We just don't trust Washington...
A key reason for keeping it local.
Thanks for posting this, Toolsmith.
Tim Worstall is an economist whose commentary is well worth reading.
As he writes, trust is a major difference between Scandinavian and US politics. The Scandinavian middle classes are willing to pay the taxes that support their social programs because they believe their money is spent effectively. They understand that universal health care is not a free lunch.
Americans, however, believe (correctly, I think) much of their tax money for social programs is wasted. And, absurdly, a significant part of the American electorate (the left) believes that if other (rich) people pay for their social programs then their tax money will be well spent. For Americans, the vision of "single payer" is "free lunch."
The Europeans and many other societies employ a tax system called Value Added or VAT. It is imposed on all non agricultural production and everyone pays. It does not cover all government services and local taxation is allowed to cover the cost of local services and these are based on wealth or income. I had a Dutch friend who admitted to me that 65% of his income went to pay taxes. He got the same benefits as those on the government or private charity and paid nothing.
The U. S. Constitution requires the Congress to tax to pay for the Defense and General Welfare of the United States. Besides, taking on more obligations not originally authorized, the Congress has unlawfully borrowed to pay for them. Yes, the Congress is authorized to borrow but that was intended for emergencies such as war and initially to pay the cost of operations until they could be covered by taxes, just as the States were given this by their constitutions.
Because we have adopted an economic system that relies on an exchange that accumulates rather than emulates the basis of its value (the fuel value of food that enables life and the ability to work), it continues to lose value with each new issue. We are doing what Germany did after World War I and basically printing more and more exchange with less and less value and taking the rest of world down a path where the amount of exchange being printed and distributed will not buy the fuel value that sustains it.
Great post Toolsmith. The article explains a lot and does so convincingly...
What Watcher said . . except . . this cake was screaming for frosting!
The emphasis on local and the comparison of states and counties was a glowing, unattributed tribute to the Founding Fathers and their original tax design. We have generations of citizens who have no idea what a Founding Father is.
Local control. Think it could work here?
It was the original idea, wasn't it? ;-)
I liked the part about people paying the actual tax rate for their bracket.
Good point Matt, given that brackets refer to taxable income (after deductions).
People who get credits are not paying the rate for their bracket.
How about them folks who are in a negative tax bracket? By that I mean people who get welfare disguised as the Earned Income Tax Credit. They pay not taxes but get what is laughably called a refund. Also, those people who have legitimate credits, are entitle to them as that is the law.
Watcher, my point was not about policy, but about math.
Say my household income is $74,000 and after deductions, my taxable income is $50,000.
For simplicity let's say the rate for my bracket is 10%.
My tax obligation is $5,000.
Then let's say I have tax credits for two kids at $2,000 each.
That leaves me paying only $1,000 of my $5,000 obligation.
I'm paying 2% on my taxable income, not 10%.
So using Matt's terms, I'm not paying the actual tax rate for my bracket.
To be fair, I don't really think this was what Matt had in mind when he made his comment.
Understood Mainemom but, does anyone pay the actual tax rate what with all the deductions, credits etc almost everyone gets? The tax credit in your example of $4,000 is the same as saying your taxable income is really $10,000...because it cost $40,000 per year to raise two kids.
As in the Graduate...let me whisper two words...Sales Tax! Solves all problems.
Now you tell us!
I read Tim Worstall's article twice more looking for that mysterious information about tax brackets.
Watcher, I seem to recall Republicans led by David Trahan pushing back hard against moving away from the state income tax and relying more on the sales tax. Oops!
Economike, not only was the tax bracket tidbit not in the Worstall article, it wasn't in the linked Salon article, either.
I guess Matt just needed a venue for hand-wringing about the effective tax rate of millionaires and billionaires.
All clear now, mainemom. Thank you.
Heh. Speaking of Maine Republicans and the state income tax, I remember (Yes, I'm that old!) when Scott Lamb (R) circulated a petition, at the state convention in 1972, to repeal the income tax. The GOP establishment piled onto him as though he was as uncouth as Paul LePage.
As his reward, I think John Reed is still serving as Viceundersecretary of Small Business Underdevelopment at the Department of Commerce down in WashingtonDeeCee.
As a fanciful speculation, I imagine that if the state income tax had been repealed in 1972, Maine's per-capita GDP would be about $12K higher today.
My apologies. I had started reading a few other articles about taxation in Scandinavian countries.