Heavily progressive income tax makes it harder for individuals to accumulate capital for enterprenial endeavours, be it their own or investing in others'. This limits early stage investments and growth.
Also, there are limited incentives in investing in careers and productivity as net income is surprisingly similar in lowest 10% and highest 10% income earners.
The question is, how do we build a stronger representative government in the United States (where I live) when we're so divided and distrusting? Having a common enemy might work, but it can't be another group of people to go to war with. Might need to be the metaphorical devil(s) on our shoulders, and for that we need good mental health training from a young age, which now, given how broken and dispersed so many family groups are, requires tax money guided by science and wisdom.
You and I are here but a moment. The bleeding edge of life will quickly pass us by, and the positive impact I am most proud of is the love and care I give to future generations, human and otherwise.
Also, you’re romanticizing what happens with tax money. When a major portion of it is going to a military I have no say in, I don’t get warm fuzzy feelings contributing my portion to the feds.
> how do we build a stronger representative government in the United States (where I live) when we're so divided and distrusting?
You’re assuming the conclusion here. Many people want a much weaker federal government and your question can be rephrased as “how do we make the anti-government people go away?”
Also, the military is 20% of the discretionary budget, but 10% or less of the total budget.
Something doesn't quite add up, as there's appears to be a constant shortage of such talent.
Perhaps high skilled ones would prefer a country with better climate ... :-)
You do pay out the ass for it though so good job making someone rich I guess? Shame about all the dead babies though[2].
[0] https://www.statista.com/statistics/283221/per-capita-health... [1] https://www.healthsystemtracker.org/chart-collection/quality... [2] https://www.americashealthrankings.org/learn/reports/2019-an...
Just to be clear, I was referring to the Nordic countries, Australia, better performing OECD countries, etc and not referring to the US.
Your links bear out my position, that US "free market | low taxes" approach doesn't deliver good outcomes for the masses.
The argument that other countries might be technically higher in taxes will remain moot so long as in the US, needing an ambulance could mean years of financial hardship if you're not sufficiently well off. The same goes for lodging, food safety, etc.
Once you add those in, the Nordics still pay a bit more, but not by the margin you might expect.
Your mileage will of course vary a lot depending on specifics, and especially which US states you compare with.
While you could probably find cheaper places to live in the US than California, and therefore find much more agreeable tax rates, it's not that easy. Culture varies a lot in the US. I love the South, but a some folks would rather drink poison than live there.
And you can't forget property taxes. These vary at the county or city level and can be quite significant. And, just for fun, they generally pay for the public schools, which depending on where you are may be abysmally awful, so now your "tax rate" includes stumping for private school, which could be the equivalent to a year's salary in some Nordic countries.
If you want to compare the real costs and benefits of starting a business you need to compare like for like, which includes all national, state, and privatised taxes and other indirect costs.
When you include those the reality-based answer is that the US fares relatively poorly.
Which is why the US has a more aggressive VC sector. Whether by accident or design start-ups are forced to look for outside funding far earlier, and bootstrapping is far harder.
The result is more of a monoculture that chases unicorns and less of a vibrant sector of independent small and medium businesses, some of which will grow into unicorns naturally.
What the US does differently from most of the EU is to hide as much spending as possible in the form of targeted tax breaks. From a cash flow perspective little changes but from a political standpoint it’s not spending.
The real drag is the US healthcare system, which effectively finances most of the medical R&D for the US, India, South America, and Europe, and also provides ridiculous levels of treatment for people who are about to die (in comparison to other health systems). There is also the US social security system, which seems to be very inefficient at best...
US healthcare spending hardly subsidizes the rest of the world. Paperwork and insurance overhead don’t magically turn into R&D money. Litigation, malpractice insurance, excessive testing etc is just waste.
At best ~12% of US healthcare spending is for retail drugs, but it’s not that relevant globally when you consider how much US companies are spending on advertising vs R&D. Which is then compounded by how much more expensive US drug trials are.
So yes, you can get imaginary defense costs to ~4%, but I ask you where is the coast guard, national guard, DoE, or VA’s budget here? “The budget funds five branches of the U.S. military: the Army, Navy, Marine Corps, Air Force, and Space Force.” https://en.wikipedia.org/wiki/Military_budget_of_the_United_... Some might argue the national guard isn’t defense spending but we sent 250,000 guard members to Iraq and the guard is fielding F-35’s.
I will acknowledge some some outliers like the United States Border Patrol, while it’s job is literally defending the border it probably shouldn’t be included in defense spending.
PS: It gets even sillier, not that long ago we where hiding the cost of the Iraq war from defense spending numbers.
Additionally, the government doesn’t require you to network with the right people, come from the right subculture, etc.
Do you want your “taxes” to go to the needy or the wealthy? Because in startups angel investors are capturing bigger percentages of the capital from your labor than the government.
Best data I could find[2] after a quick google on USA puts income distribution ratio around 5.2x, so not much of a substantial difference in gross income disparity vs USA at the 20th/80th percentiles. Personal income tax rate is about 37%[3], so certainly USA lets you keep more of your paycheck than Denmark.
So high earners in US are making ~20% more than their peers in Denmark relative to the bottom 20% in their respective countries, and folks in the US pay ~20% less tax as well.
Certainly it's a notable difference but we're not talking orders of magnitude here, especially since the above math doesn't account for all of the benefits that higher tax rate brings, both tangible and intangible.
However, when we're talking in absolute numbers, most Danes out-earn most Americans. The median wage in the US is ~$52k [4] vs Denmark at ~$72k [5], which closes the gap even more.
I suspect there are significant differences and outliers at the extremes however, and that is likely where most of the VC money lives - whether we're talking about angel investors dropping >$100k or VCs spending millions on pre-revenue companies. I'd wager we're well into the top 1% of earners in the US doing the funding. This is the most likely explanation to account for the differences in early stage investments and growth opportunities you described above, imho.
[0] https://tradingeconomics.com/denmark/income-distribution-eur...
[1] https://tradingeconomics.com/denmark/personal-income-tax-rat...
[2] https://dqydj.com/average-median-top-household-income-percen...
[3] https://tradingeconomics.com/united-states/personal-income-t...