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What We Pay For

whatwepayfor.com

81 pointsryandvm18 comments

Great site. Just today Ezra Klein of the Washington Post did a piece on a proposal to mail a 'receipt' to tax payers for services rendered, so people stay informed about the proportion of their dollars spent annually. I think it's a good idea.

Post Article: http://voices.washingtonpost.com/ezra-klein/2010/09/shouldnt...

Tax Receipt Proposal: https://docs.google.com/viewer?url=http://content.thirdway.o...

I made Where My Money Goes last night, which is a more visual take on the receipt idea, if not as in depth: http://news.ycombinator.com/item?id=1748042

The problem there is that most people don't know exactly how much they spent on taxes each year. The posted site here is nice because you can just put a salary.

I'm working on it! Also, income varies by state, which this site doesn't correct for. Tonight I should have a solution :)

I love how out of one submission of an NPR article to HN there came about 4 different apps that all do an amazing job of making the 'tax receipt' concept a reality

Most of these different apps simply linearly scale the results, which is incorrect. Some taxes are non-linear (such as Social Security, which is only collected on the first $106,800 of income).

This an extremely important point.

What would be useful is if somebody created a mathematical model of the tax system. This model could drive these other sites, and it could also be used in all sorts of "what-if" scenarios.

I don't think this exists, and it seems like such an obviously good thing to have. I guess the problem is that there's not really a mathematical model of the tax system. Everything is subject to some interpretation, and the rules and system has become so complex that it is probably impossible to model.

(Just answered his own question)

When I estimated my costs Social Security was roughly $5,400.00 a year yet I keep hearing that when I get to retirement age that there won't be any Social Security left.

This is a bad investment or we need to rethink the ways in which that money is being use. Because that seems like a lot of money for a program which may never benefit me.

In almost every country, social security payments go toward paying the current recipients, not to paying one's own way. This was, I guess, done in this way to make it possible to set up a social security net in a couple of years instead of in a couple of generations; unfortunately, it gives us the problems of too many old people for the active people to support that we have now.

Of course, even if it was "saved" for future recipients, it wouldn't necessarily be better: one way or another, the future recipients will consume a share of future production. Money is only a way of accounting for this; it's only a way of choosing how to divvy up wealth production amongst consumers.

A thought experiment: imagine a hypothetical economy of 10 people with a bulge in it, but producing new young people at exactly the same rate that old people die off. Let's say current dependency ratio is 6 to 4: 6 people supported by 4 people's production. No matter what way you dice it, on average everybody is getting 4/10 of the average person's wealth production. At a later time, the dependency ratio may get worse; let's say it's 8 people supported by 2. Still, everybody needs to get by on average with 2/10 of the average person's production. Whether this is done by taxing current production, or because of a share of ownership of production via capital saved earlier, it doesn't change the fact that there's only so much wealth to go around amongst all the people.

Of course, productivity is increasing over time, so it's not like everybody is going to starve. But if anything, using a tax on current production to fund current dependents is more flexible than relying on capital ownership to fund future dependents (who will become "current dependents" in the future). If that 8/10 people own enough capital that they really try to put the squeeze on the 2/10 people creating wealth, that productive minority will revolt. With taxes, a political solution can be found.

That's a very good point, although it assumes you cannot "store" production surplus at all. Still, a good point.

It's a shitton of money, funding what is ultimately a pyramid scheme where I'll never reach the top of the pyramid.

Its a wealth transfer - young people pay in, old people get paid. Also, some amount is currently being set aside for when there aren't enough young people paying in to pay for all the old people directly. That amount looks like it won't be enough, so in the future either a) old people will get paid out a little less or b) young people will pay in a little more.

Where's the scheme?

It seems a lot closer to a ponzi scheme than a pyramid scheme.

I do believe if I was funding an IRA/ROTH-IRA with that money I would be much better off. However, we are not funding OURSELVES, we are funding those who came before us. And while we may not get our payout (may not be funded my those who come after us) the fact is that those being funded right now deserve what they are getting. It's pretty selfish to just say 'if it isn't helping me, why should I care?'

> the fact is that those being funded right now deserve what they are getting.

Really? Why do they deserve it?

Interesting fact: Black men collect only a fraction of what black men contribute.

And, unlike IRAs, their SS contributions don't result in something that they can leave to their heirs.

The idea that there won't be any money left is a common misperception, but it's pretty inaccurate. Since it's a pay-as-you-go system, it can't run out of money like a bank account. Instead, it will simply be taking in less than it should be paying out. The current best estimates are that Social Security will be paying out around 75% of what it should be paying out by the time that people in their 20's now retire. That's still a massive, gigantic problem, but it's a world different from there simply being no payout at all.

http://www.getrichslowly.org/blog/2010/09/01/yes-you-will-ge...

I guess your saying that payouts across the board will be 25% short? I guess that is some comfort from the fact that I know I 'have' to pay in to a system that I have no choice in and at least get 75% of my money back at some point.

I'd love to see one where you choose a country of origin, currency, then see what the taxes are. I'm really curious to see if the myth that taxes outside the US are as nightmarish as Americans think.

It's a little off but that page estimates i'm taxed at about 42%.

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