Beyond that, we have an issue where corporations and high-net worth individuals aren’t paying taxes, which could prevent onerous taxes on the middle class. No nation really taxes the rich (cf. the Panama Papers).
Basically, if you have enough equity, a bank will loan you the money you need, while you can leave those stocks untouched. You don't have to pay any tax, let alone the extremely preferential capital gains tax.
The Whitehouse in 2021 estimated that the 400 wealthiest families paid around an 8% income tax (https://www.whitehouse.gov/cea/written-materials/2021/09/23/...).
US has a tax gap of perhaps $1 trillion, and much of that is wealthy Americans who are too hard to pursue: https://www.nytimes.com/2021/04/13/business/irs-tax-gap.html. That could be 50% of the bill if we were able to cut healthcare expenses by dropping insurance companies, removing pharma control of prices, etc., to try to attain similar OECD healthcare costs.
The US is in a unique situation. We have to both reduce the amount of rent-seekers within the healthcare system while increasing the taxes we levy on the wealthy. Universal care might mean an increase in taxes on the middle-class, but universal care will ultimately reduce their expenses since it's more efficient.
PS. Please don't attack people personally: it's much better to say, "This comment does not account for X," than "You seem very uniformed [sic]?"
PPS. If you need a poignant example of the failure of the US healthcare system, look no further than maternal mortality rates. What a disgrace.
In other words, a 42% federal income tax plus (roughly) a 20% federal sales tax.
The maximum payroll tax is 42% for incomes above 62k Euros. The part of income below has a tax excempt amount of ~10k, then a linear progressive tax. (There is an rate of 45% for incomes over 250k, but let’s skip that for the argument.)
There are also some tax reducing things, but let’s say you have a taxable gross income in the range of 60k. The deductions are as follows: - 25% payroll tax (which is the tax _average_, only the amount above 62k is taxed with 42%) - 7.3% healthcare (or 14.6% if you are self-employed) - some percentage for other public insurances
Gives you around 65% net income, from which you pay 19% VAT for most things you buy as consumer. But e.g. rent doesn’t have a VAT.
If your income is higher (as I wrote in my other comment), the healthcare / public insurance cost is capped, so every Euro above 62k is taxed with 42 (or 45) percent. If your income is lower you simply pay less taxes (relatively) and might have 80% or more net income.
Edit: forgot about tax average …
Now here's how it works in the US. Let's take my $170K household income (it's 2x of state median in Massachusetts, but 1x in my town). My effective tax rate (without medical insurance and without employer part of payroll taxes) is 33%, but with employer taxes and after tax base adjustment it's going to be (0.33 + 0.08) / 1.08 = 38% (I'm ignoring social security cap here, but it won't make a big difference). But we left out a very important part, and it's medical insurance. Let's add 24K/year (14%) to the mix, then it becomes (0.33 + 0.08 + 0.14) / 1.22 = 45%. Oops! Sounds like I'm paying the same percentage as in Germany. Sure, I have 2x of median, but for 1x things are getting even more ugly, because 24K will stay the same, and while the income tax is lower, medical will take its part and more.
Of course I still bring home more than an average German family, yet expenses are different too so it's hard to compare. Sure, I can buy more junk, and I have a bigger home so I still have some place to live after I placed all that junk :) But to the original comment:
> The American lower and middle classes pay a lot less of their incomes - that would be the group that would have to pay for an American welfare state. That won't go over well...
No, American lower and middle class doesn't pay "a lot less of their incomes", it's simply not true.
Also, you must be thinking of your marginal rate being 33% - your federal taxes should be under 20% of your income at $170k, even if filing as single. In Germany, your tax rate would be about 27%.
33% is not a marginal rate, it's an effective tax rate (filing jointly) including payroll taxes which are deducted from my wages, I mentioned it. Also we have a state tax in MA which is also included in 33%.
In any case there are other taxes too (e.g. gas excise, vehicle excise, property tax etc.), so I'm not trying to compare the whole tax burden, that would be too much for HN. But regarding payroll taxes -- they are pretty close even if you consider VAT, certainly not a "lot less", it's a myth propagated by politicians. So the question is: we pay (almost) "welfare state" taxes, where is my part of a welfare state?
All those other taxes exist in Germany too, by the way, and are much higher.
No, I'm not getting "welfare state" benefits, I'm getting a pretty crappy medical service for a price which is waaay higher than in Germany. And if I lose my job I will be paying 2K/month + copays and co-insurances, not mentioning deductibles, unlike in Germany. And God forbids you get into a hospital without insurance, your jaw will drop to the floor when you see the bill.
Have you ever been in the Boston subway? Compare it with almost any city in Europe, hell, even with Montreal. Tell me which welfare state has subways like Boston or NYC? Commuter rail like in Boston? NYC commuter rail is a bit better, but still is not even close to German railways.
And all of the above we get for taxes which are very similar to Germany. No, they are not much lower, it's something with your math. And in absolute value we pay waaay more than in Germany given higher salaries.
Public healthcare is obligatory for all employees except you’re earning more than ~65000€/year or are a civil servant. In which case you are entitled for private health care which might be (or in fact is) more expensive but has more options for treatments and some prioritizing on waiting lists and doctor’s appointments.
Family (husband, wife and children) is always insured for free except they are also employed. Children have to pay seperately after reaching age of 25, and if they still study they pay only a low flatrate.
The rate is always 14.6% of gross income except for very low incomes, in which case the employer pays everything, or very high incomes. There is a cap: everything above 65k is not rated – which seems unfair to me.