(FORTUNE Magazine) – If you ever want to get the fur flying in a roomful of policy wonks, ask them whether the tax burden in the United States is excessive. Absolutely! the opponents of big government will roar, including nearly all conservatives and a majority of Republicans. Most Democrats--and all who yearn to expand the role of government in American society--will scream No way! just as fervently. It's the kind of question that gets the veins popping out on people's necks and temples, that's argued and analyzed endlessly, and is never, ever resolved. One reason is that it's not quite as straight-forward as it seems.

Antitax types make some persuasive arguments, perhaps the simplest being that anyone beyond middle age can remember a time--not too many decades ago--when the U.S. tax burden was even lower than it is today, and the economy seemed the better for it. The share of the nation's total production of goods and services that went to the federal government for taxes was less than 15% in 1950; it has crept up to nearly 20% today. Add in state and local taxes and deficit spending (a disguised tax), and you get the most comprehensive measure of the government burden: total government spending as a percent of GDP. The percentages: 35% today, according to the latest estimates, vs. just under 30%, on average, from 1960 to 1973.

The characteristic retort of big-government liberals is that tax burdens have increased relentlessly in all industrialized countries, and that the U.S. today is still among the most lightly taxed nations in the world. Sure, they'll say, the government burden here may be 35% of GDP, but it's 50% or more in prosperous nations, such as Germany and France. For the 27 nations that make up the Organization for Economic Cooperation and Development (OECD), the average government burden is 42%, and for the Europeans alone it's 52%. That sounds pretty compelling. It makes you wonder whether U.S. taxpayers in general--and conservatives in particular--are just being crybabies. It's even true, so far as it goes. It just doesn't go very far.

What the "Americans are undertaxed" types ignore is that the overall profile of government taxing and spending is very different in different nations. For one thing, taxes in many European countries pay for the kind of cushy economic safety net that's never existed in the U.S., including things like fat long-term unemployment and disability benefits. And in many industrialized nations your tax dollars buy you essentially free college educations for your children--something that can cost, on average, $20,000 per year per kid in the U.S.

But perhaps the single biggest difference between America's tax and spending system and the others--and one that helps explain why we don't, by and large, feel like we're undertaxed--is the way we pay for health care spending. Nearly all the other nations in the OECD have nationalized medical care, so that practically all your medical expenses are paid for when you pay your taxes. For the OECD nations, on average, 75% of health care spending is paid by the state, out of tax revenues, with the percentage ranging as high as 89% in Belgium and 94% in Norway. In the U.S., the government covers less than half of total health care spending, and most of that goes to the poor (Medicaid) and the elderly (Medicare). It's true, of course, that the U.S. spends a greater share of its GDP on health care than other nations--14% in 1993 (the last year for which we have detailed data), compared with about 10% in Canada, France, and Switzerland, and less than 9% in Denmark and Germany. But the point is that the level of health care spending is largely imposed on people, and the burden feels just like the burden of taxes. The costs of private health care expenditures are taken from people's compensation--in the form of insurance payments--before they get their paychecks.

If you add private, nongovernmental health care spending to government outlays, much of the seemingly huge difference between the apparent tax burden of the U.S. and the other OECD nations vanishes. In 1993, private health care spending in the U.S.--more than half of total health care spending--was nearly 8% of GDP. Add that to government outlays, and you get an overall tax and health care burden of more than 42% of GDP. That's nearly as much as the 44% average you get if you add up the numbers for all OECD nations. The average for the European nations alone is still much higher, at 54%. But to put it another way, adjusting the data for health care spending explains nearly half the apparent difference between Europe's and America's tax burdens.

With the presidential election looming and the tax debate intensifying, the conservative position is ascendant: Bob Dole is talking up a 15% tax-rate cut, and President Clinton is trying to outmaneuver him with tax-break proposals of his own. The opponents of lower taxes will argue their case, in part, by trotting out the OECD data to "prove" that the U.S. tax burden is already way lower than other nations'. Don't believe them.

REPORTER ASSOCIATE Lixandra Urresta