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> Meanwhile in most European countries, punitive taxation makes it extremely difficult to move up in social class, even from middle class to upper middle class.

> Meanwhile in most European countries, punitive taxation makes it extremely difficult to move up in social class, even from middle class to upper middle class. This is not true. Several of the highest taxed countries in Europe also have the best social mobility in the OECD: https://www.oecd.org/els/soc/1-5%20generations.png https://www.oecd.org/els/soc/1-5%20generations.png It might be the case that Germany is particularly rigid, but that is not transferable to most of Europe and certainly can't be attributed to taxes.

RandomLensman 5y ago
That OECD study is really tricky as it only goes to mean income. The interesting bit would be to really rich and there I am not sure Scandinavia would score so well.
hnbad 5y ago
German has extremely liberal inheritance taxes. On the one hand this is often justified with the existence of the German "Mittelstand" (medium sized businesses typically owned by one family over generations), on the other this means the easiest way to get rich is to have rich parents. Low inheritance taxes are actually a great predictor for maintaining social inequality over generations. If you wanted to reduce social inequality you'd instead want to drastically lower VAT (which disproportionately affects poorer people), adjust income taxes to lower the tax burden on lower incomes and raise it on higher incomes, and drastically raise taxes on income from capital (rather than labor). This isn't even simply an opinion, this is scientific consensus.
- sokoloff 5y ago
  That reduces social inequality, but that is not the singular goal of a society. Producing goods and services and wealth for the nation is a goal that competes with “tax away almost all the gains of these activities”, which is why there’s debate about how to balance these things.
  - hnbad 5y ago
    Frankly, who is "the nation" if not its people? As long as even a single individual suffers poverty, "the nation" has failed. If "the nation" is its people, protecting every single person from hardship is a higher goal than allowing a minority to live in excessive luxury. If you think the "wealth of a nation" is measured by the luxury of a few rather than the poverty of the many, you might as well just revert to feudalism.
llampx 5y ago
Thank you for the chart. Germany is further down the list than even I thought, admittedly. How sad ist that. Here I thought that at least Germany having a good social safety net and free university would mean it is somewhat easy to pull yourself out of low income if you are intelligent and have the drive, as well as parents who gave you a bit of encouragement in your early years. Seems like even that is harder than I thought. Do you have one for mean income to upper class by chance? Even +1 Std Deviation move would be significant in terms of wealth building.

RandomLensman 5y ago

That OECD study is really tricky as it only goes to mean income. The interesting bit would be to really rich and there I am not sure Scandinavia would score so well.

hnbad 5y ago

German has extremely liberal inheritance taxes. On the one hand this is often justified with the existence of the German "Mittelstand" (medium sized businesses typically owned by one family over generations), on the other this means the easiest way to get rich is to have rich parents. Low inheritance taxes are actually a great predictor for maintaining social inequality over generations. If you wanted to reduce social inequality you'd instead want to drastically lower VAT (which disproportionately affects poorer people), adjust income taxes to lower the tax burden on lower incomes and raise it on higher incomes, and drastically raise taxes on income from capital (rather than labor). This isn't even simply an opinion, this is scientific consensus.

sokoloff 5y ago
That reduces social inequality, but that is not the singular goal of a society. Producing goods and services and wealth for the nation is a goal that competes with “tax away almost all the gains of these activities”, which is why there’s debate about how to balance these things.
- hnbad 5y ago
  Frankly, who is "the nation" if not its people? As long as even a single individual suffers poverty, "the nation" has failed. If "the nation" is its people, protecting every single person from hardship is a higher goal than allowing a minority to live in excessive luxury. If you think the "wealth of a nation" is measured by the luxury of a few rather than the poverty of the many, you might as well just revert to feudalism.

llampx 5y ago

Thank you for the chart. Germany is further down the list than even I thought, admittedly. How sad ist that. Here I thought that at least Germany having a good social safety net and free university would mean it is somewhat easy to pull yourself out of low income if you are intelligent and have the drive, as well as parents who gave you a bit of encouragement in your early years. Seems like even that is harder than I thought. Do you have one for mean income to upper class by chance? Even +1 Std Deviation move would be significant in terms of wealth building.