Yesterday, rioters in London attempted to overrun the building that houses Britain’s Conservative Party, as 52,000 demonstrators gathered near Parliament to protest a proposed increase in university tuition. In an effort to cut spending by $130 billion, the national government has proposed raising the maximum schools can charge from $9,600 to $14,400 a year.* That idea proved unpopular. As the Times puts it, “Tuition is a politically sensitive subject in Britain, where universities are heavily subsidized by the government. Until the late 1990s, when the Labour government introduced tuition, students paid nothing to attend college.” Under the new plan, students would borrow the money from the government—as they do now—and begin paying back the loans at 9% of their wages once they began making more than $38,000 a year. After 30 years, the loan would be wiped out, regardless of whether it had been paid or not. In England, this plan prompted rioting in the streets. Meanwhile, out-of-state tuition at the University of Michigan costs $20,000 a year ($35,000 for Harvard,) and students start paying back their loans immediately whether they can find a job or not. I am beginning to suspect that we’re getting a raw deal.
“Ah!” you say, somewhat effeminately, “but the British pay much more in taxes than we do.” Like so many things that everybody knows, that turns out to be only sort of true. Subjects of the Crown who make less than $60,000 a year are taxed at the basic rate of 20%. A single American who brings in $59,999 a year pays income tax of 25%, plus FICA and other payroll taxes. A married person making the same amount of money pays only 15%, which is A) bullshit until I meet a height-weight appropriate woman who likes both Danzig and French existentialism, and B) lower than what they pay in Britain. But once you add payroll tax of 7.2%—or 15% for self-employed people, and again I call bullshit—we’re back above the British 20%.
Where we colonials really start to enjoy an advantage over our English counterparts is in the higher tax brackets. Britons who make between $60,000 and $242,000 pay 40% income tax, and those who make more than a quarter million a year pay 50%. In the US, on the other hand, the rate tops out at 35% for incomes above $373,000. (Our quarter-million earners pay 33%.) So it’s true that rich and even upper-middle class people pay more in taxes in the UK than they do in the United States. But the majority of us would actually pay less under the British system.
In fact, that majority is vast. In the United States, 82% of taxpayers make less than $60,000 a year. Such earners would be taxed at 20% in the UK, but in America, we’re paying between 22% and 32%. We’re also not getting free health care* or subsidized college tuition with loan forgiveness. What we are getting is constantly told that government spending is out of control and taxes are too high—for the rich.
Two-thirds of that argument is true. Government spending is out of control, and taxes are way too high for 82% of the country. Eight out of ten Americans are paying UK prices and getting Uruguay product, but that’s because taxes are way too low for the richest among us. Since 1954, the top marginal income tax rate has fallen from 91% to 35%, and the threshold for that top rate has dropped from $3 million to $375,000. More Americans are paying more taxes, and a few Americans are paying much, much less. They happen to be the people who had a bunch of money already.
In London, they’re smashing windows and lighting things on fire at the mere suggestion of a deal that would constitute a tax cut and/or tuition abatement for most Americans. Meanwhile, we’re shouting at the post office in tri-cornered hats because Congress almost tried to let us buy national health insurance. The same cabal of wealthy Americans that gave themselves a 60% tax cut at our expense is working hard to convince us that we’re under attack. I agree, but I’m suspicious about where from.