"Something in America has clearly broken. The U.S. has always been a capitalist society but it always believed in meritocratic principles, allowing smart, hard-working individuals to advance through strong public schools and publicly-funded state universities. That’s all but disappeared now." ---

Low taxes are destroying the American dream.

For decades now, so-called conservatives in the United States, from Ronald Reagan to the Koch Brothers and Donald Trump, passing through dozens of Republican-controlled state legislatures, have convinced Americans that they’re overtaxed.

It’s a lie, of course. If you compare the U.S. with other advanced industrialized countries, the share of the economy accounted for by taxation is on the low side at 26 per cent and trending lower. Countries with more extensive social safety nets are much higher — Denmark, for example, is at 45.9 per cent. Canada comes in at 31.7 per cent, higher than the U.S. but still much lower than the OECD average of 34.3 per cent. If you want good comparators for the U.S., look to Mexico and Turkey.

Low taxes are a great indicator of an under-developed society, where elites hoover up the benefits of low taxes and buy the best private education and health care money can buy. In the meantime, everybody else suffers from second-class public services.

And in the U.S., that low-tax effort ratio was calculated before the massive Trump tax cut was approved by Congress late last year. That tax cut will lead to a surge in U.S. federal deficit and debt levels with serious consequences for the U.S. economy and future generations and will likely lead to cuts to social spending in future.

But it’s at the state level that the U.S. anti-tax movement has had its most catastrophic impacts. Republican-controlled states have been at the forefront in rejecting the expansion of Medicaid for poor Americans that came with Obamacare and have critically slashed funding for public schools.

Those education cuts, the direct result of lower tax revenues, have sparked recent teacher strikes in places like West Virginia, Oklahoma and Arizona. The stories emerging from these places are shocking.

In Oklahoma, per-student funding of public schools has dropped by an inflation-adjusted figure of 28 per cent over the past decade as the state legislature has reduced tax rates for oil and gas companies and high-income individuals.

Teacher pay in the state was until a recent strike the second lowest in the United States. Not only do teachers have to moonlight as babysitters and restaurant servers to make ends meet, their classrooms are filled with broken desks, leaky ceilings and ancient textbooks. One Oklahoma parent reported that her daughter’s eight-grade history book was published when George W. Bush was U.S. President.

An Oklahoma science teacher reported that her 70 students had to share 25 anatomy books, their bindings broken and pages falling out. Sort of makes you feel like there should be a crowd-sourcing campaign for these schools as if Oklahoma were Haiti or Malawi.

In Arizona, which has tilted right from the days of Barry Goldwater, lower taxes have been the rallying cry of the Republican-controlled legislature for years. As the top state individual tax rate has fallen from 7 per cent in 1990 to 4.5 per cent in 2018, state funding of schools has shrunk as well, by 14 per cent per student over the past 10 years.

According to Tom Rex, an Arizona State business professor, “It’s an ideological aversion to taxes. It’s a governor and a legislature who have not only said they will never raise taxes but cut taxes every year.”

The result is that average teacher salaries in Arizona fell over the past decade to $47,000 from $53,000. The New Yorker magazine recently profiled a couple of high school teachers in Flagstaff, Ariz., whose combined salary was $80,000 a year. The husband, a history teacher with an M.A., sells firewood on the side and because teachers get no paid maternity leave, the couple had to refinance their home when their second child was born to give the wife a bit of a break after the birth.

Some Arizona schools have now turned to the Philippines and Jamaica for imported teachers, bringing them in under temporary work visas because Arizona teachers’ colleges are finding trouble recruiting students.

After 75,000 teachers and their supporters descended on the Arizona legislature last week and closed most state schools, the legislature passed emergency legislation that is supposed to raise average teacher salaries by 20 per cent by 2020. But of course, it will be all be done without raising taxes. God forbid.

The governor has said he’ll get the extra cash cutting elsewhere, imposing a higher level on vehicle registrations and banking on stellar economic growth. But there won’t be an extra cent for salaries of support staff or any of the other pressing needs of students.

For the state’s wealthy residents, who can afford to send their kids to private schools and to retirees in places like Scottsdale who have an aversion to paying for the education of other people’s children, especially if they’re poor and Latino, who cares if the roof leaks and an under-qualified teacher is struggling with an overcrowded class?

But something in America has clearly broken. The U.S. has always been a capitalist society but it always believed in meritocratic principles, allowing smart, hard-working individuals to advance through strong public schools and publicly-funded state universities. That’s all but disappeared now as is social mobility in the U.S. Better chance of getting ahead if you’re a child of immigrants in Canada than south of the border.

I’m convinced this is not a winning strategy for America or U.S. business long-term. Impoverished government will mean crumbling infrastructure, an under-educated work force and huge social problems.

Thankfully, we’re not there yet in Canada.

The libertarian right has always been weaker here and despite the Harper government’s best efforts — the unnecessary cut in the GST is the most egregious example of its boneheaded fiscal management — Canada’s education, health and social systems remain adequately funded by tax revenues.

But I worry every time groups like the Business Council of Canada start complaining about the need to match the Trump corporate tax cuts, for the sake of “competitiveness” and threaten all sorts of dire consequences if we don’t march in lock-step with the Republican right. If we follow that advice too closely, our children will soon be studying from ripped 30-year old textbooks on computers running Windows 98.

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