Are Low Taxes Taxing Our Happiness?

Americans have found solace in paying low or no taxes since a certain dumping of tea into Boston Harbor in 1773. Low taxes have contributed to the psychology behind the country's economic individualism, but have they made us happy?

An OECD study collates research Gallup gathered in 2008 to rank countries by order of relative happiness. Those that ranked high generally had high tax rates and modest GDP per capita.

The Netherlands, Finland  and Denmark, where citizens pay the lion's share of the earnings to the state, rank as the top three happiest countries. The United States, where tax rates hover between 15 and 25 percent, ranked 11th on the happiness scale.

The three European countries have an average GDP per capita of roughly $39,000 per year, compared to $47,000 in the U.S.

The OECD's findings stand somewhat contradictory to the Pew Center's Andrew Kohut whose research has shown the happiest people are those who earn more.

When one adds in the extra expenditures--for health care, education, public transit--many economists calculate Americans pay close to European tax rates, just not directly. And the services Americans receive are often fewer and less comprehensive than those in Europe.

All of this contributes to a sense of worry that Thomas Kostigen notes could be reducing our overall share of happiness.

Further Reading:

OECD's Society At A Glance which survey which countries sleep more and eat more

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