5 ms·

Have people forgotten the classic way of investing in humans? Social programs. In Denmark part of my taxes goes to pay public pensions, and when I get old tax

by jopsen 6y ago

Have people forgotten the classic way of investing in humans? Social programs. In Denmark part of my taxes goes to pay public pensions, and when I get old taxes will fund some pension for me. The public pension isn't huge, so yes, almost everybody has a private pension scheme too. My private pension is exposed to global stock performance over ~30 years. My public pensions is exposed to value of humans in Denmark in ~30 years. So in a way I do have exposure to some human investment :) This is also why it makes sense for my taxes to fund tuition for everybody.

andxor 6y ago
So Denmark would forcibly take more than half of my income to invest in stuff I don't have a say on, while no one is held accountable by competition and economic incentives. I'll pass.
- tomglynch 6y ago
  Do you think taxes are necessary for a cohesive society?
  - andxor 6y ago
    Yes, of course, but not > 50%.
    - Kosirich 6y ago
      I'm not refuting your point but where did you get >50% from? You absolutely can get taxed up to 54% but for that you would need +200k (krona) per month.
      - Vinnl 6y ago
        And also only applies to the amount above the threshold.
        blackbrokkoli 6y ago
        Thank you! I can't believe that not even HN can get tax brackets into their head. It is not a hard concept!
      - adreamingsoul 6y ago
        Did it come from propaganda talking points that outline the dangers of “socialism”? I hear similar statements from my relatives in the US.
        oblio 6y ago
        Crickets. No reply from the original poster. I think you're right :-)
  - jopsen 6y ago
    > Do you think taxes are necessary for a cohesive society? I don't know if a better way to fund public services. Maybe we could tax work less and tax natural resources higher.. but I'm not expert on the long-term economic implications -- so who knows. In any case: my point was that getting exposure to human capital as an investment instrument is probably best done through public pension schemes rather than ISA or human token IPOs :) Investing in humans makes sense. Most countries already do it! Do we need to reinvent it?
- volta83 6y ago
  I pay 30% of my income in taxes. I get, in no order: - free transportation (free high quality high-ways, train network, subway, tram, bus, rent-a-bike...), - free education for myself and my children, from pre-kinder garten up to university. - paid very high-level education (PhD, postdoc) for myself and my children, - free health-care for everyone, - universal salary for everyone (no homeless people around, extremely low crime rates) - free sport offerings, open-air health activities, safety sport training (climbing, skiing, ...) - free internet, - free cable TV, - all the usual stuff (garbage collection, street cleaning, access to water and power networks, etc.) Of course, "free" does not mean "free", since I'm paying all of this with my taxes. But how many taxes do you pay, and what do you get from them? Because what I get is that my biggest worry in life is "How will the weather look like at the weekend?" and "Depending on that I might go hiking, or cycling, or surfing, or skiing...". I don't worry about my children, or school, or being able to pay for anything, or crime, or security, I don't worry about my 6 year old son taking the subway and a bus alone to go to primary school, or them making it back home safely, or my 16 year old daughter going partying till 5am and then walking home alone at night, or what happens if they break an arm and need to go to the hospital, or whether I can afford the university they want to go to, etc. Like, really, my only worry in life is "What's the weather like and what am I going to be able to do in the weekend depending on the weather".
  - bitsoda 6y ago
    Which country is this? 30% seems reasonable for all that.
    - assadk 6y ago
      Most likely a Scandinavian country.
      - bitsoda 6y ago
        I figured as much, but was surprised by the 30% figure. I always assumed a tax rate of > 40% to support those social programs and benefits.
- adreamingsoul 6y ago
  Including your pension and healthcare, how much of your income is “taxed”?
  - jopsen 6y ago
    > how much of your income is “taxed”? Generally all income is taxed. I think the personal deductible is around ~10k USD. -- That's not meant to ask, but it's what you asked :) Taking all taxes deductibles etc. then all in all I think I pay around ~48% of my income in taxes. Note. that lower income means less taxes too. When I lived in SF it was around 38% (I think). Not that much considering cost of healthcare wasn't covered through taxes in the US. None of this includes sales tax or VAT, just income.
- Broken_Hippo 6y ago
  Most folks don't pay that much in tax, and I'm guessing that your state taxes, federal taxes, insurance premiums, and deductible is more than whatever tax rate you'd be paying in most countries that charge similarly. It isn't like you get a real say in where your taxes are spent in any country, honestly, and part of paying taxes is that they get spent on some thing you don't like. Not only that, but no one is really held accountable by competition in most things that taxes pay for (health care and infrastructure and a safety net aren't held accountable because of economics since someone always has leverage and they are easily monopolies as the choice isn't real).
- jopsen 6y ago
  > So Denmark would forcibly take more than half of my income to invest in stuff I don't have a say on.. If you could invest in humans, you'd want a diversified portfolio anyways. Indeed to keep operating costs low, you might want a passive investment scheme, like index funds. Paying taxes to fund education and pensions is kind of like investing in an index fund tracking all humans in a given country. Only kind of like! Such schemes definitely shouldn't be the primary assets in your portfolio. But it's failure modes a very different from stocks, so some exposure is good.
  - jopsen 6y ago
    Also it's usually less than half. Average tax rate in Denmark is around 45%. In San Francisco I was paying 38%. Can you pay education for your kids with 7% of your income? How about healthcare? What is a social safety net worth?
    - andxor 6y ago
      Salary in SF is much higher than Copenhagen. Factor that into the equation.
      - jopsen 6y ago
        But the tax rate isn't the reason salaries are higher in SF. (Oh, and most people aren't software engineers) 7% of 130k is that enough to cover education, healthcare, etc? Note. To be fair, the us does have some pension through medicare. (But I was honestly shocked to learn that it was regressively taxed)
        andxor 6y ago
        130k is not a good salary in SF.
john_moscow 6y ago
This only works if you have a reasonable population growth rate. And this isn't happening anymore. So we are boosting population numbers through immigrants that will never afford the kind of housing and retirement the previous generation had. And we are boosting the stocks through printing more money, that also drives real estate prices insane. That's a recipe for a social conflict. Once the majority can't afford a house and a pension comparable to yours, they won't just stand aside and let you enjoy it. They will label you an oppressor and will come and take it. And the laws won't help you if the majority finds them unfair.
- oblio 6y ago
  Why do you need population growth rate? You can just have each individual self fund their retirement, no Ponzi shenanigans.
  - john_moscow 6y ago
    Because otherwise if you graduate at 25, work until 65, and expect to die at 85, your retirement contribution during work years needs to be half of your retirement check. If you are aiming for the same income level, 1/3 of your income needs to go towards retirement. In reality, people cannot put aside that much, so the % is much lower, relying on higher returns (private) and population growth (public).
    - oblio 6y ago
      Returns on investment? Even public pension plans can have them.
      - jopsen 6y ago
        Actually, the point was to not have the public pension save up money. Instead, we're betting that future generations will pay through taxes. Note. Public pensions are tiny, so you'll still want a private pension that is invested in stocks. But both is fantastic, because you have diversified your pension into stocks (private pension) and humans (public pension).
adreamingsoul 6y ago
Thanks for sharing. we have similar programs in Norway and about %35 of my income is taxed.

by jopsen 6y ago

andxor 6y ago

So Denmark would forcibly take more than half of my income to invest in stuff I don't have a say on, while no one is held accountable by competition and economic incentives. I'll pass.

tomglynch 6y ago
Do you think taxes are necessary for a cohesive society?
- andxor 6y ago
  Yes, of course, but not > 50%.
  - Kosirich 6y ago
    I'm not refuting your point but where did you get >50% from? You absolutely can get taxed up to 54% but for that you would need +200k (krona) per month.
    - Vinnl 6y ago
      And also only applies to the amount above the threshold.
      - blackbrokkoli 6y ago
        Thank you! I can't believe that not even HN can get tax brackets into their head. It is not a hard concept!
    - adreamingsoul 6y ago
      Did it come from propaganda talking points that outline the dangers of “socialism”? I hear similar statements from my relatives in the US.
      - oblio 6y ago
        Crickets. No reply from the original poster. I think you're right :-)
- jopsen 6y ago
  > Do you think taxes are necessary for a cohesive society? I don't know if a better way to fund public services. Maybe we could tax work less and tax natural resources higher.. but I'm not expert on the long-term economic implications -- so who knows. In any case: my point was that getting exposure to human capital as an investment instrument is probably best done through public pension schemes rather than ISA or human token IPOs :) Investing in humans makes sense. Most countries already do it! Do we need to reinvent it?
volta83 6y ago
I pay 30% of my income in taxes. I get, in no order: - free transportation (free high quality high-ways, train network, subway, tram, bus, rent-a-bike...), - free education for myself and my children, from pre-kinder garten up to university. - paid very high-level education (PhD, postdoc) for myself and my children, - free health-care for everyone, - universal salary for everyone (no homeless people around, extremely low crime rates) - free sport offerings, open-air health activities, safety sport training (climbing, skiing, ...) - free internet, - free cable TV, - all the usual stuff (garbage collection, street cleaning, access to water and power networks, etc.) Of course, "free" does not mean "free", since I'm paying all of this with my taxes. But how many taxes do you pay, and what do you get from them? Because what I get is that my biggest worry in life is "How will the weather look like at the weekend?" and "Depending on that I might go hiking, or cycling, or surfing, or skiing...". I don't worry about my children, or school, or being able to pay for anything, or crime, or security, I don't worry about my 6 year old son taking the subway and a bus alone to go to primary school, or them making it back home safely, or my 16 year old daughter going partying till 5am and then walking home alone at night, or what happens if they break an arm and need to go to the hospital, or whether I can afford the university they want to go to, etc. Like, really, my only worry in life is "What's the weather like and what am I going to be able to do in the weekend depending on the weather".
- bitsoda 6y ago
  Which country is this? 30% seems reasonable for all that.
  - assadk 6y ago
    Most likely a Scandinavian country.
    - bitsoda 6y ago
      I figured as much, but was surprised by the 30% figure. I always assumed a tax rate of > 40% to support those social programs and benefits.
adreamingsoul 6y ago
Including your pension and healthcare, how much of your income is “taxed”?
- jopsen 6y ago
  > how much of your income is “taxed”? Generally all income is taxed. I think the personal deductible is around ~10k USD. -- That's not meant to ask, but it's what you asked :) Taking all taxes deductibles etc. then all in all I think I pay around ~48% of my income in taxes. Note. that lower income means less taxes too. When I lived in SF it was around 38% (I think). Not that much considering cost of healthcare wasn't covered through taxes in the US. None of this includes sales tax or VAT, just income.
Broken_Hippo 6y ago
Most folks don't pay that much in tax, and I'm guessing that your state taxes, federal taxes, insurance premiums, and deductible is more than whatever tax rate you'd be paying in most countries that charge similarly. It isn't like you get a real say in where your taxes are spent in any country, honestly, and part of paying taxes is that they get spent on some thing you don't like. Not only that, but no one is really held accountable by competition in most things that taxes pay for (health care and infrastructure and a safety net aren't held accountable because of economics since someone always has leverage and they are easily monopolies as the choice isn't real).
jopsen 6y ago
> So Denmark would forcibly take more than half of my income to invest in stuff I don't have a say on.. If you could invest in humans, you'd want a diversified portfolio anyways. Indeed to keep operating costs low, you might want a passive investment scheme, like index funds. Paying taxes to fund education and pensions is kind of like investing in an index fund tracking all humans in a given country. Only kind of like! Such schemes definitely shouldn't be the primary assets in your portfolio. But it's failure modes a very different from stocks, so some exposure is good.
- jopsen 6y ago
  Also it's usually less than half. Average tax rate in Denmark is around 45%. In San Francisco I was paying 38%. Can you pay education for your kids with 7% of your income? How about healthcare? What is a social safety net worth?
  - andxor 6y ago
    Salary in SF is much higher than Copenhagen. Factor that into the equation.
    - jopsen 6y ago
      But the tax rate isn't the reason salaries are higher in SF. (Oh, and most people aren't software engineers) 7% of 130k is that enough to cover education, healthcare, etc? Note. To be fair, the us does have some pension through medicare. (But I was honestly shocked to learn that it was regressively taxed)
      - andxor 6y ago
        130k is not a good salary in SF.

john_moscow 6y ago

This only works if you have a reasonable population growth rate. And this isn't happening anymore. So we are boosting population numbers through immigrants that will never afford the kind of housing and retirement the previous generation had. And we are boosting the stocks through printing more money, that also drives real estate prices insane. That's a recipe for a social conflict. Once the majority can't afford a house and a pension comparable to yours, they won't just stand aside and let you enjoy it. They will label you an oppressor and will come and take it. And the laws won't help you if the majority finds them unfair.

oblio 6y ago
Why do you need population growth rate? You can just have each individual self fund their retirement, no Ponzi shenanigans.
- john_moscow 6y ago
  Because otherwise if you graduate at 25, work until 65, and expect to die at 85, your retirement contribution during work years needs to be half of your retirement check. If you are aiming for the same income level, 1/3 of your income needs to go towards retirement. In reality, people cannot put aside that much, so the % is much lower, relying on higher returns (private) and population growth (public).
  - oblio 6y ago
    Returns on investment? Even public pension plans can have them.
    - jopsen 6y ago
      Actually, the point was to not have the public pension save up money. Instead, we're betting that future generations will pay through taxes. Note. Public pensions are tiny, so you'll still want a private pension that is invested in stocks. But both is fantastic, because you have diversified your pension into stocks (private pension) and humans (public pension).

adreamingsoul 6y ago

Thanks for sharing. we have similar programs in Norway and about %35 of my income is taxed.