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The article explicitly states that pre-tax inequality is greater in Germany than the US. I don't know why you insist otherwise. And, I've never said that Euro
by anamax 15y ago
The article explicitly states that pre-tax inequality is greater in Germany than the US. I don't know why you insist otherwise.
And, I've never said that Europe has a fairer tax policy.
However, I'm happy to say that the US should NOT emulate the EU's abysmal per-capita GDP. I'll come to the consequences of that at the end.
You're the one who thinks that progressiveness is a virtue yet prefer a less progressive tax policy.
Let's review.
The original table (in
http://www.taxfoundation.org/blog/show/27134.html http://www.taxfoundation.org/blog/show/27134.html) had international comparisons for the mid 2000s. It showed that the top 10% in the US got 33.5% of the income and paid 45.1% of the income taxes. The ratio, 1.35, was the highest of the (selected) OCED countries. (Yes, including the majority of the EU countries.)
You found articles showing that the top 10% had a greater fraction of income in other years and assumed that that somehow contradicted the above table or at least the conclusion. (You implied that the original table's income numbers were wrong, but since they're for different years....)
However, progressivity is a relationship between two numbers and you didn't bother to look for the second number, the tax revenue share.
http://www.taxfoundation.org/news/show/250.html http://www.taxfoundation.org/news/show/250.html table 1 has the US numbers for 2009, when the top 10% had a higher fraction of income than in the mid-2000s. That fraction, 43.2%, is roughly the same as your articles. However Table 1 also has the fraction of income taxes. It's 70.5%. I'll do the math for you - the ratio is 1.63, or
significantly more progressive than the mid-2000s.
Oops.
Of course, this ignores consumption taxes, which are a big deal in the EU. However, consumption taxes much less progressive than income taxes so including them makes the EU even less progressive....
You then launched into inequality. I pointed out that the US isn't the most unequal pre-tax and you pointed out post-tax was different.
Well duh.
However, that doesn't support your argument that US tax policy needs to change to address inequality. It actually weakens it.
There are TWO factors - taxes and spending. The US doesn't spend (as much) to reduce inequality. Making the tax system even more progressive won't change that. (See http://lanekenworthy.net/2009/04/17/reducing-inequality-how-to-pay-for-it/ http://lanekenworthy.net/2009/04/17/reducing-inequality-how-... .)
In anticipation of "but the US needs more revenue", I'll point out that the US has roughly the same tax revenue per person as major EU countries. It has more than Canada, just a little less than the UK, and way more than Japan. (See http://gregmankiw.blogspot.com/2010/03/taxes-per-person.html http://gregmankiw.blogspot.com/2010/03/taxes-per-person.html .)
Yes, tax revenue is a smaller fraction of GDP in the US. Are you certain that you increase the fraction without decreasing the GDP? As someone put it, if I'm paying German-style taxes, why wouldn't I work German-style hours. The result is German GDP, which is significantly
lower, and not much more tax revenue.
Do you really want to argue that the US would spend tax revenue better if it had a lower GDP?
Ah, but you don't believe that taxes affect the economy. But I'll bet that you believe that gas taxes affect gas consumption....
Back to Europe's abysmal (per capita) GDP - do you blame the tax policy or the spending choices? (Surely you're not going to argue that Germans are inherently less capable.)