USA taxes more progressively than Old Europe

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This article from the WSJ points out that the USA already has the most progressive tax system in the developed world. To afford more social programs, we're going to have to take money away from the middle class.

"While income distribution has become a source of protest and political debate, any analysis of taxes paid in high tax-and-spend countries shows that the U.S. has the most progressive income tax system in the world. An inconvenient truth for the advocates of higher taxes on America's rich is that big governments in developed countries are funded not by taxing the rich more than the U.S. does, but by taxing everybody else more...If the U.S. spent and taxed like France and Sweden, it would hardly affect the top 10%, who would pay about what they pay now, but the bottom 90% would see their taxes double."

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Growingtrees
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Comments

Income taxes, not total taxes.

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Phaedrus76
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When you bring up other taxes, what other taxes are you referring to? Here're the main possibliities:
1) Sales Taxes (e.g. Europe's VATs) - Everybody knows that these hurt the poor more than the rich. These taxes are actually retrogressive and anti-progressive. The USA has a much lower sales tax burden, partly because unlike the dying nations of Europe, we don't have a national sales tax.
2) Corporate Taxes - These hurt the rich more than the poor. First all, it's common knowledge that the USA's corporate taxes rates are the highest, by far, in the developed world. They really should be counted as part of the income tax that the rich have to pay, because corporate taxes lower the rate of return rich people enjoy from their equity, security, and debt interests in corporations by exactly the same degree of that tax.

I'm not sure what other taxes you're referring to, but these other two also show that the USA currently has the most progressive tax system in the developed world.

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Payroll taxes (13%), sales taxes including states taxes (yes, some states have high sales taxes, which are comparable to Old Europe's) alcohol and tobacco taxes, gasoline taxes, etc etc.

Most states have a regressive tax system. Here in AZ, the poorest 20% pay a higher % of their income in state taxes than the wealthiest 20%.

On corporate taxes, while the number is high 35%, almost no corporations pay it. When GE, Bank of America, and Verizon pay no US corporate taxes, that system is broken.

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Phaedrus76
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It has been pointed out many times that our corporations do not pay these "high corporate taxes." They just slip through the massive loopholes and get money back instead.

You also do not refer to the benefits Europeans get for their taxes. We pay corporate profiteers a lot for a little, so were we paying European taxes instead and getting free public education through college, free healthcare, great public transportation, great unemployment, etc., we would not have streets filled with the homeless and indentured servitude as a way of life.

What is causing Europe any grief at all is the financial system we are screwing up with our ridiculous approach to Wall St. and the Casino. When they play in this game because it is "international" in our Empire, they also get the social issues of financialism and bad debt.

Greece is the victim of Goldman Sachs, not its public investments in its people. It is also coming out of a time of military takeover and corruption with rich people who avoid taxes.

We had a progressive tax system a long time ago. Reagan drove the nails into its coffin, and look at all the vampires it produced.

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Quote DRC:It has been pointed out many times that our corporations do not pay these "high corporate taxes." They just slip through the massive loopholes and get money back instead.

No, that is not categorically 100% true (and the obvious fact that it isn't is obvious proof of your mongering). Some corporations don't pay any taxes sometimes, others pay less than full rate, and others pay at or near the full amount. But individuals get tax breaks too. If you want to bring up this tax break issue, you've got to do so consistently. Compare the effective rates that the rich pay directly as individuals and indirectly through corporations vs. the effective rates that the middle class and poor pay, and the effective rates that dying Europeans v. Americans pay.

The degree to which corporations still pay some degree of corporation income tax to both the national government and state governments is part of the degree to which the rich actually pay overall higher tax rates than the poor in the USA.

Quote DRC:You also do not refer to the benefits Europeans get for their taxes.

The way Old Europe gets those higher benefits is not by taxing the rich more, but by taxing the middle class more. That's how the USA has a more progressive tax system - We tax the middle class less, so the difference between the taxes the middle class face and the rich face is larger here than in Old Europe.

So the issue then becomes the degree to which governments in the USA should tax the middle class more to return benefits to both the middle class and the poor.

Quote DRC: We pay corporate profiteers a lot for a little, so were we paying European taxes instead and getting free public education through college, free healthcare, great public transportation, great unemployment, etc.,

Um, I hate to break it to you, but those aren't free (and the fact that you call them free is more proof of your mongering). Old Europe gets those higher benefits almost exclusively by taxing the middle class and poor at higher rates than the middle class and poor are taxed here in the USA.

Quote DRC:We had a progressive tax system a long time ago. Reagan drove the nails into its coffin, and look at all the vampires it produced.

Maybe the USA's tax system was more progressive in the past, but currently it's still the most progressive in the developed world. Your mongering is based upon ignoring that fact.

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Quote Phaedrus76:the poorest 20% pay a higher % of their income in state taxes than the wealthiest 20%."

Again, though, that's probably ignoring the effect of corporate income taxes that reduce the income of rich people. While some large corporations are able to avoid those US corporate income taxes, corporations in general are not able to avoid taxes in such a complete way. The US government still collects a lot of corporate income tax. And that's completely ignoring the effects of state corporate income taxes (I wonder whether GE, or any of its subsidiaries, pay state corporate income taxes anywhere).

And then you come to quasi-taxes like the payroll "tax" you mentioned that affects individuals, but then there're the quasi-taxes that affect corporations, like paying unemployment insurance and contributing to workers' compensation for job-connected injuries. I wonder to what degrees each quasi-tax is distributed among individuals vs. the rich through corporations. I wonder, also, whether economists conclude that these corporate quasi-taxes effectively take money away from worker's wages or out of owners' equity, and if both, to which degree each. I don't know anything about that at all.

Although some states have high sales taxes, I challenge you to show that those states' sales taxes surpass those of Old Europe. And then when you average those high-sales states with low or no sales tax states across the USA, you're still seeing a much lower regressive sales tax burden in the USA than in Old Europe. With the exception of the individual payroll quasi-tax, complicated by the corporate quasi-taxes that likely affect the rich, all the evidence very strongly points to a very progressive tax system here in the USA.

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Corporations can write off the cost of a pack of gum. Wage earners cannot. Corporations pay taxes on income after all expenses, ( way too many to list are available ) and business friendly loopholes ( way too many to list are available ).

Wage earners can't write off the cost of their gas or the mileage placed upon their vehicles or tools they buy or a book of stamps or almost every expense you need in order to make money. Remember that tax laws are written by corporations and business people. If they were written by an assembly of American workers then it would probably be a little different story.

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@Bush_Wacker

Nevertheless, corporations in general still do pay some amount of income taxes to the national government and to state governments, even if they get to expense a large proportion away from their earnings. The degree to which they still pay taxes is an added tax on the rich in addition to the fact that the rich already pay a higher proportion of their individual income than the middle class or poor do.

Let's pretend for a moment, though, that you are 100% right - Corporations in effect pay no income tax to the national government or to state governments. It still is the case that our tax system overall is more progressive than those of Old Europe, and that Old Europe pays for its greater social benefits almost entirely by taxing the middle class & poor more than the middle class & poor are taxed here in the USA.

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If the gap between wealth and workers is less, it will appear that the wealthy elites in America pay higher than the more averaged Europeans. It will still be the more robust 'Middle" there sharing the load, as we would be glad to do here. But, we need more of the income to be able to do so. We would also love to get real value for our taxes instead of just having to pay the rich again to have education or health insurance. I have always told the whining rich that we feel their pain and would love to relieve them of their elitist burdens if they would just share more of the money with us.

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@DRC

I'm curious, which would you rather want:
7% of $10,000 - or,
8% of $8,000?

WIth the exception of small banking countries like Luxembourg and Switzerland, the major countries of Old Europe all have lower per capita GDP than the USA does. Despite the greater wealth disparity here in the USA, except for maybe the bottommost 5% in each area, our middle class and poor are richer than the middle class and poor in Old Europe. What it comes down to is that you live in a fantasy world where you think that paying for more government benefits can be achieved solely by taxing the rich more. That is impossible. Not only is there 1) not enough wealth among the rich, but, as that earlier article points out, doing so 2) disincentivizes the most productive workers to produce as much, and so dramatically lowers the overall pot of productivity that is available to society and thereby impoverishes everyone. Providing more benefits can only come by taxing the middle class more.

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High marginal tax rates work better than depriving the middle class of purchasing power because the wealth glut of unproductively invested capital is still out of the economy. My point is that those poor Europeans get a hell of a lot more for their taxes than we do. If we need more money after we have taken back the Says' Law imbalance, we can still find a progressive way to share the burden. Your stats do not tell the truth, and remember, the lead article is Murdoch's WSJ, not the old good journalism with bad editorials paper.

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Finally, a conservative that admits that corporate income taxes are paid by shareholders and not passed on to consumers. Thank you for your honesty.

chilidog
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Jul. 31, 2007 4:01 pm

That opinion piece you linked from the Wall Street Journal was written by Phil Gramm.

I don't see anything in that piece that analyzes corporate income taxes paid in the USA, France, or Sweden (apparently the only three industrialized nations in the world.)

The most revealing part of that piece is the cartoon by David Gothard.

chilidog
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Jul. 31, 2007 4:01 pm

This implied over-taxing of the Rich in the US is an illusion. The reason that the Rich pay more taxes in the US is that income concentration in the US is extreme. Income is much more evenly distributed in the EU.

If you notice from the WSJ article, they use figures for the top 10%. Why is that? It is because our income and wealth is concentrated in the top 1% and 0.1%. So picking the relatively "poor" next 9% skews the data. This is typical of the WSJ.

Another important fact is that the Europeans get much more for their taxes than US citizens get. They get guarenteed high-quality health care, low-cost college educations, and good unemployment insurance. We get multiple wars of conquest and a world-wide empire. The "benefits" of our activities go mainly to the Rich. They should pay more taxes.

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Quote olenzekm:The reason that the Rich pay more taxes in the US is that income concentration in the US is extreme. Income is much more evenly distributed in the EU.

Okay, so it seems like a good deal to me. The greater wealth disparity in the USA is matched by a tax system that is more progressive than the tax system in Old Europe, which is more regressive, and in return the upper 95% of the people in the USA get a higher standard of living than the upper 95% of the people in Old Europe.

Quote chilidog:Finally, a conservative that admits that corporate income taxes are paid by shareholders and not passed on to consumers.

Well, to be honest, I bet that in reality the cost of corporate income taxes is shouldered by both shareholders and consumers, just like the cost of corporate quasi-taxes like unemployment insurance and workers' compensation is probably shared by both shareholders and workers. To what degree each party (shareholders and consumers) bears that cost, I'm not certain, but it seems tentatively safe to me with my limited knowledge of economics to suppose that corporate income taxes hurt shareholders more than consumers, and that business quasi-taxes hurt workers more than shareholders because they're so tightly tied to a business' employment situation.

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Quote DRC:My point is that those poor Europeans get a hell of a lot more for their taxes than we do.

Quote olenzekm:Another important fact is that the Europeans get much more for their taxes than US citizens get.

No, that's not mostly true. Those statements are mostly false. As this article I linked to earlier points out, when comparing Sweden with the USA, the bottommost 5% in Sweden have it better there than the bottommost 5% in the USA; however, the rest of the 95% in Sweden have it worse than the rest of the 95% in the USA.

Quote olenzekm:So picking the relatively "poor" next 9% skews the data.

No, in this case I don't think it does. In order for your counterpoint to be true, that would have to mean that 90-99% percentile in the USA pay lower taxes proportionally in such a way that flattens out the slope on an otherwise steeply progressive income tax curve, while the remaining top 1% gets hit so bad with taxes that including the 90-99% in with them skews the lower 9% to make it seem like that lower 9% pays more taxes than they really do. Is that really what you're trying to say?

I don't think you really thought through the statistical details of your assertion and just decided to monger against the WSJ, which seems like a very lazy fallback.

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You grabbing stats showing % of taxes paid by perncentile groups. Could part of that effect be a result of the US having extremely low taxes on top earners, and the lowest capital gains taxes in the industrial world, thereby encouraging the wealthy to pay more to themselves?

And, if the poorest Americans don't pay much, couldn't that be an effect of a system where we don't pay them very much?

If we had a smiliar minimum wage to Old Europe and a welfare system to match, wouldn't that double the income of the bottom 40% of Americans? And the next 20% would see a significant raise too. Higher incomes for them would result in much more taxes paid by them.

So, try comparing apples to apples, and someone find a chart showing in % of GDP what the US pays in taxes vs. France, Sweden and Germany, and what % in gdp the rich pay in those same countries.

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No, you can't look at Germany, Netherlands, Austria, Switzerland, Belgium, Norway, Denmark, or Japan. You can only look at France and Sweden.

And you have to assume that every dollar in corporate income tax is paid by American citizens, regardless of who in the world owns the stock.

chilidog
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We certainly pay for the taxes they don't pay.

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You make some good arguments about the tax system. They surely challenge the current progressive dogma. It is good to challenge beliefs, that is how we get closer to the truth. I am still processing the tax-related arguments that you have made.

What I suspect about these tax arguments is that the WSJ is cherry picking data. I looked at the OECD book they used as a data source, but it cost $98 and I am not yet willing to spring for it. If you have a source of reliable raw unprocessed data I would be interested in seeing it.

But on the bigger picture, I think that you are asking the wrong question. That is if your goal is a large, prosperous, and stable middle class.

The problem is that our economy is out of balance. When an economy is grossly tilted to the “supply side,” as ours now is, then you get the boom-bubble-bust type of economic performance that has been mentioned on Thom’s show. This causes a ratcheting-down of the middle class as the winners take bigger and bigger pieces of the economy. It is true no matter how the imbalance occured.

The policies since Reagan have contributed to this problem. Other causes such as greatly increased productivity without a corresponding rise in middle class wages is also acontributor. This has been fostered by the same supply-side policies.

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Probably the small percentage of poor souls in Denmark who are stuck at Denmark's minimum wage ($16.an hour) don't complain a whole lot with a take-home pay greater than their American counterpart. earns before taxes...and the Dane has all the social goodies to boot.

Probably free higher education and no student loans without a job to pay them with is just one European bonus. Never facing a medically induced bankruptcy is probably another.

As Thom has often noted, all taxes paid by employees are ultimately employer-paid. The greater the tax rate on wages...the higher the wages have to be to compensate. Think beyond surface appearances.

The German auto worker earns $60 an hour. His American counterpart $30. If the German pays 50% in taxes, and the American 20%...who is the winner in take-home income PLUS social benefits? The German.

Retired Monk - "Ideology is a disease"

polycarp2
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Jul. 31, 2007 4:01 pm

Welcome back, from Europe? Your ripostes still have their great style. The blade of truth cutting with eloquence and elan.

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Quote polycarp2:

As Thom has often noted, all taxes paid by employees are ultimately employer-paid. The greater the tax rate on wages...the higher the wages have to be to compensate.

I've heardThom say this before. I don't buy it. Reagan raised payroll taxes significantly in the mid-1980's - did wages grow significantly in that time?

We've had significant inflation in the last 10 years - have wages grown? What's the difference between inflation and higher taxes on median wages?

chilidog
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Jul. 31, 2007 4:01 pm

Nope. Americans are still paid just enough to get by. When the policy is to gradually lower living standards over time, it becomes accepted.

Had we jumped overnight from a min. wage earner being able to buy a home to barely affording a room in a slum, the policy would be more obvious.

.Take-home pay (after taxes) will reflect expectations of the job category. Some Europeans have higher expectations. Their higher take-home incomes and benefits reflect that, don't they....even with the higher taxes.

Probably if Denmark had the same tax rates the U.S. does, their min. wage would be closer to ours instead of more than double it. The rate has to be higher to pay for the social benefits. Employers pay it with higher wages, don't they?.

If the wage rate was the same as ours and labor had high taxes to pay for the social goodies, there wouldn't be enough left over to buy food and pay the rent. Employers pay for all of it with higher wages.

Retired Monk - "Ideology is a disease".

polycarp2
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Quote polycarp2:

Nope.

Is that "Nope." as in yes, Reagan significantly increased payroll taxes and wages did not increase?; and yes, inflation has been high, there is no difference between inflation and higher taxes, and wages did not increase?

I can understand Thom's analysis in that, ceteris paribus, when taxes on wages are LOWERED, the employee will not demand a higher wage, as his take-home compensation is higher (although in the long run inflation will eat that away, ceteris paribus.)

chilidog
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Jul. 31, 2007 4:01 pm

It's been the policy of the U.S. to lower wages....slowly. The purchasing power has been diminished considerably over time. A min. wage earner can no longer buy a home, etc., as I once did.

Lower wages are possible without high expectations. Example: Central African cobalt miners are paid less than it costs to feed themselves. The employed die slowly of starvation rather than quickly without a job...and pay no taxes. That's the expectation in that country.We have higher expectations than Central Africans.

Europeans have higher expectations than we do. They pay higher taxes for their social programs...and have higher wages to compensate for the taxation. Take home pay in many countries is higher than ours...even after higher taxation. Ultimately, the employer pays for all of it through a higher wage base. just as Central African employers pay for nothing through a lower wage base and non-taxation of labor.

The lowering of wages in the U.S. through inflation and non-adjustments for inflation in the wage base (beginning with min. wages) is a matter of policy begun under Reagan.

If we had the tax rate of Germany to provide benefits for our citizens and maintained the official policy of lowering real wages (the min., wage is a floor upon which all other wages are measured)...landlords would squeel from a lack of rent payments. Banksters wouldn't know what to do with all the foreclosures. Incomes would have to rise..

Americans expect little in relation to their European counterparts...and receive little.

Retired Monk - "Ideology is a disease"

polycarp2
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Jul. 31, 2007 4:01 pm

I don't think we can afford these lowered expectations. How will we pay for it? Thanks, Poly.

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DRC
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I can be pretty slow at times. More progressive than old Europe? Progressive how so?

I think being a socialist and paying 60% tax is progressive. It supports the commons, good police, good fire protection, fantastic national health care where you don't have to worry about gosh gonna be homeless or get a heart bypass so I can live healthy for another 10 years... And accessible college education for all the young who can meet the academic challange.

Being progressive says that we keep up our infrastructure. Here in US we are not doing any of that.

We are more progressive than Europe? You gotta be kidding me!!

smilingcat
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Sep. 23, 2010 9:14 am

First of all, the original post refers to "Old Europe" which was the language of the last GOP neocon Project-For-A-New-American-Century cabal. Dude probably misses Talon News.

Secondly, his "Old Europe" only counts Sweden and France. Perhaps all things old are new again, as the saying goes, so Germany, Denmark et al are now "new." And I'd bet if we drilled down the numbers we would find cherry-picked timeframes of 3-4 years that are not current and reflect the worst performance of those two economies.

If you read the linked opinion piece by Phil Gramm it's written as if by a drunk 17-year-old high school C-student.

chilidog
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Jul. 31, 2007 4:01 pm

So, the USA has the lowest capital gain rates? Assuming that's true, it's also true that the USA has the developed world's highest corporate income tax rates.......by far. And that tax is paid at least sometimes. To what degree do rich Old Europeans pay their taxes? It's possible that they can avoid paying taxes to the same degree American corporations and rich people can.

What does "progressive" mean? A progressive tax system means that the rich are taxed at higher rates than the poor, and by that definition the USA's tax system in general is way more progressive than Old Europe's. Nobody on this thread has bothered showing how a desired level of goods and services made available to the middle class & poor can be achieved merely by taking from the rich. Old Europe achieves its government programs by taking wealth away from the middle class, which flattens out and weakens progressiveness of its tax system. Witness VATs (that acronym makes me think of soilent green for some reason), which as an effective sales tax is regressive, not progressive. Old Europe has national VATs; the USA doesn't. Okay, so let's say the American middle class demands more. The government's going to have to meet its demands by taxing the middle class more, just like the middle class its taxed more in Old Europe.

Income is only one side of measuring how wealth is spread in a society. Consumption of goods and services is the other side, and I'm not convinced that on an absolute level (measured by things such as affordability of vegetables & meat, and access to different sorts of medical services, both measured by number of hours a worker has to work to buy or gain access each) average or lower class Old Europeans have it better than average or lower class Americans.

If anyone knows of articles that measure affordability of basics according to number of hours one needs to work to afford each, I'd appreciate it! How many hours does a poor Old European v. a poor American have to work to afford a pound of organic beef? How many hours does an Old European woman have to work v. an American woman to get a pap smear or a mammogram?

If it takes a poor American fewer hours to afford a kilogram of organic beef than a poor Old European, than you know what, I don't care that America has greater wealth inequality. It doesn't matter. What really matters is that one need not work as much as the other guy across the pond to get a pound of organic beef to grill in my backyard on a sunny afternoon with my peeps.

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Sure, the WSJ is a bogeyman. Is NPR a bogeyman too? Because it has an article that also points out how our federal tax system is very progressive:

"If you leave out corporate taxes, the rate paid by top earners falls significantly. (Most corporate profits go to the top earners.) But tax rates still tend to be higher for those with higher incomes. "

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@chilidog

Your biased assumption about the WSJ is wrong.

This quote is from an academic article posted on a UC Berkeley website article on comparative international tax progressivity: elsa.berkeley.edu/~saez/piketty-saezJEP07taxprog.pdf

"...countries in which government spending is a fairly high share of GDP have always relied on a mix of taxes that create relatively low distortion, with less progressivity, large exemptions for capital income, and so on. Meanwhile, Anglo-Saxon countries in which government spending is a relatively low share of GDP have historically relied on more progressive taxes" (20).

The rich don't have enough wealth to pay for higher social spending. In the end, the middle class and the poor have to pay for higher social spending, which is why when social spending increases, tax system progressivity decreases.

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Jul. 31, 2007 4:01 pm

The issue is not whether the Wall Street Journal is a bogeyman. The issue is that Phil Gramm is not a journalist, and his opinion piece is incoherent.

And I don't see where the NPR article supports your idea that our federal "tax system" is "very" progressive.

http://en.wikipedia.org/wiki/United_States_Income_tax

Look at the table under Effective Income Tax Rates. The data is from 2007, but nothing's changed since. People making $60,000 pay 13%, people making $1 million pay 21%.

chilidog
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Jul. 31, 2007 4:01 pm

@chilidog

Did you read that Berkeley article?

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Growingtrees
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Jul. 31, 2007 4:01 pm

Since the minimum wage in Denmark ($13), Germany ($14) and Sweden $16) runs about double the USA's $7.25 /hr, and fuel and food prices being global commidities with nearly equal prices before taxes across the industrial world, obviously the Poor European is going to be much richer than his American counterpart. Add in a much broader, and higher social safety net, easier access to good public housing, welfare, and universal healthcare systems, and the basic neccessities of life aren't out of reach luxuries for Old Europe's poor.

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Phaedrus76
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@Phaedrus76

Are you kidding me? You think that food prices are the same there as they are here, and only wages are different? A cursory Google search reveals great articles that touch on the subject, noting vast disparities in food prices, with some types being more expensive in Old Europe than here (e.g. beef), other types cheaper in Old Europe than here (e.g. coffee).

May I recommend, Phaedrus76, trying to read some sources to get an initial, tentative idea of what reality is before blindly spouting off assumptions?

I'm open to the outcome that it takes Old Europeans fewer hours to afford basic foodstuffs and the range of healthcare from simple basics like vaccines to complex and expensive late-life care and surgeries. Evaluating the food is already difficult enough - The complexity of the healthcare market makes it very dangerous to assume anything without consulting some academic article about the subject. It seems to me that Old Europe's economy presents more difficulties measuring in this way (hours worked per good/service received). When an Old European pays a crazy high price for gasoline, how do you count the massive tax that's a part of that price? Part of the price of the gas, a separate price paid as a tax for healthcare services received from the government, or a mixture of both? When an American buys organic blueberries that were harvested by illegal workers paid below-market wages or legal workers paid below living-wage, do you artificially inflate the price to account for the unfair compensation? When an Old European receives an expensive and recently developed biologic, how do you measure the fact that that biologic would never have been availabe or developed at all if the corporation that invented it could not receive a profit, and that Old European government has refused to pay a profitable price to the company?

Despite these difficulties, I'd still be greatly interested in seeing actual academic analysis of these subjects. I think we all need to see such analysis.

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Growingtrees
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Jul. 31, 2007 4:01 pm

No I didn't read the Berkeley article.

chilidog
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Quote Growingtrees:

Sure, the WSJ is a bogeyman. Is NPR a bogeyman too? Because it has an article that also points out how our federal tax system is very progressive:

"If you leave out corporate taxes, the rate paid by top earners falls significantly. (Most corporate profits go to the top earners.) But tax rates still tend to be higher for those with higher incomes. "

poly replies: It depends on the income source. If it's from wages, sure tax rates are a little higher. If it's from long-term capital gains, it's much lower at a maximum of 15%. The bulk of Warren Buffett's tax rate is 15%....lower than his secretary's,.

The U.S. earns about $40,000 per year for each man, woman and baby....$160,000 per family of four. Probably $8,000 or so out of their $160,000 share (which they don't receive) could provide for health care for all families without breaking the super rich.

The average family earns about $45,000...still leaving $115,000 from each U.S. family to feed the super rich bank accounts.Many families earn way less $45,000....some not even half that amount. Lots of families...very few super rich. A bit of that $160,000 income per each American family of four could be used for taxes without driving the super rich broke. It wouldn't ground their private jets or force them to abandon their Swiss chalets...

Retired Monk - "Ideology is a disease"

polycarp2
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Jul. 31, 2007 4:01 pm
Quote polycarp2: The bulk of Warren Buffett's tax rate is 15%....lower than his secretary's,.

Um, no. That's false. Corporate level income taxes hit Buffett to at least some significant degree. And do you count the future application of the estate tax?

Look, polycaryp2, your per capita GDP and per family GDP argument sounds good. But let's look at reality. When governments like Europe try to implement such plans, they end up taxing the middle class & poor to provide those services. You've got nice theory. Then there's reality.

Again, I think that the ultimately most meaningful analysis would identify & compare between countries in a way not ever mentioning money at all that identifies the number of hours people have to work to obtain different types of goods/services.

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Growingtrees
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Jul. 31, 2007 4:01 pm

Don't think I have chimed in here yet. Can I just point out that by calculating everything in relation to GDP, this guy is doing some major asshattery with the numbers. I have never seen anyone evaluate the progessiveness of the tax code in relation to GDP like that. What matters is your effective rate compared to your personal income, not the percentage of total taxes collected in relation to GDP. You can have a regressive tax system, devised correctly, where the rich still pay more total tax in relation to GDP. Complete asshattery going on in that article.

Here would be an interesting test, look at how much the rich pay in effective rates after you subtract the massive corporate welfare they recieve on their investments. Something I have not seen done yet. I imagine if you did so, what would be revealed is a massive redistribution of wealth upward. Every statistical breakdown I have seen shows the average rich person paying a higher rate but then every artcile I have seen where a rich person - Buffet, Romney, Obama, etc. - reports their effective tax rate, it is a hell of a lot lower than I see most of the middle and lower class paying. Intruiging is it not? Where is the disconnect there?

ah2
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Dec. 13, 2010 10:00 pm
Quote ah2: reports their effective tax rate

Again, that's not including that their incomes are taxed indirectly through corporate income taxes, and they're taxed at death with the estate taxes. It's also not including sales tax.

About your GDP rant, did you bother to read through the thread and see the Berkeley article? Do a CNTRL-F on the word "Berkeley." That academic article came to the same conclusion as the "a#*hattery" article you malign out of your own biased assumptions.

Furthermore, I am trying to steer this discussion in the direction of what I think does matter the most: How many hours does a poor or middle class person have to work to be able to buy basics like food and healthcare? How does that compare with Old Europe?

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Growingtrees
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Jul. 31, 2007 4:01 pm

Corporate taxes don't come out of the pockets of the rich. They come out of the present profits of the business, which in turn leads to lower after tax income of the business, which in turn leads investors to devalue that asset. Since, any stock price is a function of the present value of the companies current and future profits. If corporate taxes go up, stock prices fall, if corporate prices fall, stock prices rise.

Your article shows that some foods are more expensive, some less expensive. And ignores the fact that the Europeans have a much more accessible social welfare system, and much higher wages.

http://20somethingfinance.com/american-hours-worked-productivity-vacation/

http://www.nationmaster.com/graph/lab_wor_tim_to_buy_bee-labor-working-time-buy-beef

http://www.nationmaster.com/graph/lab_wor_tim_to_buy_bre-labor-working-time-buy-bread

http://www.nationmaster.com/graph/lab_wor_tim_to_buy_a_car-labor-working-time-buy-car

On most of these, the US falls between half way and worst.

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Phaedrus76
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Sep. 14, 2010 8:21 pm

@Phaedrus76 Thank you for proving my point! Corporate income taxes lower companies' value. Sure some rich people make money by trading stocks momentarily, in which case the absolute value of the stock is meaningless, just the day to day change. But the vast majority of businesses in this country, and the majority of capital, is tied up in private non publicly traded companies. For those people, the absolute price of the stock is critical. And even with public companies, the absolute value of the stock matters when the price-deflating effect of taxes lowers a stock's value and then tender offers of public stock to take-over a company offer lower prices b/c the corporate-level taxes lower the earnings of the company and lower the degree to which the company has been able to build up assets.

If you want to be honest about things, you'd include corporate level taxes in the effective tax rate of rich people.

Didn't I say myself that food prices are highly variable? And, no, your three NationMaster graphs did not just put the USA halfway or worse. The USA was in the upper half on the car one. So, it's all over the map, but it also shows you it's likely that things aren't as bad in the USA for poor people compared to Old Europeans as everyone thinks. The number of hours one needs to work to afford basis is comparable. But still, though, I'd want to see an academic article. Does that NationalMaster website take into account the much higher sales taxes in Old Europe? Does it take into account the USA's Old Europe's large agricultural subsidies, which are paid through tax revenue? I doubt it, and that's why an academic article would be needed.

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Growingtrees
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Jul. 31, 2007 4:01 pm

You tend to overlook the economic benefits of a European.

A European's college education doesn't come out of his earnings. No $50,000 plus student debt when they graduate..

A working mom doesn't shell out half of her pay for Day Care.

A European filing for bankruptcy over medical expenses would be a national scandal rather than the U.S. norm.

What a nation can afford still boils down to how much wealth it generates. The U.S. generates $160,000 per year for each family of four.with an average earnings of $45,000 per year. In my neighborhood, the average family income is $12,000 - $15,000 per year. Their share of the national pie is pretty meager.

Taxing the wealthy, who receive the bulk of the national income wouldn't break them. They weren't forced to sell their mansions or give up their yaughts when their tax rate was 91%. above an equivalent of $3 million per year. They could avoid even that tax by investing in something productive like a factory, innovative technologies, etc.....holding their wealth in an asset beneficial to the nation rather than in speculative financial paper.

Probably the $600 TRILLION held in global derivatives is a bit excessive in an economy whose total planetary output is about 1/10th of that. When incomes are so high there is nothing productive to invest them in, what you get is speculative bubbles. Bubbles pop Not enough money on the planet to bail the current one being blown.

Retired Monk - "Ideology is a disease"..

polycarp2
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Jul. 31, 2007 4:01 pm

No, it doesn't account for the higher taxes, nor does it account for the much more generous welfare states in Europe, the universal healthcare, and the higher wages.

And, a privately held company generally is having all their owner's expenses paid before taxes, and privately held companies aren't subject to take overs, because the owner can just say no to any bids. So, when you see the owner of your local small business driving along in an Escalade or Hummer, remember to ask if our tax dollars paid for it.

Phaedrus76's picture
Phaedrus76
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Sep. 14, 2010 8:21 pm

I wonder if Cato Institute, Heritage Foundation, et al have any studies that show federal income taxes paid by the top 1% and the bottom 47%, where such figures include share of corporate income taxes paid indirectly.

chilidog
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Jul. 31, 2007 4:01 pm

@Polycarp & @Phaedrus76

Don't you get it? Those benefits aren't free! The more progressive tax system in the USA demonstrates the fact that the middle class & poor in Old Europe are still paying for those services every bit as much as middle class and poor Americans are, it's just that poor & middle class Old Europeans are doing so indirectly through government.

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Growingtrees
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Jul. 31, 2007 4:01 pm

Of course benefits aren't "free" However, when people band together through government to get them, they are usually a bargain.

"Free education" isn't free either, We pay for it. It was, however, probably way, way cheaper for my parents to pay for the education of their 5 chldren with property taxes instead of shelling out private tuition at private schools. for each one of us. The nation benefited by having 5 additional literate adults to join the work force.

A good educational opportunity was an "entitlement". Now a lousy educational opportunity is an entitlement. Things change.

If you want an entitlement to a good educational opportunity....head for Europe where test scores (with highly paid teachers) are way, way above our own. If you graduate a European High School, you can actually read and write! LOL

In Japan, a teacher receives a deeper bow of respect than a bankster does. Different values. When my cousin taught there, she was astounded by the difference in her social status..

Retired Monk - "Ideology is a disease"

polycarp2
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