David Brooks' Frustration
In response to David Brooks'
I am paying an effective tax rate now of 49% of my income and I am 1% off the top tax bracket, despite being far from a top earner due to Germany's cold progressive tax (adjustments for changes in standard of living are a good thing Ms. Merkel), which is a lot harsher than when one hits the top tax bracket in the US (which tends to be well above $100,000 per year). The one benefit is that I am insured, as is the whole country, and living in a place that is on the cutting edge of green technology, a direct by-product of government investment. Were it also not for the crisis, Germany would have had a balanced budget this year if not a surplus like last year. Good governance is expensive, just like good financial advice or legal representation; Goldman or J.P. Morgan won't manage my portfolio for pro bono despite my requests.
I don't know much about the efficacy of the tax collectors in France, but I know in Italy, according to the Economist, if they were able to collect all the taxes that are due, the budget would be balanced and they could lower taxes across the board, indicating that what is on the books and what is collected are two different stories, which should make your blood boil at an even higher temperature. But, to think that taxes won't be raised is silly. Services cost money. But, if health care reform is achieved, and a public plan is as effective as Medicare (over $.90 of each $1 goes directly to medical services delivered as opposed to less than $.70 in the private sector) and spending is brought under control, wages should increase as industry won't be forced to direct increased compensation into continued medical coverage as opposed to higher salaries. In other words, higher taxes but with a net financial benefit (I would much rather make 10000 at 55% than 7000 at 40%).
But, taking NY and CA as examples for zour larger point, both are in a budget crisis and the situation in NYC is particularly acute. Adding a VAT and increasing local and state taxes are the only practical methods available to the areas, resulting in zour numbers (55% is after all Fed Tax + State Tax + Local Tax + S.S. + Smiling Tax + Happiness Tax + Unhappiness Tax + etc.). The problem is that the increases in local and state taxes will hit consumption hard, amplifying the effects of the recession as the US has a consumption driven economy (not necessarily a good thing but that is another point).This is in part why Roubini and Krugman called for a much larger stimulus than was offered (check out their discussion in the New York Review of Books a few months back), as they anticipated much harsher unemployment numbers and a slower recovery than the Congress. A larger stimulus, one targeting full employment (with an anticipated unemployment rate of 10%), would have helped increase consumption by allowing people that have been removed from the market to begin participating again, stirring demand, the economy and increasing tax revenue without increasing taxes.
But, Obama, in reaching out for 3 Republican Senate votes, slaughtered the chance of an effective stimulus and is now suffering the consequences of such action. The opposition is trying to break Obama, to regain power by attacking his policies and working for their failure; it is as sad as the Moveon.org people wishing for the Surge's failure a few years back. Foreclosures, inaccessible health care, failing schools, rising tuition and bogus student loans, falling demand, dying industries, uncontrolled credit card debt, and simple unrest and disarray are driving the country to its knees. Real solutions are required, and Obama is capable of delivering them and you are right - if only Obama could whip the minions and devils in Congress to act as he wishes. But, as your yearning for Enlightened Leadership minus the bickering is similar to mine, we have a democratic from of government with co-equal branches of government. Congress must also act and as co-equal they are entitled to their own opinions and choices. We cannot forget that part of the anger directed at the Bush administration is that he ignored and walked over Congress due to this fact, and often made poor decisions despite the [best of??] intentions. Obama is right in including Congress and I just hope they can get that act together before it is too late. I'd like to have something that feels like a first world country to move back too soon.
I am paying an effective tax rate now of 49% of my income and I am 1% off the top tax bracket, despite being far from a top earner due to Germany's cold progressive tax (adjustments for changes in standard of living are a good thing Ms. Merkel), which is a lot harsher than when one hits the top tax bracket in the US (which tends to be well above $100,000 per year). The one benefit is that I am insured, as is the whole country, and living in a place that is on the cutting edge of green technology, a direct by-product of government investment. Were it also not for the crisis, Germany would have had a balanced budget this year if not a surplus like last year. Good governance is expensive, just like good financial advice or legal representation; Goldman or J.P. Morgan won't manage my portfolio for pro bono despite my requests.
I don't know much about the efficacy of the tax collectors in France, but I know in Italy, according to the Economist, if they were able to collect all the taxes that are due, the budget would be balanced and they could lower taxes across the board, indicating that what is on the books and what is collected are two different stories, which should make your blood boil at an even higher temperature. But, to think that taxes won't be raised is silly. Services cost money. But, if health care reform is achieved, and a public plan is as effective as Medicare (over $.90 of each $1 goes directly to medical services delivered as opposed to less than $.70 in the private sector) and spending is brought under control, wages should increase as industry won't be forced to direct increased compensation into continued medical coverage as opposed to higher salaries. In other words, higher taxes but with a net financial benefit (I would much rather make 10000 at 55% than 7000 at 40%).
But, taking NY and CA as examples for zour larger point, both are in a budget crisis and the situation in NYC is particularly acute. Adding a VAT and increasing local and state taxes are the only practical methods available to the areas, resulting in zour numbers (55% is after all Fed Tax + State Tax + Local Tax + S.S. + Smiling Tax + Happiness Tax + Unhappiness Tax + etc.). The problem is that the increases in local and state taxes will hit consumption hard, amplifying the effects of the recession as the US has a consumption driven economy (not necessarily a good thing but that is another point).This is in part why Roubini and Krugman called for a much larger stimulus than was offered (check out their discussion in the New York Review of Books a few months back), as they anticipated much harsher unemployment numbers and a slower recovery than the Congress. A larger stimulus, one targeting full employment (with an anticipated unemployment rate of 10%), would have helped increase consumption by allowing people that have been removed from the market to begin participating again, stirring demand, the economy and increasing tax revenue without increasing taxes.
But, Obama, in reaching out for 3 Republican Senate votes, slaughtered the chance of an effective stimulus and is now suffering the consequences of such action. The opposition is trying to break Obama, to regain power by attacking his policies and working for their failure; it is as sad as the Moveon.org people wishing for the Surge's failure a few years back. Foreclosures, inaccessible health care, failing schools, rising tuition and bogus student loans, falling demand, dying industries, uncontrolled credit card debt, and simple unrest and disarray are driving the country to its knees. Real solutions are required, and Obama is capable of delivering them and you are right - if only Obama could whip the minions and devils in Congress to act as he wishes. But, as your yearning for Enlightened Leadership minus the bickering is similar to mine, we have a democratic from of government with co-equal branches of government. Congress must also act and as co-equal they are entitled to their own opinions and choices. We cannot forget that part of the anger directed at the Bush administration is that he ignored and walked over Congress due to this fact, and often made poor decisions despite the [best of??] intentions. Obama is right in including Congress and I just hope they can get that act together before it is too late. I'd like to have something that feels like a first world country to move back too soon.
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