How much do web designers make in Somalia? How much do construction workers make in Somalia? Compute the incremental benefit for each of those people in moving from Somalia to NYC and you have your answer.
From http://www.nationsencyclopedia.com/Africa/Somalia.html: In 1986, tax rates on wages and salaries ranged from 0% to 18.9%. Income from trade and the professions was taxed at rates of up to 35%. Indirect taxes are imposed on imports, exports, mortgages, vehicle registration, sugar, alcohol, and a number of other goods and services. In 2003, Somolia's sales tax rate was 10%.
And you're ignoring the fact that many countries in the world do not charge income tax are quite nice places to live. Bermuda, Monaco, Kuwait and UAE to name a few.
I would strongly disagree that anywhere in the Middle East is a nice place to live (besides Israel), but in any case you're using four very bad examples. None of those places are sustainable societies on their own. Bermuda and Monaco are rent seekers--they are so pleasant because they are tax havens for wealth created elsewhere. Kuwait and UAE don't create any wealth to speak of either--their "GDP" is really just consumption of capital that happened to be under their ground. See: http://www.columbia.edu/~mh2245/papers1/erc01.pdf.
Precisely! Israel has notoriously high taxes: if you're going to make an argument about how high taxes and socialism (literal socialism, as in state-owned companies) are a bad idea, this is one country where you can confidently do this. I (and many Israelis) would agree that Israel could probably benefit from lower taxes, more privatization, and less regulation. Ironically this is why, despite being Jewish and strongly "pro-Israeli", I oppose foreign aid to Israel: it helps prop up an inefficient system in Israel and serves as corporate welfare for US arms manufacturers (I think some of it has explicit provisions that it must be spent with, e.g., Colt or Lockheed-Martin as opposed to IMI or IAI).
Yet, go up to any Ayn Rand fanatic and ask them if they'd prefer to live in UAE/Qatar/Bahrain or in Israel. They'll say they'd prefer Israel as it's a socially liberal, democratic state, that recognized basic individual rights.
Democracy and individual rights require an entire infrastructure of impartial judiciary, tightly scrutinized police, a citizen's army that can defend the borders against immense odds. A socially liberal populace is the end-result of education. None of those things are free.
There are indeed countries that are pleasant on the surface (i.e., are not Somalia), and have very low tax rates without relying on natural resources. Almost always they either a) have high amount of "hidden" inequality (some states in the US, some countries in Asia and Eastern Europe) b) are police states (Singapore) c) are both (Middle East)
I would also say states in the "a" category (with most favorable outcome -- individual rights, inequality of opportunity and income, but equality before the law) also on average have higher tax rates than states in "b" and "c" categories.
I really can't think of any pleasant countries, to tell the truth, that have appreciably lower taxes than the U.S. Hong Kong, Taiwan, and Singapore are all special cases, and I'm not sure their examples are really generalizable.
The Middle Eastern countries (UAE, etc) can't be counted because their wealth comes from selling off their natural capital. Selling off the furniture isn't really "income". Hong Kong and Taiwan are special cases. A lot of their expenditures are heavily subsidized (e.g. defense, by China and the U.S., respectively).
See: See: http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenu...
Sort by the Heritage Foundation column, from lowest to highest. The first country on that list I'd even consider living in is Lithuania. But even then it's not an entirely fair comparison. Countries like Lithuania are subsidized by regional stability propped-up by the defense spending of bigger neighbors. Moreover, the eastern european countries generally don't have the aging problem the U.S. and western european countries have. Then you've got Croatia, South Korea, and the U.S. around 27%. I'd live in any of those places. Going from there up to 35%, you've got some really livable countries: Japan, Switzerland, Australia, Ireland, Canada, New Zealand. If the U.S. eliminated it's deficit entirely based on tax increases (discounting the effects of the recession which we continue to be in) we'd probably only be around Ireland and Australia in terms of taxes.
I am also not using pleasant literally here: as in, places stuffwhitepeoplelike.com crowd like to visit and rave about, but would not chose as a place to settle down with children.
I like US (Bay Area in specific) and am not going anywhere. As far as within the US, I considered Seattle area, Portland area, and Austin as mental exercises, but Bay Area seems to represent the best set of trade offs in terms of what I want.
US could have either lower taxes or same taxes and greater social benefits if excessive military adventures or the drug war were curtailed, however, but the change would probably come gradually.
I am curious as to how Taiwan and Singapore are able to sustain low tax rates despite welfare states, military on active alert, and in Singapore's case, an expansive police state. Would never be able to live in Singapore (I can say that with absolute certainty), slight chance I might consider Taiwan (but probably a "no" too).
Of course that's not the only operative consideration. There are other clubs that charge different fees, which might be less. You can always move to Club Canada or Club Germany, (or wherever). In a globalized society the "fair" tax rates are limited not by some abstract ethical consideration, but by competition between countries to offer the most pleasant societies for the lowest tax burdens.
You asked: "Please explain how a web designer making $250k a year freelancing out of an apartment in NYC is "benefiting" from the government more than a $30k/year individual on welfare."
How do you measure how much someone benefits from the government? Your comment suggests you're looking only at the value of services directly received, but that's not the proper way of computing the total benefit. You have to do a marginal analysis, looking at the incremental benefit as you go from "no government" to "government."
The economic insight here is that your benefit from the existence of government is not a fixed amount valued by the services you utilize directly. Rather, it's a percentage of the incremental gain in wealth that is enabled by the existence of government. And because societies without government basically cannot create more than subsistence-level wealth, that increment is a big number.
That's not a marginal analysis. A marginal analysis would be going from "slightly lower taxes, slightly less government" to "slightly higher taxes, slightly more government".
You seem to want to debate (all by yourself) primitive tribal society vs civilization.
This is not an argument about the desirability or optimality of bigger or smaller government or higher or lower taxes. That should be an empirical fight.