4 ms·

Taxes can be just as high in the US, but without the services. Top rate for California is 50.3% (37% federal + 13.3% state), and New York City is 49.7% (37% fed

Taxes can be just as high in the US, but without the services. Top rate for California is 50.3% (37% federal + 13.3% state), and New York City is 49.7% (37% fed, 8.82% state 3.876% city) The US government actually spends more per capita on healthcare($4,197/person/year) than most countries with free excellent healthcare (Switzerland $4178/pp/y, Canada $3074/pp/y, UK $2802/pp/y). Netherlands govt spends barely more than the US govt at $4495/pp/y. https://www.visualcapitalist.com/u-s-spends-public-money-healthcare-sweden-canada/ https://www.visualcapitalist.com/u-s-spends-public-money-hea...

wry_discontent 7y ago
Is there good analysis on the differences in where the money goes?
birdmanjeremy 7y ago
This is misleading. Top tax rates can be as high as 50.3%, but the parent comment says they are paying 51% of their earnings. These are two different things, because of tax brackets. I was both taxed a marginal rate of 48.3% and had an effective tax rate of 40.6% (CA resident).
- paulsutter 7y ago
  While you obviously have an above average income, there really are people that pay very close to the marginal rate ($10M income etc). Asymptotically, the marginal rate is the top rate.
  - birdmanjeremy 7y ago
    I would bet you most of those people are paying a lower tax rate than I am, as they're smart enough (and have the means) to shift most of their earnings to capital gains and take advantage of other tax avoidance strategies.
    - paulsutter 7y ago
      "Those people" are usually folks with a onetime windfall. For example a startup employee with options not stock. And I don't see what bearing that has on the top rate.
      - birdmanjeremy 7y ago
        Most people who's earnings are over $1mm a year are spending significant time & resources planning their tax strategy and are not paying 50% effective tax rates. Source: Trump's tax returns. Actual source: https://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html https://www.nytimes.com/2011/08/15/opinion/stop-coddling-the...
        shadowprofile77 7y ago
        Stop coddling the rich? The top 20% of earners in the U.S pay a total of 87% of all tax revenue for the government, and their return from that in terms of value of government services relative to taxes paid is much smaller than it is for those in lower brackets. There are many wealthy people who use numerous legal (and in some cases illegal) means to avoid "their fair share" but overall, the numbers show that they pay far more than what most people would call fair in any other context. One source (there are many others with like 20 seconds of google searching): https://www.wsj.com/articles/top-20-of-americans-will-pay-87-of-income-tax-1523007001 https://www.wsj.com/articles/top-20-of-americans-will-pay-87...
  - snowwrestler 7y ago
    For those curious, IRS reported that in 2016, just over 16,000 people in the U.S. reported an adjusted gross income of $10 million or more. 555 of them took the standard deduction instead of itemizing!
    - jurassic 7y ago
      Interesting. Where did you come across that stat?
      - snowwrestler 7y ago
        IRS provides statistics about federal taxes: https://www.irs.gov/statistics/soi-tax-stats-individual-statistical-tables-by-size-of-adjusted-gross-income https://www.irs.gov/statistics/soi-tax-stats-individual-stat...
opencl 7y ago
You have to make over $500k to hit 37% and that's a marginal rate so your total effective rate is nowhere near 50% unless you're making several million dollars. The Netherlands income tax is also marginal but the 51.75% rate kicks in at €68,507, and the lowest rates are already over 30%.
- malandrew 7y ago
  Once you take into account sales tax, property taxes and other taxes that are not income tax, it's probably in excess of 50% much much sooner than $500k.
  - Balero 7y ago
    I don't think it's useful to look from an individual standpoint at taxes aside from income tax. If you keep going you can say you pay 'tax' when you buy something on sales tax, but also on a companies profits which you are contributing to. When you get to this point I think it's ,more useful to look at what proportion of a countries GDP is taken in by the government.
  - gamblor956 7y ago
    Sales tax does not apply to most grocery purchases, so you'd have to be eating out or buying lots of stuff for sales tax to become a large percentage of your total tax liability. You must also then compare the 0%-15% US sales tax rates to the 25% Norwegian VAT rates. Property tax rates are in the single digits (or very rarely, the low double digits). And only apply to property owners. Payroll taxes are distinct from income taxes but reduce taxable income so shouldn't be split out separately... So, TLDR: you'd still need to be making more than $300k+ each year for your annual total tax % (all inclusive) to exceed 50%. That puts you in the 0.1% of Americans.
squirrelicus 7y ago
See that's the trick. To make the high tax economies function, you have to tax even the lowest income earners at the high rate. Instead, in the US, we have greedy low earners who don't want to pay their share and just want the feds to steal more money from the rich Other and give it to the Good people like me.
option 7y ago
exactly. Then (on top of that) there are real estate taxes (huge in CA, unless you bought 25 years ago), sales taxes, medicare and social security taxes.
pessimizer 7y ago
I'm really baffled at the lack of understanding of marginal tax rates amongst otherwise educated adults (assuming you're not being deliberately deceptive here.) > The US government actually spends more per capita on healthcare($4,197/person/year) than most countries with free excellent healthcare (Switzerland $4178/pp/y, Canada $3074/pp/y, UK $2802/pp/y). Netherlands govt spends barely more than the US govt at $4495/pp/y. This is an unbelievably important thing to bring up. The US government already spends enough to have fully socialized, excellent health care. The only reason taxes have to go up for an M4A proposal is because enormous amounts of protectionist legislation and regulatory capture make the same services cost double in the US. If we had sane health care costs (which could be accomplished pretty quickly by opening the local market to foreign competition), taxes wouldn't have to go up at all. edit: Dean Baker made a suggestion that stuck with me years ago; instead of a public option, just allow Americans to buy into other countries' health systems, for example, France's. They could provide services at a nice rate on US soil, and use US payments and addition to the risk pool to subsidize their own citizens' health care at home. Other countries would start competing with each other for US business, and would so radically undercut local providers that health care prices would be vaguely economically justifiable in no time.
- tracker1 7y ago
  The problem mostly comes down to patents and licensing... I think eliminating extension patents, and requiring dual sourcing for all medications for FDA approval would resolve a lot of that side. Forcing open-books for medical practices and making it illegal to charge more than 20% difference for the same procedure between two payees within 2 calendar years would help a lot as well. Last would be requiring insurance companies to negotiate as a fiduciary to the benefit holders would wrap it up. All these things really need to happen to close a lot of the loopholes in the US system.
- basementcat 7y ago
  > instead of a public option, just allow Americans to buy into other countries' health systems, for example, France's. One problem is if this is opt in, only the elderly and sick will want to buy in and the foreign government would balk at the large number of high risk signups. Young and healthy individuals who are accustomed to the freedom of not buying insurance and just going to the emergency room will be reluctant to pay for something that they believe they don’t want. There’s also a mismatch between therapies permitted by the FDA, religious freedom laws, etc.
jurassic 7y ago
With FICA and the 0.9% Medicare surtax in the mix, in California, I think you'd need an income of about $2,300,000 to have an effective tax rate of ~50%.

wry_discontent 7y ago

Is there good analysis on the differences in where the money goes?

birdmanjeremy 7y ago

This is misleading. Top tax rates can be as high as 50.3%, but the parent comment says they are paying 51% of their earnings. These are two different things, because of tax brackets. I was both taxed a marginal rate of 48.3% and had an effective tax rate of 40.6% (CA resident).

paulsutter 7y ago
While you obviously have an above average income, there really are people that pay very close to the marginal rate ($10M income etc). Asymptotically, the marginal rate is the top rate.
- birdmanjeremy 7y ago
  I would bet you most of those people are paying a lower tax rate than I am, as they're smart enough (and have the means) to shift most of their earnings to capital gains and take advantage of other tax avoidance strategies.
  - paulsutter 7y ago
    "Those people" are usually folks with a onetime windfall. For example a startup employee with options not stock. And I don't see what bearing that has on the top rate.
    - birdmanjeremy 7y ago
      Most people who's earnings are over $1mm a year are spending significant time & resources planning their tax strategy and are not paying 50% effective tax rates. Source: Trump's tax returns. Actual source: https://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html https://www.nytimes.com/2011/08/15/opinion/stop-coddling-the...
      - shadowprofile77 7y ago
        Stop coddling the rich? The top 20% of earners in the U.S pay a total of 87% of all tax revenue for the government, and their return from that in terms of value of government services relative to taxes paid is much smaller than it is for those in lower brackets. There are many wealthy people who use numerous legal (and in some cases illegal) means to avoid "their fair share" but overall, the numbers show that they pay far more than what most people would call fair in any other context. One source (there are many others with like 20 seconds of google searching): https://www.wsj.com/articles/top-20-of-americans-will-pay-87-of-income-tax-1523007001 https://www.wsj.com/articles/top-20-of-americans-will-pay-87...
- snowwrestler 7y ago
  For those curious, IRS reported that in 2016, just over 16,000 people in the U.S. reported an adjusted gross income of $10 million or more. 555 of them took the standard deduction instead of itemizing!
  - jurassic 7y ago
    Interesting. Where did you come across that stat?
    - snowwrestler 7y ago
      IRS provides statistics about federal taxes: https://www.irs.gov/statistics/soi-tax-stats-individual-statistical-tables-by-size-of-adjusted-gross-income https://www.irs.gov/statistics/soi-tax-stats-individual-stat...

opencl 7y ago

You have to make over $500k to hit 37% and that's a marginal rate so your total effective rate is nowhere near 50% unless you're making several million dollars. The Netherlands income tax is also marginal but the 51.75% rate kicks in at €68,507, and the lowest rates are already over 30%.

malandrew 7y ago
Once you take into account sales tax, property taxes and other taxes that are not income tax, it's probably in excess of 50% much much sooner than $500k.
- Balero 7y ago
  I don't think it's useful to look from an individual standpoint at taxes aside from income tax. If you keep going you can say you pay 'tax' when you buy something on sales tax, but also on a companies profits which you are contributing to. When you get to this point I think it's ,more useful to look at what proportion of a countries GDP is taken in by the government.
- gamblor956 7y ago
  Sales tax does not apply to most grocery purchases, so you'd have to be eating out or buying lots of stuff for sales tax to become a large percentage of your total tax liability. You must also then compare the 0%-15% US sales tax rates to the 25% Norwegian VAT rates. Property tax rates are in the single digits (or very rarely, the low double digits). And only apply to property owners. Payroll taxes are distinct from income taxes but reduce taxable income so shouldn't be split out separately... So, TLDR: you'd still need to be making more than $300k+ each year for your annual total tax % (all inclusive) to exceed 50%. That puts you in the 0.1% of Americans.

squirrelicus 7y ago

See that's the trick. To make the high tax economies function, you have to tax even the lowest income earners at the high rate. Instead, in the US, we have greedy low earners who don't want to pay their share and just want the feds to steal more money from the rich Other and give it to the Good people like me.

option 7y ago

exactly. Then (on top of that) there are real estate taxes (huge in CA, unless you bought 25 years ago), sales taxes, medicare and social security taxes.

pessimizer 7y ago

I'm really baffled at the lack of understanding of marginal tax rates amongst otherwise educated adults (assuming you're not being deliberately deceptive here.) > The US government actually spends more per capita on healthcare($4,197/person/year) than most countries with free excellent healthcare (Switzerland $4178/pp/y, Canada $3074/pp/y, UK $2802/pp/y). Netherlands govt spends barely more than the US govt at $4495/pp/y. This is an unbelievably important thing to bring up. The US government already spends enough to have fully socialized, excellent health care. The only reason taxes have to go up for an M4A proposal is because enormous amounts of protectionist legislation and regulatory capture make the same services cost double in the US. If we had sane health care costs (which could be accomplished pretty quickly by opening the local market to foreign competition), taxes wouldn't have to go up at all. edit: Dean Baker made a suggestion that stuck with me years ago; instead of a public option, just allow Americans to buy into other countries' health systems, for example, France's. They could provide services at a nice rate on US soil, and use US payments and addition to the risk pool to subsidize their own citizens' health care at home. Other countries would start competing with each other for US business, and would so radically undercut local providers that health care prices would be vaguely economically justifiable in no time.

tracker1 7y ago
The problem mostly comes down to patents and licensing... I think eliminating extension patents, and requiring dual sourcing for all medications for FDA approval would resolve a lot of that side. Forcing open-books for medical practices and making it illegal to charge more than 20% difference for the same procedure between two payees within 2 calendar years would help a lot as well. Last would be requiring insurance companies to negotiate as a fiduciary to the benefit holders would wrap it up. All these things really need to happen to close a lot of the loopholes in the US system.
basementcat 7y ago
> instead of a public option, just allow Americans to buy into other countries' health systems, for example, France's. One problem is if this is opt in, only the elderly and sick will want to buy in and the foreign government would balk at the large number of high risk signups. Young and healthy individuals who are accustomed to the freedom of not buying insurance and just going to the emergency room will be reluctant to pay for something that they believe they don’t want. There’s also a mismatch between therapies permitted by the FDA, religious freedom laws, etc.

jurassic 7y ago

With FICA and the 0.9% Medicare surtax in the mix, in California, I think you'd need an income of about $2,300,000 to have an effective tax rate of ~50%.