[luke warm]

french socialist PM wants to raise taxes on the wealthy (evidently so they can "pay their fair share") to 75%... even the not-so-wealthy are gonna take a hit... obama-like?

[Bbradley62]

There's a big difference between a marginal tax rate of 40% and one of 75%.

[luke warm]

 Bbradley62, on 2012-August-09, 11:06, said:

There's a big difference between a marginal tax rate of 40% and one of 75%.

“We’re getting a lot of calls from high earners who are asking whether they should get out of France,” said Mr. Grandil, a partner at Altexis, which specializes in tax matters for corporations and the wealthy. “Even young, dynamic people pulling in 200,000 euros are wondering whether to remain in a country where making money is not considered a good thing.”

they should worry, "For higher earners — people with incomes above 70,830 euros a year — the tax rate will soon rise to 44 percent"

this in a country that hasn't had unemployment below 7% for what, 30 years or so? when are people going to realize that socialist policies do not work

[mike777]

1
For starters I dont think high tax rates=socialism. Also this may only hit 7000 people per the article.
Also per the article these people are highly suspicious.

In any event lets not forget other taxes are added to this such as VAT, property taxes, water and sewage taxes, phone and uitility taxes...etc etc.

[luke warm]

 mike777, on 2012-August-09, 12:36, said:

1 For starters I dont think high tax rates=socialism.

maybe not in and of themselves, but when taken as a whole (and when the PM is from the socialist party), there's a pretty good hint of the direction being taken... kind of like mitterand

[mike777]

Do you really believe he wants to control the means of production and distribution of goods and services?


btw there appears to be a huge number of what are called "local taxes" in addition to this fed income tax.



The overall rate of social security and tax on the average wage in 2005 was 71.3% of gross salary, the highest of the OECD. The levels of social security contributions are particularly high (16.3% of revenue against 9.4% in average for OECD). The social security budgets are larger than the budget of the national government. The budgets of both the national government and of social security organizations run deficit


http://en.wikipedia....ation_in_France

[luke warm]

 mike777, on 2012-August-09, 14:17, said:

Do you really believe he wants to control the means of production and distribution of goods and services?

of course i do, if he thought he could get away with it, and in france, that's very possible... this is a country whose citizens honestly think the gov't has all the answers... they've been programmed to hate the rich, and most of them do... comparing him to obama, i think that obama wants the u.s. to look more like europe, especially the tax structure and prices (gasoline for example)

and yeah, i don't know how anyone lives over there, given the massive taxation... of course, when you've been unemployed for a generation and the gov't supports you, i guess it doesn't matter much

[lalldonn]

5 years in a row, huh?
(Ok ok, as of 2010)

[kenberg]

Or:

http://www.numbeo.co..._by_country.jsp

Or there is the West Side Story index:

Bernardo: Terrible time in America
Anita: You forget I'm in America

Of course tax rates matter, but maybe less than some think. I'm retired and I still live in Maryland with a rather high tax rate. I have known people to move to Nevada, no state income tax I believe. I like it here. If I move, it will be to someplace that, for whatever reason, I decide I like better. Taxes will have little if any impact on my choice.

[Quantumcat]

It makes sense that taxes are higher in places where it is nicer to live. If all people cared about were taxes, they'd all move to Nigeria or somewhere.

[Codo]

We all agree with Warren Buffett, that the taxes the rich people pay are much too low, don't we?
If you earn 10 Million Dollars a year and even if you have to pay 75 % taxes, you still have 2,5 Mill. bucks. I must admit, that my compassion is quite limited.

You can use simple statistics and see that the european countries with the lowest tax rates for the highest incomes are the countries with the biggest financial problems.

The scandinavian countries are well known to have quite high tax rates for high incomes. Greece for example has no sufficent tax office and a lot of legal ways to avoid taxes- especially when you own your own shipping company. Italy - under Berlusconi- went in the same direction- they just do not limit it to shipowners...

Who do you think has the higher net income, more billionaires per inhabitants and a more stable economy?
And besides this: What is the alternative? Mr Hollande dislikes the "german way" to safe as much money as possible. He thinks that this way will kill our prospects for the future. Maybe he is right, there are models which prove him right- and other models which prove him wrong. In my opinion, our states do still not safe enough money. It is irresponsible to leave our kids so crazy liabillities.

[phil_20686]

 luke warm, on 2012-August-09, 11:17, said:

this in a country that hasn't had unemployment below 7% for what, 30 years or so? when are people going to realize that socialist policies do not work

Frictional unemployment is higher in europe, essentially as its nicer to be unemployed. Better off people, like, say, teachers, are quite happy to take 6 months off when they lose their jobs, in order to find a better job, rather than the first one that comes along. This is not a bad thing. Moreover, you often talk about it as if its the same seven percent of the work corce continually unemployed. The truth is that the rate of long term unemployed in the US and the UK is, on average, about the same. Long term unemployment in the UK (over one year) represents only 1/3 of the headline rate. Over two years is only 1/6, and these fractions were much smaller pre crash (1/5 1/10). Long term unemployment is what we should be worried about. If your average guy spends a total of one year searching for jobs in his working life, that is roughly 2.5% unemployment in most reasonable definitions.

 mike777, on 2012-August-09, 14:17, said:

Do you really believe he wants to control the means of production and distribution of goods and services?

Taxes are controlling the distribution of goods and services. In some cases they also control the means of production, like the National Health Service in the UK. Socialism is a spectrum, Europe is more socialist than the US. Comparisons to communism are ridiculous. The reality is that many production needs are obvious, like health care, and it makes little difference who controls the means of production.

 luke warm, on 2012-August-09, 15:30, said:

of course i do, if he thought he could get away with it, and in france, that's very possible... this is a country whose citizens honestly think the gov't has all the answers... they've been programmed to hate the rich, and most of them do... comparing him to obama, i think that obama wants the u.s. to look more like europe, especially the tax structure and prices (gasoline for example)

and yeah, i don't know how anyone lives over there, given the massive taxation... of course, when you've been unemployed for a generation and the gov't supports you, i guess it doesn't matter much

I cannot imagine living in a society with a murder rate like the US. Its four times the UK, and we are considered `crime ridden' by the standards of western europe. I meet a lot of people who have lived in the US in academia, and their number one report of culture shock is than in western europe people (especially women) can wander round cities at night with virtually no fear. Sure there are some places you shouldn't go, but urban area's in the US are incredibly dangerous.

 lalldonn, on 2012-August-09, 15:51, said:

5 years in a row, huh?
(Ok ok, as of 2010)

I have no particular knowledge of this study, but they often are based on how residents rate their country. Thus those who have a culture of nationalism/patriotism tend to do well. The UK, on the other hand, is a nation of whiners. Countries like eastern europe do well on these, because they have improved a lot, and people suffer badly from anchor bias. Also, their data reporting of crime tends to be very suspect.

 Codo, on 2012-August-10, 01:36, said:

We all agree with Warren Buffett, that the taxes the rich people pay are much too low, don't we?
If you earn 10 Million Dollars a year and even if you have to pay 75 % taxes, you still have 2,5 Mill. bucks. I must admit, that my compassion is quite limited.

You can use simple statistics and see that the european countries with the lowest tax rates for the highest incomes are the countries with the biggest financial problems.

In my opinion, our states do still not safe enough money. It is irresponsible to leave our kids so crazy liabillities.

I have always considered that this last point to be a misunderstanding. Equality is about the distribution of consumption, and consumption cannot be saved. Whether funded or unfunded the elderly will still be taking a fraction of the economies production. Direct taxes at the time, or indirect taxes when the liquidation of their savings causes inflation. Its all the same really. To a first approximation, having funded or funded liabilities does not change the fact that it is the production by economically active persons who are `paying' since they are getting to use less of what they produce. Entries in ledgers will not change this .

Of course, at second order its a bit more complicated. Saving sometimes represents investment, and some investments are durable, etc. Of course, in reality, there is a constant flow from worker to retired to dead, so it makes some sense to talk about `saving' for retirement, but this is really just talking about the pecking order among your, generation of retirees. You can read more on this point at worldofinterest.wordpress.com.

Another not often talked about element of this is that almost every retirees will receive more consumption in retirement than they produced in their working lives. Exponential productivity growth means that our output per worker doubles roughly every twenty years, and production in each twenty year period is greater than the sum of all previous production. Since twenty years is roughly a retirement period, and pensions roughly track average salaries, it is the case that as a retiree you will recieve more consumption claims than and average worker would have accumulated if he had worked for all of recorded history.

[Vampyr]

 phil_20686, on 2012-August-10, 02:55, said:

Frictional unemployment is higher in europe, essentially as its nicer to be unemployed... The truth is that the rate of long term unemployed in the US and the UK is, on average, about the same. Long term unemployment in the UK (over one year) represents only 1/3 of the headline rate.

The unemployment rate luke warm mentioned was in France.

[phil_20686]

 Vampyr, on 2012-August-10, 04:03, said:

The unemployment rate luke warm mentioned was in France.

So? the uk's stats are representative of every state with a large welfare state. Its commonsense really, free healthcare, and relative prosperity coupled with generous benefits, reduce the pressure to find a new job. This is very different from being unable to find a job. It is a luxury of being part of a prosperous western european state. When comparing headline unemployment rates, you are comparing apples and oranges. Not only that, but methodologies differ. Most people think that the US understates its unemployment rate, but we are mostly interested in the change, so its not a big deal. There is a much larger incentive to declarer oneself unemployed and looking for a job if you are required to do so to access benefits.

Long term unemployment is what we should be measuring if we are evaluate `socialist policies'. And long term unemployment is similar in the US and Europe (not at the moment, but over a representative period).

"American Exceptionalism" is an irritating myth. The US has higher crime, worse healthcare system, a more unequal society, the worst educational outcomes in the developed world, ghettos of under-privileged children consigned to crime and poverty through the failure of the education system, the highest incarceration rate in the developed world, and yet your politicians go on tv and announce to rousing cheers that they live in the greatest country on earth. Its bizarre. Except that it isnt, its similar to britian in its Empire building phase, or the early days of the USSR. Young countries with short histories do not appreciate how easy it is to make expensive mistakes. On the other hand, I have friends who live in houses which are older than your country. That gives a certain perspective.

Americans often seem to think of themselves as the saviours of Europe in WW2. Well, that is one way to look at it. The other way to look at is that you sat on your asses for three years will millions of young men died and your senators talked piously of the need to respect the internal politics of Europe. It was only after Hitler betrayed his peace treaty with the USSR, and it looked certain that the UK and the USSR would lose the land war, and leave you alone facing a german empire spanning half the known world, that you entered the european theatre in a meaningful way. The truth is that you were making a foreign policy error of the gravest magnitude. Had the battle of britian been lost, as most predicted, there would have been no staging are in western europe for US troops. No D-Day, europe would have been lost to tyranny for generations. And for this, you think you are the good guys?

[\end rant]

[barmar]

 Codo, on 2012-August-10, 01:36, said:

We all agree with Warren Buffett, that the taxes the rich people pay are much too low, don't we?
If you earn 10 Million Dollars a year and even if you have to pay 75 % taxes, you still have 2,5 Mill. bucks. I must admit, that my compassion is quite limited.

But you used to earn $6M. No one likes taking a pay cut, certainly not more than 50%.

And while $2.5M may still be a huge amount, what if you've been taking advantage of what you'd been earning? Maybe you have a home with a $2M/year mortgage. You used to be able to afford that with plenty left over, now it's most of your take-home pay. If you used to be a philanthropist, giving $1M each year to charity, you're not going to do that so much when they raise your taxes.

BTW, don't forget that from the Depression until the Reagan era, the highest US tax bracket was 70% or higher, and was as high as 94% during WWII (you had to be making the equivalent of 10's of millions to get into this top bracket).

http://en.wikipedia....ry_of_top_rates

[phil_20686]

 barmar, on 2012-August-10, 08:57, said:

But you used to earn $6M. No one likes taking a pay cut, certainly not more than 50%.

Boo-hoo? Seriously, I am quite conservative, and very sympathetic to arguments for low marginal tax rates, but this type of argument is bizarre.

Also, I am sceptical of the work incentives argument. People work because of the team ethos that develops in an office. No one thinks, "I'd better work five hours a week extra so that I can afford a 55 foot yacht instead of a 49 foot yacht". In fact, I now strongly suspect that in the kind of jobs that pay you 10mn a year, the primary motivation is just beating the other guy.

If you want to argue for lower tax rates, pick from among the following:

(1) True marginal tax rates are generally higher than income taxes suggest, as people pay many other taxes.
(2) A 75% tax rate is not revenue maximising.
(3) Very high tax rates encourage tax avoidance.
(4) They negatively impact my freedom to trade time for money.
(5) Its more sensible to tax consumption than income, to encourage saving.
(6) It unfairly penalises small business owners who took significant risks to build their business and are now reaping `just' rewards.
(7) Tax rates over 50% `seem unfair'.

[ArtK78]

 barmar, on 2012-August-10, 08:57, said:

BTW, don't forget that from the Depression until the Reagan era, the highest US tax bracket was 70% or higher, and was as high as 94% during WWII (you had to be making the equivalent of 10's of millions to get into this top bracket).

Note that there was a maximum tax rate of 50% on earned income (salary or wages, or earnings from self-employment).

The higher tax rates ony applied to unearned income (dividends, interest, etc.).

[mycroft]

Note 1: *Marginal* tax rates are just that. If you have a top marginal rate of 75%, and you earn $10M, then you pay 75% of your earnings *after the top rate hits*, which we don't know, but could easily be around $7.5M. You pay lower tax rates on the first N dollars, just like everybody else making N dollars or less.

The no-new-taxes people use the big scary number, and "forget" to tell you that it's only on income past a limit that their audience will never reach (the people making that much already understand this. Okay, so their *accountants* already understand this, I guess).

Note 2: Nobody pays the % actual tax rate, and the more you make, the easier it is to organize your free money (money you don't need to eat/work/live) in such a way as to pay less taxes yet. That's what tax accountants are *for*, and if they do their job properly, you save more in taxes than you pay them in consulting fees. Again, the more money you have, the more likely that is possible, and the better the accountant (well, the more expensive the accountant) you can hire to do this.

As as result, the top marginal tax rate has to look ruinous, or the *actual* top marginal tax rate paid will be miniscule. Viz the rumour (only a rumour!) that the reason Romney won't release previous tax returns is that he played the game well enough to pay *no tax*, on a 44% top marginal tax rate.

Note 3: The relative value of additional income goes down quite significantly at the upper reaches. The first $20-40K or so (depending on where you live), every dollar is critical; do we buy food or housing this month? type critical. Up to $100K, it's nice to have; you have a better place, you can take holidays, you can decide to eat out if you want, rather than budgeting once or twice a month, and so on. And so on up the chain. After a while, however, it really does get to "just a way of keeping score"; and I don't see from a life perspective (and yes, to an average US American, I am a socialist), why one shouldn't return a large fraction of your "points" so others avoid "critical money". Not the critical money, not the "nice to have" money, not the "live a life of luxury" money, but the points? Yeah.

Note 4: Oddly enough, there are many tax benefits/loopholes/dodges that can only be effectively used if you have a lot of money to spare. I can't imagine why, given that one of the things that gets a massive tax benefit is political contributions. If you can afford a good tax accountant, you can probably afford to play the games that get you these tax benefits that "everybody" has access to (but only people in your income range can actually use). This is a spin-off effect of Notes 2 and 3, of course.

Note 5: Unless the marginal tax rate is > 100% (counting sales taxes, state and municipal taxes and other fees) you always make more money when you make more money. Oddly enough, the most common situation with > 100% marginal tax rate on income is at the *low* end of the scale, because of 75% or 100% clawbacks of government assistance when one hits a particular "not poverty" number. Add to the clawback the cost of working (additional transportation, childcare, wardrobe, ...) and you can, in fact, lose money by making it.

But that rarely if ever happens after about $100K, and certainly not at $nM (unless you're looking to become a politician, and feel you can't politically afford to entail yourself of all the tax games you would legally be allowed to, of course).

[phil_20686]

 mycroft, on 2012-August-10, 12:11, said:

Note 5: Unless the marginal tax rate is > 100% (counting sales taxes, state and municipal taxes and other fees) you always make more money when you make more money. Oddly enough, the most common situation with > 100% marginal tax rate on income is at the *low* end of the scale, because of 75% or 100% clawbacks of government assistance when one hits a particular "not poverty" number. Add to the clawback the cost of working (additional transportation, childcare, wardrobe, ...) and you can, in fact, lose money by making it.

High marginal tax rates caused by means testing is a huge issue in the UK. Its the third most important argument against means testing benefits. I read in an artilce (not checked the numbers), that if you earn between 32 and 40k (in pounds obv), and have twins who go to university, you can be better off by taking a pay cut in order to benefit from the means testing of university fees. I assume it also applies if you have two kids of different ages who are at uni simultaneously.

Similar considerations apply with housing benefits and unemployment benefit.

[luke warm]

 phil_20686, on 2012-August-10, 04:48, said:

So? the uk's stats are representative of every state with a large welfare state. Its commonsense really, free healthcare, and relative prosperity coupled with generous benefits, reduce the pressure to find a new job. This is very different from being unable to find a job. It is a luxury of being part of a prosperous western european state.

how are you defining "properous?" are the headlines we've been reading wrong? it looks to me like several "prosperous" european countries are on the verge of bankruptcy, and there's even talk of some going back to their own currancy (and completely out of the euro zone)

that could be the cost of prosperity... free stuff is rarely, if ever, free