Inequality and Taxation

Despite all the moaning we do about taxes, Americans actually pay lower taxes than the citizens of most successful countries:

As a result, our governments at all levels have less money to spend, and we choose to spend a much higher percentage of that revenue on our military than anybody else on the table. This matters because it is government spending, more than anything else, that creates economic equality. Consider this table, which compares inequality before and after government transfer payments:

The US is fairly equal in terms of the salaries people are paid at work, but once you factor in government spending on things like retirement, medical care, and welfare, we show up as the most unequal of rich countries.

I am coming more and more to believe that the middle class society the US had in the 1945 to 2000 period, and that Americans say they value, was entirely the creation of the government, and that only radical government action can sustain it in the face of global capitalism. A huge percentage of middle class jobs are either in the government or (like mine) required by government regulation; left to its own devices capitalism creates a society much more divided between rich and poor than I want, or than most other Americans say they want.

At some level I am repulsed by a regime of 90% income taxes and massive bureaucracy, which reeks to me of stagnation and vast gray buildings full of faceless people. But I don't see any other realistic way to prevent a new Gilded Age. I say "realistic" because the cases of Japan and Switzerland show that other mechanisms can create reasonably equal societies. In both cases the mechanism seems to be a very strong national solidarity; Swiss and Japanese companies pay their employees well and limit the compensation of CEOs because of intense social pressure to get along and be good team players and what all. But I don't see anything similar happening in the diverse, freewheeling society of the contemporary US. For us, the alternatives are an economic program far more leftist than anything the Democratic party is offering, or a further slide into a world of billionaires and paupers.