4 ms·
Yes, of course, there is some redistribution going on. But that's not the main explanation of the difference between say UK and France taxes. If you remove pens
by cdavid 14y ago
Yes, of course, there is some redistribution going on. But that's not the main explanation of the difference between say UK and France taxes. If you remove pension funding alone, you get very close between UK and France, I believe, although I have not checked the numbers (it would cost me around 17 % of my pre-income tax to contribute to the French pension system, so I am basing my calculation only my case alone with all the associated caveats).
As for letting people buy those services, this becomes more dependent of what you believe: I don't think it is that clear cut that there is no net benefit of having everyone getting the same basic health care in terms of costs, etc... A lots of what is costly in France is closer to insurance than anything else. Buying an insurance against disability is so expensive in the UK that nobody does it (which is why it is expensive in the first place). Since everybody has to do it in France, the system becomes much more viable since the pooling is very large.
- mseebach 14y agoThe difference between UK and French pension payments is that in the UK you actually own your contributions, in France you merely hope that a future politician won't decide that you're too rich to get a state pension ("means-tested benefits" is fancy word this in the UK). In Denmark it's a national sport for politicians to figure out just how many pensioners/soon-to-be-pensioners you can afford to piss off in a given election cycle and adjust various limits accordingly.
- mercurial 14y agoI think the situation in the UK is only superficially different. Does anything prevent the government from increasing taxes on private pensions?
- mseebach 14y agoI think there is a substantial difference in the political tactics required, mostly founded in the awareness of those affected. It's easy to promise that the lowering of pensions is temporary until the crisis passes, while once you've taxed somebody's savings (rather than properly borrowing them, which is very common - pension funds are enormous holders of public debt), there's no cover to pretend you'll give it back. EDIT: Also, public pension schemes can be allowed to become progressively underfunded to the point where it's impossible to fix and the responsible officials have long since retired. No so with private savings.
- cdavid 14y agoThis is only a superficial difference. On a relatively big economy like France, the difference between state-based pension and capital-based ones are very minor: in both cases, you're hoping that people who work when you retire will be able to pay for your retirement. Private funds in UK are severely underfunded by the way (although I can't find a reference on the exact number, which is supposed to be around 250 billions pounds), in the same that state-based systems are underfunded. The main factor for retirement is the 'working people'/retired people ratio (ration de dependence in French, not sure about the proper English translation), much more than how it is funded. Governments can easily change tax benefits/incentives on those funds, so the taxation aspect is not that different either.
- mseebach 14y agoA private savings account can't become underfunded. It may no be enough to comfortably retire on, but that's a different kettle of fish. Regarding the underfunding number, I believe these are private defined benefit schemes - I'm talking about regular savings-schemes. Also, see my response to mercurial.