentage of GDP steadily increasing from 20% in the 1930s to over 35% in the last two decades. From the first success of the Progressives in the late 19th century, the United States has tended toward the European regulatory-welfare state model. Is this convergence wise?
Certainly European-style governance has many drawbacks. Consider Denmark. There, tax revenues are used to pay for health care expenses, all levels of education, child care, etc. Even students receive support grants while in school! Vacation policies are generous with employers required to grant at least 5 weeks of paid vacation per year. All this may seem great-you pay for nothing and get “free” vacation time. But, of ourse, there are no free lunches.
Danes pay a large price for all this. Minimum tax rates in Denmark are over 45%. In addition, Denmark pays the supra-governmental EU-imposed VAT (value added tax) of 15% on top of the national VAT of 10%. The VAT tax is essentially a sales tax raising the price of everything. Consumer goods are much more expensive with gasoline costing $6-8 per gallon, a beer over $10. European taxation shifts choice away from individuals and limits their ability to enjoy much of the world’s marvels.
Average take home income in Denmark is close to that of the United States, but Danes have a much lower purchasing power given these downstream taxes and the higher prices resulting both from the sales tax and the regulatory burdens. Home ownership in Denmark is more than 10% lower than in the United States.
Personal car ownership is discouraged in Denmark in favor of public transportation. The tax on a new car is over 100% of the sticker price, doubling the cost of car ownership. Danes also pay an annual ownership tax of anywhere from $1000-$4000. As a result, only about 400 individuals per thousand own automobiles in Denmark, compared to over 750 per thousand in the United States.
These aspects of European life are less well known to Americans. American tourists see a “nicer” side of Europe, staying in lovely hotels, enjoying beautiful scenery, and eating wonderful foods The reality of everyday life in Europe is less lovely.
While America is not perfect, allowing the government to control more aspects of our lives will not yield a better, healthier society. The government cannot wave a magic wand and rid the world of problems. We all want a healthier, safer, and wealthier society. Are free markets or bureaucracy the better path to those hopes? Indeed, if we continue down the current road, what will America resemble tomorrow? France without the good food?