Our defense and war spending is very much a black hole. I'm sorry if I fight being taxed to death in regards to this. Not all of us have a tiny military like your country does.
Worse, federal taxes are just one piece of the pie for Americans. We're usually taxed heavily on the local level with property taxes, state taxes, etc. With those taxes we can certainly see providing value. What the federal government takes goes into a budgetary black box that pays for some pretty odious things. Currently my taxes pay for NASA to stop studying climate change and for the White House family to constantly vacation and live in places other than DC. Things like medicare and social security are taxed separately anyway. So I can see those as individual items and largely don't have an issue with them.
I think a lot of anti-tax attitudes here in the US aren't ignorance, but a protest against a corrupt system wasting money and using it for a net negative for us and the world (Iraq conflict, endless drone strikes, sabre-rattling with China, etc).
There's a moral position for the left to criticize taxation. Imagine if your country spent the kinds of money we did on defense. Would you be so happy with it?
I think US defense (which is really very little defense and mostly power projection) is completely bizarre. A reasonable level would be perhaps 3% GDP which would still be huge. The Swedish military is tiny, and by GDP it's a joke (around 1%). We should be spending at least 2% and I think we will pretty soon, the way things are going now.
> I'm sorry if I fight being taxed to death in regards to this.
But are you fighting taxes or arguing that money is being spent on the wrong things? I.e. are you saying "I oppose high taxes because they just get spent on X!" whereas in most countries you'd see people say "Let's spend less of the tax money on X".
> Currently my taxes pay for NASA to stop studying climate change and for the White House family to constantly vacation and live in places other than DC.
I think a lot (most western?) countries have funding for space exploration, climate research etc. I certainly pay for ESA research just like you'd pay for NASA, and we obviously have climate research etc. I think the cost of the US presidency seems like a blank check if the president himself is able to choose where to go/stay/live.
I also pay for the living and security expenses of a prime minister. They obviously are nothing like the US expenses of the same kind - but that's because I'd vote to change that if it was too high. Now that I'm thinking about it, my (official, ceremonial) head of state is the King. So I pay for a King to live in a castle!. I don't mind doing that though. The costs are "reasonable". Any excess is immediately causing headlines and calling for a republic...
> Worse, federal taxes are just one piece of the pie for Americans.
That's not unique to the US. Obviously in every single country of the world you have administrative divisions on various levels (cantons, counties, regions, states, ...) and often several of these administrative divisions have taxation. In Sweden i'm income taxed on 3 levels (local, regionl, national). But it's deducted in one place from my paycheck so I don't notice much. The state level taxes are also used to pay our expensive EU membership which effectively makes that a fourth level, a kind of federal spending - so my tax money is for example subsidizing farmers in eastern europe.
> I think a lot of anti-tax attitudes here in the US aren't ignorance, but a protest against a corrupt system wasting money
I realize that. But it seems like an indirect and inefficient way of protesting wars and corruption! Don't starve government, change it. Vote. If voting doesn't change anything then change that (i.e. change first-past-the-post elections, gerrymandering and all those other defects - until voting actually changes things). Especially since in the US, budget cuts tend to kill things like meals on wheels before it kills foreign wars.
For average earners, the tax levels you outline are possible in Belgium, Austria, Germany, France, Hungary or Italy, based on OECD numbers. All of which outdistance the Nordics when it comes to taxation.
Again when looking at averages, of the Nordics, Sweden is highest with ~42.7% of total labour cost going to taxes for an average earner (of which 23.7% is employer payroll taxes). Norway has 36.6%, with 11.5% employer payroll taxes. Denmark 36.4% with 0.8% employer payroll taxes. Finland 43.9% with 18.7% payroll taxes.
Your VAT calculation is vastly exaggerated in any case, as from your net salary you also have to deduct housing costs, food and other essentials, many of which are tax exempt in most European countries. Last time I calculcated how much of my gross salary (excluding payroll taxes) went on VAT, while I lived in Norway, it was closer to 4% (of gross wages, so lower as percentag of total labour costs to make it comparable with the numbers above) despite earning way above average and having a higher disposable income after housing costs etc. than average. For lower earners it will typically be lower, as a lower earner tends to have less disposable income to spend on products that are rated at the full VAT rate.
Yes, I'm above average income for Sweden. Roughly my employer pays 1/4 payroll and 3/4 to me as gross salary. I pay 1/3 tax on gross salary and keep. 2/3. That means the net share of the employers' expense is roughly (2/3)x(3/4) which is 1/2 or 50%.
For a median income, the calculation would roughly instead be: the employer pays 1/4 payroll and the employee 1/4 income tax on that, meaning the employees take-home earnings are (3/4)x(3/4) ~ 0.56 so about 44% taxes (Which is surprisingly close to the figure you had there of 42.7%)
The VAT in my calculation was obviously the most exaggerated one because as you point out - a lot of my expenses have lower vat, or even negative tax (I pay a boat load of interests every month, which effectively have a -30% tax since they are completely deductible, even from earned income not just cap gains).
Oh: A source of great injustice in Sweden is that renters (predominantly low income earners) don't deduct interest rate expenses of those who own property (their landlords) while those who own their property deduct a crapload of interest, especially since we have a weird housing system with lots of huge long-term loans (100y mortgages are norm). Basically anyone who owns a flat or house deducts $5-25k a year of interest rates from their income tax. Essentially it's a huge transfer of money from renters to owners. A very regressive tax if you ask me.
I've cross checked the OECD numbers many times, and they are very precise. Any discrepancy tend to be year to year changes in deductions etc.
> Oh: A source of great injustice in Sweden is that renters (predominantly low income earners) don't deduct interest rate expenses of those who own property (their landlords) while those who own their property deduct a crapload of interest
This is interesting. Norway has that for a long time as well, and I believe the US allows it, but very few other countries in the world does and didn't realise Sweden also allowed it. Norway allows deductions of all debt interest, which makes it one of the most extreme examples of this, and is one of the big confounding factors when people look at tax rates without taking into account that e.g. even credit card interest paid gives a deduction towards taxable income...
In Norway at least I believe it's largely been seen as an incentive to reward home ownership, and making the average worker a home owner has been as one of the big goals of the labour movement, to the extent that any growth in proportion of population renting has come to be seen as a sign of collective failure.
https://en.wikipedia.org/wiki/Mortgage_interest_relief_at_so...
It's pretty obviously a failure.
You make $8k a month:
You pay $2k in taxes (Employer pays an additional $1k in tax), so your income is 9k.
You pay $500 in health and other benefits (employer pays another $500)
If you spend remaining $5.5k, you'll usually pay $250-$500 In sales taxes.
In other words, you have $5k remaining to spend on shit that you probably don't need.
How did the employer paying an extra k mean you make more? I think it's only relevant to talk about 2 figures: a) the expense to the employer and b) your take home (net) salary.
Everything in between there is "taxes" and who pays them and when is less important. If the employer needs $9k to hire you that's what it costs. Then the tax man takes $1k payroll, you get $8k, pay $2k income tax. That leaves you $6k after all payroll and income taxes from a starting $9k making the income+payroll taxes 33%.
Just because your employer is the one writing the checks doesn't mean that the tax burden is really falling on them. The employer side of FICA, for example, is essentially a tax on employee's income.
I don't know what the grandparent poster was trying to say "employer pays $1k payroll tax so you make $9k"? Just shows how confusing this is (apparently)
Denmark is an example of the opposite of this: Employer social security contributions make up 0.8% of total tax wedge, and they've rolled all of the employee contributions into the income tax, which makes Danish income tax look really high compared to most other European countries that have much higher employer contributions, and presumably contributes to the idea that the Nordic countries are particularly high tax, while Denmark overall is actually roughly average for OECD.
> I don't know what the grandparent poster was trying to say "employer pays $1k payroll tax so you make $9k"? Just shows how confusing this is (apparently)
He clearly misinterpreted you and though $8k was your gross salary, rather than gross salary + payroll tax, hence my original comment to him.
I'm a software engineer and work is a means to an end for me, to feed my family, give me financial security, and enable me to do the things I want to do when I'm not at work. For the most part I enjoy what I do but I would strongly prefer to spend less time at work and have more "me" time. I certainly don't want the responsibility and stress of my own business.
The epitome of happiness is certainly not starting your own business for most of Americans.
Tax calc for me:
Employer pays $8k
Payroll taxes deducted: $2k
My gross salary: $6k
My income tax: $2k
My net salary: $4k
If I make one big pruchase for all my $4k, the VAT is (with some exceptions, 25%) so I buy goods for $3k + $1k tax.
So basically, of $8 paid by my employer each month, I can buy goods or services for $3k. That's pretty steep! If you look at the income tax above, you'll see it's only 1/3 however.