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I asssumed they'd be more scary. With a smaller labor pool, and a larger demand (as people live longer), the cost will go up, outstripping savings long before

I asssumed they'd be more scary. With a smaller labor pool, and a larger demand (as people live longer), the cost will go up, outstripping savings long before the need for care ends.

saalweachter 14y ago
Eh, I'm not worried about demographics in my lifetime. The birthrate declines in industrialized nations are only a problem if you're an optimistic xenophobe and imagine that borders are going to stay shut. The younger end of the workforce in industrialized nations will be taken over by immigrants from countries with exploding birthrates like Africa or India, and the dreaded population implosion won't happen. Maybe another N decades later once countries with exploding birthrates sort their shit out we might be at risk of an upside-down pyramid, but I think it's just as likely that we'll gradually oscillate around the replacement birthrate until we reach a comfortable steady-state population. Once we hit steady state population, I think we'll be fine. Assuming we don't back-slide on industrialization (say, if post-peak fossil fuels make everything prohibitively expensive), we're already massively over-supplied on labor. Despite its far-below-replacement birthrates and a hearty helping of xenophobia, Europe's suffering from a demand crisis, not a labor crisis. The US peaked at a 63% employment ratio, pre-crash. I don't have the slightest doubt that we could maintain a pretty nice civilization with an employment ratio of 40%. I wouldn't be surprised if a 25% employment ratio is doable with the right social infrastructure to allocate resources. As long as there is enough labor, it's all just bizarre math. Say in 2050 the total personal income in the US is $27 trillion in 2012 dollars (2% yearly growth above inflation from today). The population of the US has grown to about 400 million (assuming a 0.9% growth rate, it'd be 437 million, but 400 million is nice and round). With a 25% employment ratio, that $27 trillion gets divided 100 million ways, so the average income in 2050 would be $270,000 in 2012 dollars. Right now the average income is about $70,000. Now to tax it. Right now the total US government tax revenues are about $5 trillion. We're running a helluva deficit, so let's add another $1 trillion for a balanced budget. Apply the same 2%-above-inflation growth as we did for income, and the US tax revenues in 2050 should be about $12.7 trillion in 2012 dollars. There are also more people on the dole, so let's increase the budget by another 50%, to $19 trillion, and the average tax burden in 2050 is $190,000 / (working) person. End result, the total tax rate in 2050 is about 70%, compared to a tax rate of about 38% in the US now. After-tax income in 2050 is $80,000 / person, after-tax income in 2012 is $43,000 / person. Productive workers have more after-tax income than they do today, and the unproductive elderly are still comfortably cared for by the government, individual savings or no.
- anamax 14y ago
  > End result, the total tax rate in 2050 is about 70%, compared to a tax rate of about 38% in the US now. The average tax rate, the number that matters, is much lower than 38% now. The US govt has never collected 22% of GDP in taxes, regardless of rates, and that was for only a couple of years. We have managed to sustain 19-20% for significantly longer.
  - saalweachter 14y ago
    I'm using total government revenue over total personal income as a proxy for the tax rate. That includes some taxes on individuals which are not levied as income taxes, like sales tax, and some which do not fall on individuals directly, like corporate tax. Regardless, this is a pretty good proxy. The federal numbers alone are $2.5 trillion of the $5.1 trillion dollar total. 2.5 / 13 is 19%, which is the more familiar number for the effective average federal tax rate. If you live in Taxtopia, the story ends there, but on average if you're a US citizen you're paying another 19% in local, property, and sales taxes, for a total of 38%.
    - anamax 14y ago
      > I'm using total government revenue over total personal income as a proxy for the tax rate. Which is absurd because about half of US govt income comes from "not personal income tax" sources. > That includes some taxes ... like sales tax hold that thought. > If you live in Taxtopia, the story ends there, but on average if you're a US citizen you're paying another 19% in local, property, and sales taxes, for a total of 38%. You're double-counting sales taxes.... And, your computation for 70% is missing those local, property, and sales taxes, which puts your number at closer to 90%. (Since those state and local taxes actually pay for a significant fraction of the income assistance that you're advocating, it's curious that you think that they'd go away.) However, your 19% "other" is also high. The highest sales tax is over 9% but most states are considerably less. However, sales tax only applies to post-tax income and doesn't apply to all purchases. For example, it typically excludes food and housing, which is 20-30% for most people. Higher income folks spend a smaller fraction of their income on food&housing, but they more than make up for that by spending their money on other things that aren't sales-taxed. As a result, sales tax as a fraction of income is at most 5%. The highest state&local income tax marginal rates may be 15%, but typical is closer to 5%. Do you really think that the average property tax burden is anywhere near 9%? (I'm very property-heavy and my property taxes are less than 5% of my income.) Note that a significant fraction of the property taxes are paid from income that you excluded above, namely biz income.

I asssumed they'd be more scary. With a smaller labor pool, and a larger demand (as people live longer), the cost will go up, outstripping savings long before the need for care ends.

saalweachter 14y ago

Eh, I'm not worried about demographics in my lifetime. The birthrate declines in industrialized nations are only a problem if you're an optimistic xenophobe and imagine that borders are going to stay shut. The younger end of the workforce in industrialized nations will be taken over by immigrants from countries with exploding birthrates like Africa or India, and the dreaded population implosion won't happen. Maybe another N decades later once countries with exploding birthrates sort their shit out we might be at risk of an upside-down pyramid, but I think it's just as likely that we'll gradually oscillate around the replacement birthrate until we reach a comfortable steady-state population. Once we hit steady state population, I think we'll be fine. Assuming we don't back-slide on industrialization (say, if post-peak fossil fuels make everything prohibitively expensive), we're already massively over-supplied on labor. Despite its far-below-replacement birthrates and a hearty helping of xenophobia, Europe's suffering from a demand crisis, not a labor crisis. The US peaked at a 63% employment ratio, pre-crash. I don't have the slightest doubt that we could maintain a pretty nice civilization with an employment ratio of 40%. I wouldn't be surprised if a 25% employment ratio is doable with the right social infrastructure to allocate resources. As long as there is enough labor, it's all just bizarre math. Say in 2050 the total personal income in the US is $27 trillion in 2012 dollars (2% yearly growth above inflation from today). The population of the US has grown to about 400 million (assuming a 0.9% growth rate, it'd be 437 million, but 400 million is nice and round). With a 25% employment ratio, that $27 trillion gets divided 100 million ways, so the average income in 2050 would be $270,000 in 2012 dollars. Right now the average income is about $70,000. Now to tax it. Right now the total US government tax revenues are about $5 trillion. We're running a helluva deficit, so let's add another $1 trillion for a balanced budget. Apply the same 2%-above-inflation growth as we did for income, and the US tax revenues in 2050 should be about $12.7 trillion in 2012 dollars. There are also more people on the dole, so let's increase the budget by another 50%, to $19 trillion, and the average tax burden in 2050 is $190,000 / (working) person. End result, the total tax rate in 2050 is about 70%, compared to a tax rate of about 38% in the US now. After-tax income in 2050 is $80,000 / person, after-tax income in 2012 is $43,000 / person. Productive workers have more after-tax income than they do today, and the unproductive elderly are still comfortably cared for by the government, individual savings or no.

anamax 14y ago
> End result, the total tax rate in 2050 is about 70%, compared to a tax rate of about 38% in the US now. The average tax rate, the number that matters, is much lower than 38% now. The US govt has never collected 22% of GDP in taxes, regardless of rates, and that was for only a couple of years. We have managed to sustain 19-20% for significantly longer.
- saalweachter 14y ago
  I'm using total government revenue over total personal income as a proxy for the tax rate. That includes some taxes on individuals which are not levied as income taxes, like sales tax, and some which do not fall on individuals directly, like corporate tax. Regardless, this is a pretty good proxy. The federal numbers alone are $2.5 trillion of the $5.1 trillion dollar total. 2.5 / 13 is 19%, which is the more familiar number for the effective average federal tax rate. If you live in Taxtopia, the story ends there, but on average if you're a US citizen you're paying another 19% in local, property, and sales taxes, for a total of 38%.
  - anamax 14y ago
    > I'm using total government revenue over total personal income as a proxy for the tax rate. Which is absurd because about half of US govt income comes from "not personal income tax" sources. > That includes some taxes ... like sales tax hold that thought. > If you live in Taxtopia, the story ends there, but on average if you're a US citizen you're paying another 19% in local, property, and sales taxes, for a total of 38%. You're double-counting sales taxes.... And, your computation for 70% is missing those local, property, and sales taxes, which puts your number at closer to 90%. (Since those state and local taxes actually pay for a significant fraction of the income assistance that you're advocating, it's curious that you think that they'd go away.) However, your 19% "other" is also high. The highest sales tax is over 9% but most states are considerably less. However, sales tax only applies to post-tax income and doesn't apply to all purchases. For example, it typically excludes food and housing, which is 20-30% for most people. Higher income folks spend a smaller fraction of their income on food&housing, but they more than make up for that by spending their money on other things that aren't sales-taxed. As a result, sales tax as a fraction of income is at most 5%. The highest state&local income tax marginal rates may be 15%, but typical is closer to 5%. Do you really think that the average property tax burden is anywhere near 9%? (I'm very property-heavy and my property taxes are less than 5% of my income.) Note that a significant fraction of the property taxes are paid from income that you excluded above, namely biz income.