One of my friends, who is definitely in the upper 1% of the US income bracket, was grousing at the overall percentage of income taxes paid by upper income taxpayers. “It’s over 50%,” he said. “It’s absurd!” All of those poor people who don’t have enough income to bother collecting any income tax ought to be paying their fair share.
Maybe they could get a third part-time minimum wage job with no benefits. It still wouldn’t really amount to much.
If you’re part of America’s elite, I just don’t have a whole lot of sympathy for you guys. I live in China and pay a marginal income tax rate on my mid-5-figure income of ~39% (the income tax is graduated and tops out at a relatively low income scale) There are no deductions allowed whatsoever, and only the first $80 or so of my income (monthly) is exempt from tax. On top of that, I pay a 17% value added tax on everything I buy, and that’s if it’s a domestic item. Imported items have taxes of over 100% in some cases and average 80% tax overall.
And I still save more money than I did in the US, despite the higher taxes, and despite my (much) lower income. My standard of living is marginally lower (no car), but my expenses are substantially lower. The reason? Taxes here pay for things that I actually use. Rather than going to bank bailouts, a bloated military and interest on the national debt, they pay for infrastructure. There is even a budget surplus, which funds US deficit spending… at a price.
I ride the subway to work for 60 cents a day, and can take a bus for 6 cents if I want to save money. There’s a bullet train that can take me roughly the equivalent distance from SF to Sacramento in 30 minutes (Beijing-Tianjin) for $8, or the equivalent distance of SF to Seattle (Beijing-Shanghai) for under $40. Domestic flights are cheap, and regular trains (not bullet trains) are laughably inexpensive. China has infrastructure the likes of which I’ve never seen anywhere in the world.
There are also heavy agricultural subsidies, in the form of state owned farms (no shareholders to pay dividends, no landlords to pay rent). This translates to much, much lower food costs than in the US. And the list goes on and on. There’s enough left over for me at the end of every month that I can afford to live in the absolute center of Beijing, in between two of the most famous historical sites in China, in a neighborhood that looks like it belongs in a movie but is actually just my backyard.
Does all of this drag down the economy, harming the so-called “job creators?” Nope! The economy here is growing faster than any other world economy, although it’s a relatively anemic 8.6% growth this year. And China’s new crop of millionaires and billionaires isn’t hurting either. America’s elite would doubtless be pleased to see all of the Audi A6s clogging the streets of Beijing.
While the top earners of America are hell-bent on avoiding a few extra percentage points in taxes and a corporate jet tax exemption loophole being closed, Joe Sixpack doesn’t really understand very much about macroeconomics. But he’s beginning to figure out that he’s getting screwed, and he has a gun or three. Hey, 1%ers, are you factoring bunkers, weapons, and personal security into your cost/benefit analysis? Check out South Africa with its bars on the windows and rampant carjackings, and tell me if you would prefer to live in the security climate there. Meanwhile, China is laughing all the way to the bank at our political system’s inability to accomplish essentially anything. Years later, when we discover that we’re no longer the world’s largest economy and wonder what happened, we may finally learn that cooperation pays.