I don’t know what country you live in, but I can tell you how it is in Sweden. As a freelancer I pay appropriately 70% of what I charge in taxes. How high do you think taxes can get before people stop putting energy into raising their productivity?
Better distribution is through capital tax, not income tax. Taxing workers even more is the opposite of sharing productivity gains captured by shareholders. Are capital gains and dividends taxed at least at 70% in Sweden?
1. Salary is your company's money that becomes your money.
2. Capital tax is tax on your company's money.
3. Income tax is tax on your money.
With either tax, the economic system that consists of you and your employer is being robbed.
Speaking of which, if someone takes your groceries and runs, just before you have paid for them, that is shoplifting. If it's just after you paid, it's robbery. You might think you're better off with the former, but shoplifting raises prices; some of it is shifted onto you, so that it is effectively robbery.
1. Companies only have money because of the work I and others do.
2. It doesn't follow that when companies have more money their workers get more. Evidence is: record profits concomitant with layoffs, corporate profits vs wages, etc etc.
3. Taxes fund a government that answers to me. Capital powers corporations that not only don't answer to me but likely want to exploit me.
If what you were saying were true, there would be no corporate tax, and probably no worker protections, no social safety net, no building safety standards, no regulatory apparatus, no antitrust, etc etc.
I like that stuff, and I'm pretty confident corporations wouldn't have done it themselves without a democratic government forcing them to.
There's a meaningful difference between democratic governments and corporations, and governments don't have to be perfect for this to be true.
The situation is trickle down from laissez-faire is definitely proven wrong just by the situation we are in and is the starting point of the discussion. Tax is just a tool to correct the failure of the system of failing to correctly redistribute productivity gains from workers starting a few decades ago (and the point above is with the promises of LLM it’s crucial we address that situation). Robbery or not is not the debate here, income tax higher than capital tax is just a good candidate cause and solution (given historical data), but of course we can discuss alternatives.
>With either tax, the economic system that consists of you and your employer is being robbed
Except differences in tax rates will have significant impact on what type of income people want to earn. If personal income is taxed lower than capital, then people will want to increase their income through work.
If personal income is taxed higher than capital, people are incentivized to build more machines than the economy needs and this will put people out of work.
by tax revenues
In China, corporations pay more than 2 times more taxes than individuals (in the US, individuals pay almost 6 times more taxes than corporations).
China: corporate income tax (19%), individual income tax (7%)
USA: corporate income tax (7.6%), individual income tax (41.1%)
IMHO that is very misleading in this context where there are a lot of Americans.
If the VAT rates went to 0% you would still get to keep the exact same amount as with the current 25% rate. And when discussing B2B prices VAT is never included, as it is generally not an expense for the company but rather just an accounting detail.
I would include VAT. No matter B2B or not, it's how much your end customer pays is what matters. Yes, business will pass on this tax further, but end consumer won't be able to claim it. It's the same as a sales tax in the US. To include it in price or not is more a psychological thing (in the US it's not included in price). When I pay $106.25 for something it makes a little difference for me that $6.25 goes to my state or passed to the previous business, and if I only have $100 you lost me. That's the reality.
Basically it's very similar to debates about US taxes. Sure, it's not 70%, but things add up quickly. Income tax, social security, medicare, medical insurance, sales tax. The usual argument is "but, but ... it's not me who is paying my medical insurance or half of social taxes, it's my employer, so it's not my tax". Well, it is. That's the money your employer would have paid _you_ if those taxes hadn't existed.
Not to mention, things that fall outside of capital / income taxes which increase the overall percentage in sneaky ways in the US: car registration fees, the death tax, property taxes, student loan repayments (depending on your view of subsidized university).
We can actually be certain that humans work the other way since we ran huge experiments in labs called the Soviet Union and China. In those experiments we found out that people worked way less/not at all when there was no economic incentive to do so.
Sure that’s risky for 100% of population. But for 0.1 percent of population who makes many millions a year, who cares? No one is that special of a snowflake we need to optimize for their productivity. Most of those people are either already workaholics or already retired on a yatch.
Societies taxing their entrepreneurs at 10 and at 90% are always vastly different. This difference in turn heavily influences every participant’s system of motivations, so comparing these two numbers alone is usually not very helpful
That’s not true. Many companies people work at provide them little to no incentive to work harder or better, yet still a lot of people try to do so. Lots of places have almost no possibility of promotion just the ability to go elsewhere. Some professions like teaching, nursing pharmacy treat all workers as interchangeable with no performance incentives.
I can tell you that there is no way I’d be doing what I do if it wasn’t for the money. I’d be developing useless keyboard firmware or some other junk no one but me would care about. It would provide minimal value to the world.
Who pays nurses more just because they are good? In a lot of professions rates are set by governments or institutions and there is not enough competition between businesses for wages.
Any private clinic would pay the better nurse more? You can check this quickly on job-listing portals – nurse wages are in the 20000-100000k/year range, so clearly supply and demand as well as qualification are determining it. Which socialist country is it where wages are ceiled by the government?
Agreed. After all, that is the equivalent rate for all work done in the commons, on free software for example. Zero dollars earned, but somehow the incentive is still there. Money is not the only thing that motivates human beings.
Sure this works for creative endeavors. Now what would motivate someone to pick fruit in the summer Sun? Or clean toilets in a corporate office?
Sure you could say, "there are some people who just enjoy picking fruit." But are there enough people to satisfy the demand? And even if there are, what do you do with them as that demand decreases? The people who love picking fruit will have to clean toilets.
I believe this is why the income tax is so popular with economists. Other taxes create some type of negative feedback where raising the tax decreases transactions and shifts capital elsewhere. But with the income tax people have no choice but to keep working and may even have to work more. So the "economy" benefits because more labor/capital can be squeezed out of individuals without slowing anything down.
I wonder why people endlessly argue how much they should tax the rich and the poor, there is only one answer: 100% of everything, i.e wealth, income, gifts etc. It's a nice round number and everybody is taxed fairly.
Interesting, my understanding is exactly the opposite. In my opinion the reason why so many people don’t care much (or are so in love with admin jobs) in Sweden is precisely because it’s too safe?
The Nordic countries are actually the easiest place in the world to earn at least 30 million dollars (or become billionaire for that case) exactly because of the welfare system: https://youtu.be/A9UmdY0E8hU
When you don’t have to struggle for a living, you’re more free to take risks and start your own business. Workers accept disruptive innovation and being let go, knowing that the state will help them reskill if necessary.
Edit: Changed sentence from "earn a million dollars" to "30 million dollars" to reflect the actual video contents. (Mea culpa.)
USA demolishing most everyone else, as you'd expect if you own what you create. Almost 10% of 400 million people are millionaires in the USA! Insanely productive all things considered.
Also kind of shockingly the USA has the most progressive tax system, I believe -- the vast majority of those paying are high earners, low earners pay barely any taxes and can save a lot.
People in the USA who want to have a European-style welfare state don't realize that American high-earners already pay European levels of tax. The American lower and middle classes pay a lot less of their incomes - that would be the group that would have to pay for an American welfare state. That won't go over well...
Having a single payer healthcare system would increase taxes but could decrease overall costs by 50% (since US pays 2x what other equivalent countries pay).
Beyond that, we have an issue where corporations and high-net worth individuals aren’t paying taxes, which could prevent onerous taxes on the middle class. No nation really taxes the rich (cf. the Panama Papers).
We are talking past each other: I'm saying there are lots of ways that the wealthy avoid taxes, such as borrowing against equities for expenses (https://www.wsj.com/articles/buy-borrow-die-how-rich-america...). Trump had a private jet but paid $750.00 in income tax for a couple of years. Additionally, capital gains taxes are lower than many income brackets (cf. Buffet's famous quote about being taxed more than his assistant). Finally, carried interest loophole allows private equity managers to classify services as capital gains.
Basically, if you have enough equity, a bank will loan you the money you need, while you can leave those stocks untouched. You don't have to pay any tax, let alone the extremely preferential capital gains tax.
US has a tax gap of perhaps $1 trillion, and much of that is wealthy Americans who are too hard to pursue: https://www.nytimes.com/2021/04/13/business/irs-tax-gap.html. That could be 50% of the bill if we were able to cut healthcare expenses by dropping insurance companies, removing pharma control of prices, etc., to try to attain similar OECD healthcare costs.
The US is in a unique situation. We have to both reduce the amount of rent-seekers within the healthcare system while increasing the taxes we levy on the wealthy. Universal care might mean an increase in taxes on the middle-class, but universal care will ultimately reduce their expenses since it's more efficient.
PS. Please don't attack people personally: it's much better to say, "This comment does not account for X," than "You seem very uniformed [sic]?"
PPS. If you need a poignant example of the failure of the US healthcare system, look no further than maternal mortality rates. What a disgrace.
It's not necessary about amount, but about distribution. Let's say a medical tax in Germany is 14.6% (correct me if I'm wrong), my medical insurance here in the US for a family of 2 is around 14% (yes, it's paid by my employer, but there is no free lunch and I consider it _my_ tax). The only problem here is that payment is fixed, so if I had 50% of what I have now (and that would be a median salary in my state) it would be 28%. Also if I lose my job I will have to pay it in full myself, from after-tax money. Unlike Germany. Oops. So I'm already paying on par with Germany (when I'm employed), and I would pay twice, of even triple of that if I was an average worker.
The tax rate in Germany is 42% on income over 62000 euros. That covers everything, but doesn't include any local or municipal taxes. The VAT is 19% on top of that.
In other words, a 42% federal income tax plus (roughly) a 20% federal sales tax.
You are conveniently leaving out payroll taxes which constitute another ~35%. So 42% becomes ~77%. 19% doesn't technically apply to the payroll, but it does apply when you buy something.
The maximum payroll tax is 42% for incomes above 62k Euros. The part of income below has a tax excempt amount of ~10k, then a linear progressive tax. (There is an rate of 45% for incomes over 250k, but let’s skip that for the argument.)
There are also some tax reducing things, but let’s say you have a taxable gross income in the range of 60k. The deductions are as follows:
- 25% payroll tax (which is the tax _average_, only the amount above 62k is taxed with 42%)
- 7.3% healthcare (or 14.6% if you are self-employed)
- some percentage for other public insurances
Gives you around 65% net income, from which you pay 19% VAT for most things you buy as consumer. But e.g. rent doesn’t have a VAT.
If your income is higher (as I wrote in my other comment), the healthcare / public insurance cost is capped, so every Euro above 62k is taxed with 42 (or 45) percent. If your income is lower you simply pay less taxes (relatively) and might have 80% or more net income.
Yep, but you need to count employer paid taxes too to get the whole picture. Tax base will be different (+ 7.3% healthcare + 9.3% pension + 1.5% unemployment), so if your base is ~1.17 of your "official" base, the effective tax becomes (0.35 + 0.17) / 1.17 = 45% (leaving you with 55%). Which is in line with the chart I posted.
Now here's how it works in the US. Let's take my $170K household income (it's 2x of state median in Massachusetts, but 1x in my town). My effective tax rate (without medical insurance and without employer part of payroll taxes) is 33%, but with employer taxes and after tax base adjustment it's going to be (0.33 + 0.08) / 1.08 = 38% (I'm ignoring social security cap here, but it won't make a big difference). But we left out a very important part, and it's medical insurance. Let's add 24K/year (14%) to the mix, then it becomes (0.33 + 0.08 + 0.14) / 1.22 = 45%. Oops! Sounds like I'm paying the same percentage as in Germany. Sure, I have 2x of median, but for 1x things are getting even more ugly, because 24K will stay the same, and while the income tax is lower, medical will take its part and more.
Of course I still bring home more than an average German family, yet expenses are different too so it's hard to compare. Sure, I can buy more junk, and I have a bigger home so I still have some place to live after I placed all that junk :) But to the original comment:
> The American lower and middle classes pay a lot less of their incomes - that would be the group that would have to pay for an American welfare state. That won't go over well...
No, American lower and middle class doesn't pay "a lot less of their incomes", it's simply not true.
Now do the VAT. Almost everyone who does the math on this (counting healthcare as a tax in the US) finds that only considering the income portion of your taxes, it's about equal. In most places in Europe, you also have the VAT acting as an extra tax. Your tax burden would be a lot higher.
Also, you must be thinking of your marginal rate being 33% - your federal taxes should be under 20% of your income at $170k, even if filing as single. In Germany, your tax rate would be about 27%.
Agree on VAT, but MA also has 6.25% sales tax which I didn't consider, that is if you want to start from revenue. So the difference will be less than 19%. Also VAT in Germany is not 19% on everything, there are exemptions and low rate of 7%.
33% is not a marginal rate, it's an effective tax rate (filing jointly) including payroll taxes which are deducted from my wages, I mentioned it. Also we have a state tax in MA which is also included in 33%.
In any case there are other taxes too (e.g. gas excise, vehicle excise, property tax etc.), so I'm not trying to compare the whole tax burden, that would be too much for HN. But regarding payroll taxes -- they are pretty close even if you consider VAT, certainly not a "lot less", it's a myth propagated by politicians. So the question is: we pay (almost) "welfare state" taxes, where is my part of a welfare state?
Yeah, you live in a high-tax state - counting that and payroll tax would make it to 33%. However, you can deduct a good fraction of that tax (actually all of it) from your federal taxes. Also, you included the cost of your healthcare in your calculation, so you are getting "welfare state" benefits for that cost. As to your taxes, those are paying for a welfare state for people who are less well off than you. I'm pretty sure you are in the 90th percentile on income, by the way, so you're not actually in the lower class, and arguably not even the middle class (although that level of income in a rich state like MA feels middle class).
All those other taxes exist in Germany too, by the way, and are much higher.
MA is not a "high-tax state", it's in the middle by an overall tax burden (depending how you count), so it's another myth. Check this for example: https://wallethub.com/edu/states-with-highest-lowest-tax-bur.... Also I'm not in the top 10% percentile, more like in the top 20% in MA. Give me your definition of the "middle class". Also I explained that for the "lower class" medical payments are even higher.
No, I'm not getting "welfare state" benefits, I'm getting a pretty crappy medical service for a price which is waaay higher than in Germany. And if I lose my job I will be paying 2K/month + copays and co-insurances, not mentioning deductibles, unlike in Germany. And God forbids you get into a hospital without insurance, your jaw will drop to the floor when you see the bill.
Have you ever been in the Boston subway? Compare it with almost any city in Europe, hell, even with Montreal. Tell me which welfare state has subways like Boston or NYC? Commuter rail like in Boston? NYC commuter rail is a bit better, but still is not even close to German railways.
And all of the above we get for taxes which are very similar to Germany. No, they are not much lower, it's something with your math. And in absolute value we pay waaay more than in Germany given higher salaries.
Here's some comparison, but it is misleading when it comes to the US. Technically medical insurance (de facto mandatory) can be from ~15% to >25%, depending on the income. It's not reflected on the picture, so in reality tax burden in the US might even be more than in Belgium (VAT aside).
https://upload.wikimedia.org/wikipedia/commons/4/49/Payroll_...
The public healthcare rate is indeed 14.6% but half of that is paid by your employer. Of course in the end it doesn’t matter, just that only 7.3% from your gross income will be reduced (also there are rates for nursing care insurance, pension insurance, unemployment insurance – a middle-class income pays 35–50% for tax and insurance).
Public healthcare is obligatory for all employees except you’re earning more than ~65000€/year or are a civil servant. In which case you are entitled for private health care which might be (or in fact is) more expensive but has more options for treatments and some prioritizing on waiting lists and doctor’s appointments.
Family (husband, wife and children) is always insured for free except they are also employed. Children have to pay seperately after reaching age of 25, and if they still study they pay only a low flatrate.
The rate is always 14.6% of gross income except for very low incomes, in which case the employer pays everything, or very high incomes. There is a cap: everything above 65k is not rated – which seems unfair to me.
I assume that’s a product of house price inflation. Or because you count mandatory retirement savings. If you did the same calculation in France for NPV of pension you would probably get a similar or better result
Ok but correct for taxes subtract healthcare, add npv of pensions, dental and child care. I think you would end up much closer maybe even ahead for France. Also mean per capital lies because you have to average in besos and musk. Median is a better metric
Having rich neighbors is great, gdp per Capita seems to be a nice measure.
If you don't make a lot of money in USA you pay basically no taxes... cars are cheap (or were)...
Big problem is govt being terrible with money and overbudensome with regulations, which reduces supply. Think about how many more doctors/specialists we'd have if systems weren't purposefully setup to be ridiculous.
Look into what residency takes. Not everyone has to be an amazing incredible 80hr week doctor. We could easily double supply of doctors...
The American Medical Association restricts med student slots. You could say it’s government but it’s regulatory capture rather than government regulation. Remove Citizen’s United, close the revolving door, and fund congressional research offices so that legislators don’t have to depend on lobbyists for research and writing legislation.
You know, this is the first comment I’ve ever read on government participation in the economy (socialism, if you will) that seems to make great sense to me. I would happily pay into a tax fund that was locked to educating or re-educating participants in the workforce. I like this way better than plain UBI because of the potential for increased dignity, pride and self-esteem.
This is like trying to get govt to invent flight, when instead you just give markets as much power as reasonably possible. Cheap goods and services lead to innovation way better than govt capturing and "redirecting money to their brother's school."
Please don't ignore the thousands and thousands of examples of govt being terrible at this, for the handful of somewhat useful examples of shit sticking to the wall. It's still flinging shit
You know, there's some significant issues that aren't touched on.
Any statement that's all upsides no downsides poorly reflects reality over time.
Or, in other words, if it sounds too good to be true it probably is.
The main one being how would you pay for it?
Basic accounting says the moment population growth stalls you have more outflows than inflows. You can't print money without consequence, and there are other factors that confound these issues further.
Its the ideal of socialism, but the reality is you run into the economic calculation problem. Shortages happen because we live in a world of scarcity, and when they do the system collapses usually causing death (historically).
The Norwegian tax system is not socialist as much as it is _georgist_: Norway taxes natural resource use (mainly extracting oil from oil fields and using waterfalls for power generation) _hard_. This tax policy makes the "more outflows than inflows" calculation a bit more complex than in most countries. The country is not immune to the effects of population decrease, but less so than others.
The main threat to the Norwegian tax system today (in my opinion) is that new industries (fish farming, wind farming) are actively lobbying against georgist tax policies directed at their industries: https://slimemoldtimemold.com/2022/05/17/norway-the-once-and...
Georgism is pretty great, consistently incentivizing people to utilize their land. However, I wonder how much it would change with non-land-based productivity, ie people or AI making money through the internet.
Strict georgism emphasizes taxing limited resources, i.e. resources that can be hogged, preventing others from innovating. If what you're using can be made more plentiful, it's not worth taxing.
For example, taxing your use of transmission capacity would go against georgism: It's possible to make better equipment that transfers bits faster. There are, however, resources that can be hogged on the Internet. For example, domain names: Short (non-trademarked) domain names, e.g. flowers.com, are more valuable than a random string of characters from a lesser known top-level domain, e.g. lrchcu.hat. As there is a limited number of single-word domain names, the owner of the former domain should pay a higher fee or tax for their domain than the owner of the latter.
The economic calculation problem exists form any type of economy regardless of whether it is dezentralized or centralised.
The difference is that a central miscalculation impacts the entire economy while a decentral miscalculation usually only impacts a small area surrounding that person.
If a group of independent people makes a miscalculation like during the global financial crisis then you end up with the same problem it is just less frequent.
I’m still a high earner so I’m fine. I still have approximately $7500/month after my taxes are paid. That’s a lot since all medical care, 1 year parental leave, my kids education from kindergarten through high school etc are “free”, e.g. paid with my taxes.
My point was not to complain but to say to the guy that claims that we need a new system with more wealth distribution that those systems already exist. There are a limit though to how high you can tax someone before they stop producing.
You made a good point. But I don't think people are advocating taxing people like you but the super rich. The disparity between the few super-rich and the poor is so huge in many countries. Wealth that is not being put to use by the super-rich is money wasted. All this hoarded wealth could be put to so much good.
I'm sorry but it's just true that a few people are incredible. Elon musk. Steve jobs. These people are basically worth infinity, their potential and vision is extremely useful to humanity.
Sorry a few make it to the NBA, but everyone can try.
The problem with the super-rich is that they have more money they can spend. The not spending is the problem. Money is good for public welfare only when it is earned and spent. Investments are supposed capitalist solutions to this - to make money "work" for you. But it's a broken circular system that seems to only make the wealthier more wealthy. (It's also becoming dysfunctional with speculations). It doesn't seem to be creating an egalitarian society because people with money often have access to better opportunities. And that's a huge hurdle tomorrow for your kids trying to compete with Elon Musk's or Steve's Jobs kid who are born with wealth.
And if you need that millions throughout your lifetime, that's fine. But imagine you have so much money to spend that you don't really know how to spend it in your lifetime? That's the problem.
There is no amount one couldn't spend -- why are you even saying it this way?
You could get by on like $1,000/mo. Live in a tent, eat rice + protein supplement or whatever, and donate the rest to Africa.
Why don't you do that? If you're posting on this forum: you are in the top 1-5% of the entire world. You have a refrigerator? You should be ashamed and sending that refrigerator to someone who really needs it. You can get by with dry food.
Obviously this is ridiculous. We live in capitalism, which just means _you_ own stuff and control it. If you own a company and that company makes 10,000,000 people happy every day, you're going to make a gorillion dollars. You deserve it, you're literally making that value... ugh..
Then you can do with that whatever you like, just like you can do whatever you like with your refrigerator.
Where's the inherent evil? 10,000,000 people giving $1/day is 365 * $10,000,000 a year in revenue. Where is the evil?! Of course with that money you'll at least put it in the bank, which helps with liquidity, bank runs, funding millions of mortgages, etc... ugh...
I was earning similarly in Europe. The moment I realized how much tax I was paying (51% bracket), I moved to Asia to work remotely. I honestly don’t care what’s being paid from my taxes, but to me that amount felt like theft. I now pay ~20% while being well above 10k after taxes.
This is why comparisons between the US and Europe regarding wages are always fraught. For some people, it makes sense to pay a lot of tax for the benefits it confers. For others, like you and me it seems, it is not really worth it to pay that much tax and not really receive the rewards. But everyone who discusses conflates some people's preferences to suddenly be everyone's preferences, and this is simply not a true comparison.
