Bernie Sanders’s campaign is based on the idea that his welfare programs will not entail raising taxes for the middle class, and even if they do, the services people will get in return will raise their standard of living far beyond what they could buy with the extra amount they will pay in taxes. I never lived in Denmark, so I have no idea how this approach works for the Danes but I lived in Quebec, Canada, and I can tell you what Bernie’s plan looks like in action right on this very continent.
First of all, yes, middle class people pay enormously much more in taxes in Quebec than they do in the US. And in return, they get absolutely no services whatsoever. My sister and her life partner are typical middle class: educated, hard-working professionals who work day and night. They pay ≈ 55% of taxes plus a sales tax of 15% on absolutely everything. As for the welfare they get:
- The medical care is of such pathetic quality that my sister’s doctor says, “Well, you don’t really think I have time to look at your test results, do you?” My sister has to pay for private insurance for herself and the employees in her small business.
- The government-sponsored daycare had no spots, so they had to pay $65 per DAY for it.
- Now they are paying for a private school because the public school system is overextended, the teachers are exploited, underpaid, the classes are overstuffed.
- The roads are pathetic, the snow gets collected haphazardly, the streets are not too clean.
- The government regulations are truly egregious and keep mushrooming.
So for the middle class, the situation is all about paying, paying and paying, and never getting anything in return.
But wait, there is an important thing to keep in mind! There is a group of people that benefits a lot from this situation. That group is the poor*. In Quebec, you don’t see slums like East St. Louis, horrible, shameful ghettos, extreme, racialized poverty, none of it exists. And that’s really great.
Bernie invokes the middle class because that’s what the conventions of political oratory in the US require. But in reality, what you vote for when you vote for Bernie is for the slums to start disappearing, for those people without college degrees whose life expectancy is plummeting to live longer lives, for less drug addiction and hopelessness among the very poor, etc. All of that will happen at the expense of you living a more modest lifestyle, being able to afford less things, and working (even) more.
Ultimately, it’s for you to decide if this is a good trade-off. It’s important to make an informed decision and not be guided by the fantasy of, “Bernie will tax hedge fund managers and give us all a more comfortable life with that money.”
*And the very rich because those always do fantastic, so let’s not fret about them.
Clarissa's Blog 
So as you describe Bernie’s plan, the current middle-class will be taxed until they’re poor, the current poor will become the new middle-class, and then the newly created middle-class will in turn be taxed back into poverty, while the old former middle-class (now poor) will be raised back up into middle-class status, while the former poor (now middle-class) are driven back into poverty, and then…?????
Or did I miss something in your explanation? 🙂
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:-))))))
It’s a system that doesn’t leave anybody destitute but it doesn’t allow for the kind of class mobility that exists in the US. If you are the kind of person who wants to get more by working more, you won’t be happy there. But if you are not that consumerist, into enjoying life more than increasing your workload, that’s the perfect place for you.
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And yet, with all of these negative drawbacks, your sister and her family haven’t chosen to move out of Quebec or even out of Canada yet. Knowing all of this, she started a business in what seems to be a very business unfriendly environment. Why? Was Quebec different when she started her business? Are they geographically constrained for other reasons?
Nobody keeps voting for things like this unless they get something in return. If it’s not benefits it’s something else. Is it truly just the reward of not having poverty in your face?
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That’s a huge reward. I wouldn’t dismiss it so easily.
My sister and her partner can’t move to the US because there is no immigration to the US. It doesn’t exist. And obviously they can’t apply for refugee status. 🙂 So that’s out, as much as I’d love to see them move closer to me. As for moving to another province, that would involve leaving aging parents to find circumstances that are only slightly different.
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A Canadian doctor actually said that to your sister? Out loud?? In America, that physician would get his/her ass sued off.
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Welcome to Canadian healthcare. If you are at death’s door, you’ll be helped. But anything less serious means you’re screwed.
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It was more unfortunate yet – ‘I will be honest with you. No one here has the time to look at your test results’. Referring to the whole clinic while discussing emergency testing I had done at a hospital in another province. He kept his word – despite my trying and insisting, no one has looked at my test results. It’s been over 2 months now.
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And it’s not like these test results will be relevant for much longer. 🙂
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Q: Who are the richest Americans on whom you’d raise taxes?
A: They are the Americans who qualify for the top income tax bracket. Right now, the top tax bracket begins with money made beyond $400,000, and any additional money is taxed at 39.6%.
Q: I heard Bernie wants to raise the top tax bracket to 90%. That seems too high.
A: Bernie has never said he wants to do that. He has recently said that he is “working right now on a comprehensive tax package, which I suspect will, for the top marginal rates, go over 50%.”
Q: But has it ever been that high?
A: Actually, yes. The top tax rate was over 90% from 1944 until 1964. The 39.6% tax is low compared to historical tax rates.
Q: How are capital gains and ‘dividends related to this?
A: Capital gains and dividends are sources of income almost exclusively made by the wealthiest Americans. While historically these were taxed at similar rates to normal income, since the 1970’s the tax rates have been lowered dramatically.
Source: 2016 presidential campaign website FeelTheBern.org, “Issues” , Sep 5, 2015
Lower cutoff for estate tax from $5.4M to $3.5M
Q: What does Bernie think is wrong with the estate tax?
A: While for many years this tax unfairly affected middle-class farms, it has been significantly changed to only affect large estates, worth over several millions of dollars. The rate has been lowered and the cap raised to such an extent that it has amounted to a huge tax break for the super-rich.
Q: So what is Bernie’s answer to reforming the estate tax?
A: Bernie has proposed lowering the bar on estate taxes so that individuals who own estates worth more than $3.5 million and couples who own estates worth more than $7 million will be taxed (at the moment the bar is set at $5.4 million and $11 million). This bill also increases the amount of tax on these estates, and closes loopholes used to avoid paying these taxes.
Q: Shouldn’t people be able to pass on money to their children?
A: They should–but even with Bernie’s proposed new estate tax, 99.75% of Americans would not pay any more in estate taxes than they do today.
Source: 2016 presidential campaign website FeelTheBern.org, “Issues” , Sep 5, 2015
Double the capital gains tax for the wealthiest 2%
The current ranking minority member on the Senate Budget Committee, Sanders would nearly double taxes on capital gains and dividends for the wealthiest two percent of Americans. In addition, this year Sanders asked President Obama to use executive action to close six tax deductions benefitting corporations and hedge funds. The Vermont senator would use some of the revenue gained from higher taxes on the rich to lower taxes for middle and lower class Americans.
Source: PBS News Hour “2016 Candidate Stands” series , Apr 30, 2015
We need a progressive tax system based on ability to pay
At a time of massive wealth and income inequality, we need a progressive tax system in this country which is based on ability to pay. It is not acceptable that major profitable corporations have paid nothing in federal income taxes, and that corporate CEOs in this country often enjoy an effective tax rate which is lower than their secretaries. It is absurd that we lose over $100 billion a year in revenue because corporations and the wealthy stash their cash in offshore tax havens around the world.
Source: 2016 presidential campaign website, BernieSanders.com , Mar 21, 2015
Real tax reform based on ability to pay
At a time of massive wealth and income inequality, we need a progressive tax system in this country which is based on ability to pay. It is not acceptable that major corporations have paid nothing in federal income taxes, and that corporate CEOs in this country often enjoy an effective tax rate which is lower than their secretaries. We lose over $100 billion a year in revenue because the wealthy stash their cash in offshore tax havens around the world. The time is long overdue for real tax reform.
Source: 12 Steps Forward, by Sen. Bernie Sanders , Jan 15, 2015
http://www.ontheissues.org/2016/Bernie_Sanders_Tax_Reform.htm
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And Carly Fiorina has a new tax code that is 3 pages long and will repair the entire economy.
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Hah! My net worth is well above the amount you quoted above, and you think I owe the government ANY of it when I die? I spent a lifetime working for the government (the State of California, the U.S. Air Force), for meager wages compared to what a physician could have made in private practice, serving the people of California and America while I prudently invested — and now I’m supposed to toss all the fruits of my labor, and my investment skills, back to the four winds when I die?
Every four months, even in retirement, I write a required check to the U.S. government that’s more than most citizens of any country earn in a year. My effective tax rate is about 27% — turn that into real dollars, and that adds up to $$$$$. I pay a fortune to the biggest charity in the world, the U.S. government.
Not their fault that most people aren’t as wealthy as I am — not my fault, either. Yes, I think I’m paying at least my fair share.
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Nero Wolfe. And Be a Villain. By Rex Stout.
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I spent a lifetime working for the government
Well gosh, my taxes paid your salary.
You’re welcome!
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Maybe the investment income, too, between the (tax-free) municipal bonds and the defense contractor stocks…
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A 55% tax rate is never going to happen in the US, so there’s no point discussing its doom and gloom consequences. It’s hard enough to get corporations to pay their effective tax rate, whatever that number is now, because there are always loopholes available to them. I’d be more interested in the idea that corporations pay similar tax rates as individuals, and that they not be allowed to hide their money in offshore tax shelters.
As far as healthcare, seems like Americans pay with money (or they just don’t have any insurance) and Canadians pay with (waiting) time. No system’s perfect.
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I don’t understand why people are so dismissive of the possibility to get rid of the horrible American slums. That would be an enormous achievement. The real doom and gloom is coming over to the US from Canada for the first time and seeing these horrible dead little towns with collapsing buildings, gutted old factories, hopeless people. That’s real doom and gloom.
As for corporations, they do perfectly fine everywhere in the world where they choose to flee at any given moment. Canadian banking system, for instance, is a mafia like few others.
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Oh, I read the tone of your post as doom and gloom, with your description of Quebec.
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Perhaps a side trip to Sheffield is in order during your next visit to the United Kingdom …
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I don’t understand why people are so dismissive of the possibility to get rid of the horrible American slums. That would be an enormous achievement.
We as a nation, apparently don’t want to.
The political reality right now is that we have endless fights over Social Security, which did quite a bit to ameliorate poverty in America’s old people, and even as designed, excluded large numbers of people (domestics and farm workers didn’t get social security, and in some states, teachers don’t AFAIK). We also have endless fights over government pensions, such those that still exist. Both are more reliable and are relied on by more Americans than any investment schema.
Want to see a very unpopular tax increase? Propose raising the ceiling on income for Social Security and payroll taxes or getting rid of it entirely, watch everyone who isn’t paid under the table howl. This is before you even get to federal and state income tax.
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“Propose raising the ceiling on income for Social Security and payroll taxes or getting rid of it entirely, watch everyone who isn’t paid under the table howl.”
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The current rate for Social Security and Medicare combined is 15.3% on the first $118,500 of your earned income. After that, your income is not subject to this tax rate (check the fine print at the bottom of the table). If you’re an employee, your employer pays half of that and the other half is paid from your gross income and is sent to the government by your employer. That money never passes through your hands. If you’re self employed, you pay the entire 15.3%, on a quarterly basis, I think. Many companies will classify people who should be employees as contract workers because they do not want to pay these taxes.
You pay these taxes before you even get around to filing federal and state income taxes.
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“Propose raising the ceiling on income for Social Security and payroll taxes or getting rid of it entirely, watch everyone who isn’t paid under the table howl.”
I’m not sure what this means. My understanding of the US system of taxation is not that profound.
If you actually make more than the ceiling, raising the effective tax rate to everyone else’s is a HUGE tax increase. Like others have said, many people think they are future rich people. Most people get most of their income by working for it, and not by parking money they might have saved or spent into investments. The ceiling means after a certain point there’s less marginal cost outside of salary to having a highly paid worker to the employer — that changes with the ceiling.
I didn’t mention raising the rate of taxation. When you’re at the bottom, a higher tax rate hurts because you have less leeway in your budget, even if the money is to pay for your retirement in the future.
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People ask why I choose to pay an accountant instead of doing my own taxes, and this is why. I’m not really following what you are saying and the problem is not with the way you explain. Anything that has to do with numbers, I just check out.
What I have to contribute to the subject is how tragic and shocking is the centrality of resentment that the poor feel against the very poor who might be on greater social assistance (like in the link I posted yesterday. )
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“A 55% tax rate is never going to happen in the US …”
For your edification as well:
http://bradfordtaxinstitute.com/Free_Resources/Federal-Income-Tax-Rates.aspx
A few selected quotes:
“The highest income tax rate jumped from 15 percent in 1916 to 67 percent in 1917 to 77 percent in 1918 …”
“Congress raised taxes again in 1932 during the Great Depression from 25 percent to 63 percent on the top earners …”
“In 1944, the top rate peaked at 94 percent on taxable income over $200,000 …”
“[During the 1950s, 1960s, and 1970s], the top federal income tax rate remained high, never dipping below 70 percent …”
And as for British taxes, I would be willing to cope with the 20p rate paid by the typical Plc as compared to the most recent 40p rate (and 50p before that) for individual taxes …
Ever heard the song “Taxman” by the Beatles?
You think that bit about “I’ll give you one, I’ll take nineteen” is hyperbole?
No, that’s what the effective tax rate was at the high end …
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Well, Jones, you ARE aware of the difference between the highest MARGINAL tax rate, and the actual effective tax rate that we pay in America, aren’t you?
So you’re just joking around, right? 🙂
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Oh yes, I’m joking, I’m really a bankster and I really do have the Financial Conduct Authority on speed dial …
As such it would appear that I’m conflating the two because with enough income, the effective rate approaches the marginal rate. 🙂
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This is what I’m talking about, this kind of poverty: http://www.theguardian.com/us-news/2015/nov/12/beattyville-kentucky-and-americas-poorest-towns
That’s a disgrace.
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” I never lived in Denmark, so I have no idea how this approach works for the Danes”
I haven’t either, but I’m arrogant enough to think I have some idea of how it worked (since it doesn’t work so well anymore, though probably better than in Sweden or Denmark).
Partly the goal was the same one you notice in Quebec to make sure that no one experienced extreme poverty. The idea that many could not live as richly as they might want was an acceptable trade off for the majority (no party argued with the basic premise of taking from the richer part of society to avoid poverty at the bottom, just with the degree needed to achieve this)
As a system it requires several factors to work:
High level of social cohesion: The idea was that while the tax rate might hurt at times you’re contributing to the health and well-being of fellow citizens who have similar values (and who would do the same for you).
Sense of fairness: Those receiving help need to feel either a) gratitude that their fellow citizens are willing to help them out b) embarassment for being in the poisition of needing to be helped and determined to not stint on helping if they are ever in a position to do so.
A bit of realism: Recognition that a few bad apples will exploit the system but ultimately very strict means testing will hurt more people than is worth it – that is you let a few free riders on to keep the train from stopping altogether.
An predominant ethic in society that makes the whole thing possible. The northern protestant ethic stressing moderation in enjoying the pleasures in the world and stressing the value of work and good works does that particular job (not the only one that does but the relevant one in the Scandinavian case).
Of course once the society starts tinkering with other parts of the social system (which tends to be pretty delicate) the whole thing will fall apart which is essentially what happened in Scandinavia in varying degrees.
The whole thing is unworkable in the US because there’s no enough social cohesion, sense of fairness or an ethic that says living simpler in a fairer society is a good thing.
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In Quebec, there’s neither gratitude nor embarrassment on the part of the life-long welfare recipients. Just a sense of entitlement. But the Quebecois built their entire national identity on this strong welfare and they sincerely don’t seem to mind.
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I agree with your larger point, though. The dream of making it, striking it big is much more important to Americans that having the certainty of never being destitute. The mentality of “I’ll never be rich but I’ll never be poor either, so it’s worth it” doesn’t really exist here. And I’m not seeing it suddenly appear.
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America is almos unique in the mythology of rags to riches as the way to get ahead. The middle-class that makes less than, say, 100K$/year, is always trying to get into the upper-middle class or ensure that their children make it. I can’t entirely gainsay say this ideology, because to some extend it’s true in my own family history, but it is a little more complicated that the untutored farmer or factory worker around the world who naturally wants a better life for his family.
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Clarissa may not be aware of this, so I’ll provide this for her edification (and everyone else’s) …
First, Google this just for fun: the US is the world’s largest tax haven
One typical result:
http://www.lectlaw.com/filesh/bbg33.htm
“Since the ’80s the US has been the largest tax and regulatory haven for non-resident foreign nationals in the world. Here’s information on the USA in general & the States of Delaware, Florida, Nevada & Wyoming that have Features that can be Useful for Tax Reduction, Asset Protection, Investment, Banking and a Wide Range of Other Tactics & Strategies.”
How do you think liquid capital will react to Bernie Sanders attempting to implement even the merest fraction of his programme?
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Hey, Saunders is going to raise taxes on the middle class if he’s elected if he can because Quebec, Denmark, and Fiorina’s three-page tax plan.
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Everywhere on the planet where the kind of welfare he proposed exists, taxes on the middle class are from 49 and up to 60%. If it were possible to do it any other way, wouldn’t somebody be doing it?
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Because the 1% in every country likes it that way?
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Oh, absolutely. The capital will flee immediately. Which is why nobody will burden it with too much taxation. Instead, the middle class will be taxed, just like everybody else.
But we won’t be able to discuss that while we are stuck in the fantasy of building the Swedish welfare without the Swedish taxation.
It would be easier to discuss this if people were a bit more grounded in reality.
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So true. Taxing the truly wealthy is like belling the cat. It’s a question of you and what army?
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“So true. Taxing the truly wealthy is like belling the cat. It’s a question of you and what army?”
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Taxes in Qc… I really got pissed off when I learned that we had to pay 20$/day instead of 7$, based on our income, for daycare. I thought that this was extremely unfair, as we already pay enough taxes based on our family income. I thought that this was the last straw. But then I remembered the years I had lived in the US.
Also, a survey yesterday: 75% of Québécois believe that more money should be spent on affordable housing.
And the teacher’s strike goes on!
I could nuance your description of the welfare system in QC, but I think that we get your point pretty well.
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It’s an absolute crying shame that the teachers in Quebec should be so mistreated. I will never believe that there is truly no money for education in Quebec, never. This is ridiculous. I hope the teachers win.
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Oh yes. What I do not get is that teachers mostly complain about their work condition (more students in the classroom, students with special needs but no resources), and they complain less about their salary. In fact, I get it: teachers are mostly women and they should care and be benevolent (and not hoping to receive more of such a mundane thing as money), and the rampant anti-intellectualism that form the social and cultural fabric of Quebec.
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I hear that the general public is not supportive of the teachers. Of course, working people always turn against each other in such situations. 😦 But I’m guessing that the teachers are afraid of an even greater backlash (some teachers have been threatened, I hear) and frame the strike as being only for the kids’ sake.
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Exactly! According to my friends who are teachers, they are hesitant to openly talk about the salary because of the backlash and lack of support they have been receiving from parents. 3 year salary freeze and 1% yearly increase after that? It is a disgrace to even offer this to teachers in a first-world country, yet the majority of citizens does not seem to be sympathetic. They are more concerned with the Syrians (always easier to pity the poor children in Africa VS the neighbor next door).
I find teachers’ salaries appalling and the budgets they receive for supplies embarrassing. Our tax money is definitely not going where it should.
Talking about affordable housing – stripping some underserving people of theirs would free some up! Our parents’ welfare friends live in a building in Outremont on Bernard avenue (prime location with some of the most expensive real estate in the city) and are constantly complaining that it is not up to their standards!
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Special law will put an end to that. OR, the government will give bits to nurses and teachers, and nothing to the less-likable public-function workers. Wedge politics.
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By sincerely trying to make socialism “work”, Mikhail Gorbachev destroyed it utterly. Bernie Sanders could do the same for America, which is why I plan to vote for him.
With no cooperation from Congress, Bernie will order the Federal Reserve to print trillions of dollars and spend them on education, health care, and free stuff for minorities. Police will be ever more constrained to avoid “racism”, allowing feral blacks to slaughter hundreds of unarmed white liberals who profess to love them.
Then the whole world will get very right-wing very quickly, because after democracy destroys itself in America, it’ll have no legitimacy anywhere else.
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You have a very edgy sense of humor. Good job!
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