On Taxes

I’m very opposed to excessively high taxes. I believe that absolutely nobody, regardless of their income, should ever have to pay more than 40% in taxes. That is the absolute maximum I can consider fair. And even that is too much. 30% is a lot more reasonable.

People keep touting Sweden as an example of everything good, but, from what I understand, I’d be expected to pay 60% in taxes there. That is daylight robbery!!! Absolutely nothing can justify this. Whatever social programs they can offer me in return, they can keep them. At this price, I’m not interested in anything any government can offer me. If you cannot run the state without requiring that people hand over a half of their earnings and more, move aside and let somebody try to handle things better.

This is why I wouldn’t have been completely happy in Quebec. I don’t, of course, dispute the right of the people of Quebec or Sweden to live any way they choose to. I’m just saying that, for me, this is unacceptable.

P.S. Of course, people who say that all taxes are evil are complete idiots. Good, reasonable taxation is key to a well-functioning society. (Once again, well-functioning according to my system of values.) I’m very happy with the way I’m taxed in the US and would not mind paying more in taxes than I do now, especially state taxes.

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25 comments on “On Taxes

      • I just learned something I didn’t know from the Forbes article:

        “For the US tax system is based upon citizenship while everyone else bases it upon residence. If you have a US passport then you are subject to US taxation (you might not have to pay any because of a low income, but you’re still subject to those tax laws). It doesn’t matter where you live in the world you still cough up to Uncle Sam. The only way out of this, the only way to “avoid” such US taxation is to give up your US citizenship. At which point the Feds will charge you all of the tax you would ever have paid anyway. So avoiding US taxation by leaving the country isn’t really an option: there is no “exit” possibility as the economists like to say.”

        I didn’t know this. I’m Canadian and in Canada taxation is based on residence. This is very new information to me.

        Thank you for the link!

      • For the US tax system is based upon citizenship while everyone else bases it upon residence.
        That is also not completely true – there are several European countries who base their system upon citizenship. However, these countries have bilateral agreements with other countries to avoid double taxation (so in practice you only pay taxes in the country where you live and work, even though this is not your citizeship country, but you do need to report your income to your citizenship country anyway, as you are liable to taxation of your world-wide income).

  1. The problem with the concept of “fair” taxes is that it’s really hard to define what “fair” should. Concepts like that are subjective and vary from person to person, but taxes are objective and apply to everybody. That makes it really hard to talk about a “fair” tax system.

    I just think taxes should be as high as the economy demands them to be. Hollande’s taxes are completely unnecessary, and that makes it hard to justify their punitive nature. But I could definitely imagine a situation in which they could be necessary.

    • In 1920s, during the Red Terror, the Communist authorities in Russia would grab people at random and keep them in jail until their relatives coughed up a ransom in gold and jewelry. This was justified as something the economy needed.

      This was actually an effective measure and the economy did recover. But this practice is what totalitarian States do. People are sacrificed for the sake of concepts. Is that the road we want to travel?

  2. Benoni said: “I just think taxes should be as high as the economy demands them to be.”

    This would mean that an economy that is handled badly requires its residents (or citizens) to pay more in compensation. I don’t think that letting the economy rule the tax system is a sound choice at all.

    • “This would mean that an economy that is handled badly requires its residents (or citizens) to pay more in compensation. I don’t think that letting the economy rule the tax system is a sound choice at all.”

      - That’s what I think, too. If the economy is in bad shape, then it should be handled better, a new budget should be drawn, the leadership and the bureaucracy should take a dramatic hit in salaries, the defense budget should be demolished. Then we can tack about the shape of the economy. Otherwise, some idiot will be waging endless wars, giving trillion-dollar gifts to his buddies, and I’m expected to fund this in perpetuity?

  3. About Sweden, that’s absolutely not true: I lived there for several years and income tax is about 26-30 percent, depending on the municipality that you live in (because it is locally defined).

    Also, I’ve lived in several countries now and I found out that it is just not possible to generalise on what level the taxes are in which country, because the definition of what is brutto salary and what is tax heavily depends on the country. In some places, income tax includes social insurance, in others not and social insurance is taken apart from the tax (so it looks like income tax is very low, which is not actually the case when all deductions are made). In some places, social insurance is deducted strictly from the employee, in others, a part is paid by employee and a part by employer (and so it is hidden, again making an illusion that your total tax is lower), etc. In addition, there is no general 30% level of cut off – most countries have a scale of income tax levels, depending on how much you earn (higher earners have to pay higher taxes) and/or even where you live (as Sweden)

    Therefore there is just not objective to generally compare brutto salaries and tax levels directly between the countries. I think what you could compare is a ratio of:
    - what you get in net salary after everything has been deducted for a specific level of salary and
    - average living costs (which again are very different in every country).
    Any other comparison is not objective.

  4. It is important to point out that the wealthiest would be paying close to your 60% number if/when rates go back to Clinton. There top income rate would be 39.6%. They would then have to pay 2.35% for medicare on all wages (1.45% now and as best as I can understand another .9% surtax due to obamacare). This put them at 42%. California now has top tax rates of 13.3% (unbelievable in my opinion).. So they are now at 55.3%, plus city taxes of between 1-3%. So 56-58%.

    The average state tax is more like 6-8% so the top bracket might only pay 50-55% in those cases. Also, the SUPER – SUPER rich pay less because of lower capital gains rates (which may seem unfair.. but is fairly important to encourage investment –)..

    I say this to point out that its not just people who object to “no taxes” who are so opposed to what will happen when Obama raises rates on the rich. I am curious how your outrage about your personal situation either does/or does not transfer over to the example I just shared…Were you aware how high there rates are?

    Now, for the record, I actually don’t think Obama’s tax cuts will kill the economy (they themselves won’t improve it … but they are not the end of the world) but do you see why some people are so morally opposed to higher taxes?

  5. http://en.wikipedia.org/wiki/Taxation_in_Sweden Here is a good article with the high level summary of taxation in Sweeden.

    One big thing people often forget about Europe is VAT (Value – added tax … which is a sales tax that is paid by the merchant and incorporated into the price) usually ranges between 15-20%. So not only are income taxes higher, social security-like taxes higher, sales tax are about 10% more expensive.

    Yesterday some liberal commenter thought he was being such a brilliant genius for calling me out for using the phrase “European Style socialism”. While I don’t mind someone who is misinformed calling me names, the important point is that what the left (progressives) CERTAINLY want is European style socialism and Obama MAY want that (I think in his heart he wants that, but he knows that most of the country does not and he risks being Jimmy Carter II if he goes for it).

    European Socialism has proven to be MODESTLY possible… but ONLY if you have tax rates that are massively higher. Obviously Clarissa feels those tax rates are punitive and so do many/most democrats/liberals when they have THEIR taxes raised or proposed to be raised so much.

    The worst part of European-Socialism tho? Even WITH those punitive tax rates the system is about to fail. They already have HUGE tax regimes, drastically smaller military budgets, AND cheaper health care and they STILL can’t afford it.

    I really think that last point is something probably VERY few of you had considered ( I have met few who have done this analysis and thinking) so I hope this has proved helpful for the education of fellow Americans!

    • Matt, this is boring. There is no socialism in Europe. Please look up the definition of socialism or at least read my post about it and stop embarrassing yourself. The dictionary definition of socialism is “social ownership or control of the means of production and cooperative management of the economy, and a political philosophy advocating such a system. “Social ownership” may refer to any one of, or a combination of, the following: cooperative enterprises, common ownership, direct public ownership or autonomous state enterprises.”

      Let’s try to control the need to parrot the idiocies delivered by Fox News, OK? Social programs do not equal socialism. Claiming they do makes one sound like an idiot.

      • wow… i offer a very (or at least somewhat) brilliant answer you call me an idiot.. wow.. just wow.. unbelievable…. will read your post but wow.. i offer a ton of insightful analysis on actual tax statistics and somehow that gets no comments and you call me an idiot… nice.. very offended. .for real.. I am a big boy and will get over it … and want to say something mean.. but i won’t… have a good day :)

      • Nobody called you an idiot, unless you are the owner of Fox News or at least a regular commentator there.

        There is no socialist country in Europe, Obama is not a socialist and Canada or Sweden are capitalist countries. Claiming otherwise is very ignorant.

        One little clue to distinguishing socialism from anything else is COLLECTIVE OWNERSHIP OF THE MEANS OF PRODUCTION instead of private property.

      • I agree with most of what Matt says, however, the appropriate term for the model the European nations tend to have is called “social democracy.” The right-wing in America tend to use “socialism” as a catch-all for the European economies, but it is wrong and IMO hurts the arguments of the conservatives.

        I mean from a pure marketing standpoint, when they for example call President Obama a socialist, it turns off a lot of moderates who just role their eyes and see it as crass partisanship. However, if the GOP were to say, “We do not see President Obama as a socialist, that is a term one must use carefully. But we do see him as being a form of European-style social democrat, social democracy being a system in which the government plays a much larger role in the economy then what has traditionally been the norm in America…” well I mean that sounds much more reasoned I think.

        Not all of the Euro governments adhere to social democracy however. For example, Germany adheres to what is called “Ordoliberalism,” which is actually a variant of classical liberalism (which tended to be a very limited role for the government, very much for free-markets, privatization, etc…). Ordoliberalism is kind of like a “Progressive” (with a capital “P”) version of classical liberalism, in that it focuses very much on fiscal conservatism and market capitalism, but also calls for a strong role for the state to play in terms of fostering competition and providing for a strong welfare state (the three primary ones being universal healthcare, unemployment benefits, old-age retirement system). Switzerland is also pretty right-wing in many ways. The Dutch and also Finland adhere to what is called the Polder model, which involves a form of consensus governance between employer organizations, trade union associations, and the government. Ordoliberalism is one reason for Germany’s being Europe’s strongest economy right now.

        One minor disagreement I’d have on the definition of socialism however is that it isn’t so much about the ownership of the means of production in the economy as who controls said means of production. For example, the Nazis had a government-run economy for the most part (this is explained in Adam Tooze’s “Wages of Destruction: The Making and Breaking of the Nazi Economy”). But most of the major enterprises in Nazi Germany were privately-owned, although they were controlled by the government. So the outcome for the consumer was essentially the same as if it had been a purely socialist economic system. It was the rejection of this system by the German people that helped nurture and then foster in Ordoliberalism after the war.

        Germany’s economic strength is all the more amazing considering they had to integrate in the very backwards East German economy when the Cold War ended.

      • Finally! And it only took me half a year to get people come up with the correct definition.

        You are right, Kyle, this carelessness is extremely off-putting. First, one misspeaks with “legitimate rape” then with rape pregnancy as a gift from god, then with socialism instead of social democracy, then with communism instead of socialism, and in the end you don’t trust anything that person says because they come off as ignorant.

    • Cut the stupid Pentagon budget for once and we will not hear of any budget problems for a long long time.

      I don’t mind slightly higher taxes either. On the state level, I definitely welcome higher taxes. It is a good state, it deserves it. :-)

  6. As a Canadian resident working in the US I have to pay taxes in the US first, then the balance in Canada. It is not a lot of money. The difference is not that big. What bugs me more is knowing where my tax money goes in the US, and this is something that upsets me more than high tax %.

  7. Well, I’m going to go ahead and defend Scandinavian-style taxation. Having lived in Denmark for a year, I can assure you that Danes are not suffering under high taxation, nor do they find them unfair. In fact, most of them see them as their citizen’s duty to contribute to the community. And it makes sense: after all, they all benefit from it. My main example is education. Not only is higher education free for all Danes, they even get paid to do it, even to study abroad. Needless to say, most of the Danes I have met are extremely well educated.
    Moreover, Denmark doesn’t suffer from a brain drain. Even though Danes tend to leave their tiny country to live, work or study elsewhere for a while, most of them come back eventually, not because their homesick, but because it is one of the best places to settle down and have a family and live comfortably, despite (or because?) or their tax system.

  8. Americans living in the U.S. already pay European levels in taxes, Depending on your federal income tax rate, say 28%, add onto that Social Security at 6.2% (I know it was temporarily reduced this year). Figure out what your health insurance costs as a percentage of your income and you are probably around the 40% mark. And if you live in a state, like Virginia, with an income tax. Compare that to the tax rate you would pay in Holland (42%), or Scandinavia and consider how much bang you get for your buck. Students loans? Excessive healthcare costs (leading cause of bankruptcy)? These things don’t happen in most developed countries. (U.K. is bringing in fee based university courses, but it is still significantly less expensive to go to university there than in the U.S.)

    • I’m not convinced by any of this because I lived in Quebec and experienced the taxation as ruinous. And now I live in the US and I experience the taxation as a lot less burdensome. The tax I pay in the US on the personal income of $50K is 11%. So let’s not invent things here.

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