Hacker News Reader

Comment by popee | Hacker News Reader

Hi, croat here. Just one detail, this year there will be elections in Croatia and current gov didn't do anything useful for our economy, so this is kind of popular measure. Don't get me wrong, it's always nice to help, but situation is little bit complicated, taxes are very high and in some way this is not fair to people that are paying everything. Also, there are huge number of people living and exploiting social measures, so ... In this context it's impossible to help those who really need help.

You know what is the saddest part? Opposition party (conservatives that ruled from 2007-2011) is convicted for criminality and they are atm most popular, so for common and independent people there is no light at the end of the tunnel. If someone can solve this chaos he/she will be candidate for Nobel's price.

P.S. Sorry on bad english

View on HN

These exact same words could come out of a Brazilian. Word by word. I don't know about Croatia, but in that case they are only half-truths. The idea that there are 'people who pay for everything' is usually misguided. There are the exploited, and the less exploited. Both pay in one way or another, and only a very small elite group is actually well off.

You say "the situation is complicated" and "this is not fair", but how exactly do you think this measure will fail? From a distance it sounds like it would boost the economy by allowing people to prosper, while debt is written off mostly by private entities, not the tax payers directly. Even if it was, it might still be a win.

One way it could fail is by having a substantial portion of the same people back in a similar situation within a few years. I don't know how likely that is to happen.

The obvious possible failure is that these people may find it hard to get credit in the future, as described in the last paragraph:

> Some economists, among them Baker, are skeptical whether the scheme will succeed: "I am not sure that this is the best way to help low-income people. If lenders think this can happen again they will charge very high interest rates to low-income borrowers," Baker said.

If you were a bank that had just been pressured into forgiving a bunch of loans, how likely would you be to make new loans to the same class of people?

> If you were a bank that had just been pressured into forgiving a bunch of loans, how likely would you be to make new loans to the same class of people?

Considering that many of those loans are predatory in nature, that may not be a bad thing.

Any proof of that? Or are you just assuming that it is similar to payday loans in the US?

agreed, these lowest (if any) income class should stay away from any kind of debts as far as possible. It's a spiral that they've already fallen through at least once

3 years ago, in Cyprus, the reverse happened (savings were cut off) but people still deposit money into their bank accounts without getting increased interest, despite this precedent. Why should a loan writing off cause loan interests to go up?

Exactly because the situation is reversed: the banks are much more likely to be strategic and self preserving than the general public, due to concentration of power and many other factors.

This. Good comment highlighting a super important insight: freshman Ec 10 thinking does not universally apply across all kinds of economic actors.

In trying to apprehend reality as closely as feasible, it will not do to make assumptions like "all actors have constant (or even he same lognormal function describing) marginal utility" or "ignoring transaction costs and taxes."

This is most crucial in understanding behavior in vastly asymmetric situations (e.g. A Croatian making $100 a month vs a bank). Of course, much of our consumer tech industry is founded on this sort of asymmetry, so the concept is not out of reach; yet, we of the technical mindset often are too quick to use the lens of a convenient simplifying abstraction when it comes to political questions of economic incentives...

I hear you, but isnt deposit interest an incentive for the depositor? Doesn't the interest partly reflect the risk the depositor takes? Theory aside, deciding between a bank with such precedent and one without and with equal interests, I don't think anyone would choose the 1st. This alone says something.

While I read tones of rayndianism in Baker's statement (we'd like to help poor people, but without giving them money or incurring in any actual cost ourselves) the statement is factually correct.

Even if we have not had any such bailouts for the underclasses in Mexico, delinquency rates for all sort of credit are so high that the banks have accepted this as the cost of doing business, and passed those costs to the subset of customers that actually care about paying off debt. This is how I still pay ~30% on my credit card after 20 years of solid credit history with the same bank - entry level ones charge ~50%!!! Or how a few years ago there was this brilliant advertising campaign for "the first single-digit mortgage in market" (9.97% or so).

I don't know the exact scenario in Croatia or Brazil; In general, writing off loans sets a bad precedent. People would again take loans, and will want the Govt. to bail them out. I have seen these things happen in India. There were cases people took loans and were waiting for the next election, to get their loans waived off.

How is it that this logic is lost when it comes to cities and corporations that declare bankruptcy? While Detroit may spend a few years having trouble getting good loans I imagine GM (bailed out some years ago) is already able to claim low interest loans. And these are entities that were also bailed out.

I think you answered your own question didn't you? Those companies were 'bailed out'. The government didn't just wipe out their debts by fiat; it gave them money.

Interesting, this quote comes to mind:

“The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.” – Alexis de Tocqueville

I love that quote but it should be mentioned that it is actually misattributed to de Tocqueville. Doesn't make it any less true though.

The term, bribery, is extremely subjective in this context.

It's the same ephemerality as saying someone is a hater of "Freedom".

It makes an easy soundbite but what does that even mean?

I think most people use the concept of being for or against "Freedom" to refer to the opposite sides of the bottom-up versus top-down modes of economic development and governance.

Certainly, it's an over-generalization, and the word freedom is used specifically to evoke an emotional response, but I don't think it's devoid of meaning.

An unfortunate side-effect of having a democracy with 300 million plus people in it, is that to a certain extent these sort of over-generalizations are a necessary part of coalition building.

Overgeneralizations? You mean "propoganda"?

Coalition? You mean "fear fueled mob"?

Not sure what you mean by a bottom up government but the buzzwords are flowing I'm assuming it involves something along the lines of privatizating everything.

That quote appears to be the creation of an editorial writer in the 1950s:

http://en.wikiquote.org/wiki/Alexis_de_Tocqueville#Misattrib...

I think that is actually part of the "Cycle of Democracy" by Dr. Alexander Tytler.

Any quote I don't know the origin of, I've taken to attributing to Taylor Swift. It works pretty well.

"Never trust what you read on the internet" -Abraham Lincoln

Your comment made me realize a more appropriate title would be : "Current croatian government cancels poor citizen's debts one year before election".

But that would probably cast a VERY different light on the event. The original intent was probably to give the (positive i guess) impression that the greek trend of not paying debts is spreading.

> the greek trend of not paying debts is spreading.

I don't think that trend exists (yet) but _canceling_ debt (creditor) and not paying debt (debtor) are quite different.

I don't know the details but i suppose the debts weren't owned by the state (nobody borrows from a state) but rather by credits corporations or banks.

yes, but that doesn't change the fact that the croatian government would have persuaded/forced the banks to cancel the debt, it's not the people with a loan who decided not to pay.

Well, then you must agree it's neither the side in debt neither the side who's supposed to get the money that decided to cancel the debt. Which leaves that situation in a very very weird place.

I would say, the government probably expect citizen that got their debt cancelled to vote for them in return (and they'll probably do, because those tricks unfortunately always work). Which makes them both a bit on the same "side" of the transaction.

Given the 30-300 million euro cost associated with it, I think the government is paying the debts for the people.

The article specifically states that they are not.

Greek trend? I can remember quite a few american banks doing just this recently.

Debt cancellation indeed has always existed, greeks just bringed it to another level, with their magic combo : fraud the state's accountings, get as much as you can from the eurozone before the crisis, get as much as you can from other european countries after the crisis, and then 2 years later when things start to stabilize, declare unilaterally that you're not going to reemburse people, and party in the streets over that decision.

At least US banks had the decency to not laugh about it publicly.

Geesh. I'm no Greek and not fond of Syriza, but god damn, the brainwashing is strong here.

a) fraud the state's accountings: True, but the difference was minimal (2.7% or so to 3.07%, and by fraud you mean they accounted for the expenses on arrival and not when ordering, not cook your books). Also, this was well known by all the other countries and none of them made a peep at the time

b) get as many as you can before the crisis from banks that (correctly) assumed they would get their money anyway.

c) get as much as you can from european countries after the crisis to pay the mostly German and French banks what they have loaned before, moving private debt to the hand of the tax payer (of the 250b, only about 27 billion were for greek gov. usage and all the rest was for debt payment/interest/etc [1])

d) they never said they won't pay, they just want to change terms and not just keep getting more and more indebted to foreign institutions that through their mandate are actually 'ruling' the countries.

Again, no fan of Syriza, but enough is enough. Folks in Greece (and Portugal and Spain) are in a very bad shape, poverty is up and the only thing the troika cares is about the deficit reduction and nothing else.

And why is Greece in bad shape? Mightn't the deficit and fiscal mismanagement be the problem? How else should they solve it?

There are various reasons, and I never said that it wasn't their fault they got into this mess. But lets not pretend it was ALL their fault.

But independently of whose fault it is, there are two options:

a) try to get to an agreement that can get Greece back into shape, even if it means postpone debt payments, restructuring, haircut, etc where it is beneficial for all parties

b) continue to blame them for this situation and use every opportunity to punish them with more and more austerity measures while 'feeling good' about dishing out the punishment and calling them 'lazy greeks'

Also, pre-crisis, the greek debt wasn't that bad (high, but stable) [1] compared to other countries. Spain and Portugal also had levels similar to Germany until 2008, which is interesting since it was at this time that the EU stimulus plan came to effect [2] and if you see the measures, some could say it benefitted German and French industries (cars and green tech)

1: https://www.google.pt/publicdata/explore?ds=ds22a34krhq5p_&m...

2: http://en.wikipedia.org/wiki/2008_European_Union_stimulus_pl...

> a) try to get to an agreement that can get Greece back into shape, even if it means postpone debt payments, restructuring, haircut, etc where it is beneficial for all parties

And that is what has been tried. Debt payment has been postponed a lot, there' been plenty of debt restructuring. Still, that is what Syriza now does not want to do.

Greeks are still paying less taxes (in proportion to their national income) than anyone else in the eurozone (except Lithuania, who adopted euro one month ago).

Can I ask if this taxation note is based on http://i.imgur.com/NWQ7zTM.jpg ?

I honestly don't know about Greece, but I can tell you that graph is very wrong in so many levels. For example, Sweden is at 44.5%, but they count all money paid as taxes (according to a Deloitte report I was given when I had a job offer there, I can try to dig it up if needed) including what will go to social security/retirement/etc. In Portugal, you pay income tax (let's say around 20% give or take), but then, you as an employee pay 11.5% to social security and your employer pays 22.5%. So roughly, 34.5% to social security alone, but this doesn't go to the 'tax revenue' bracket. So, if we take in account corporation tax at 23% (lower in 2015), VAT at 23% for most stuff (including electricity!!), and income tax (variable between 14 and almost 50%), + social security, that 33.1% is way off. In 2012, a person in Portugal would have to work until August to have his 'taxes paid'. This means, more than 60% of his work output is taxes one way or the other.

No, I did not look at that picture; data is much more easy to handle in text format. I looked two days ago at Wikipedia [0], but primary source should actually be Eurostat [1].

And you are of course right in that different countries have different systems, and numbers are not always directly comparable. A small difference is not necessarily significant, or there may be quite some difference in practice even if numbers are the same.

But if we look at those Eurostat numbers, what the paper says is Total revenue from taxes and compulsory social contributions - % of GDP so also for Portugal and Greece, those mandatory social security contributions of employer and employee are included as tax revenues in this comparison, like they are for Sweden.

What is significant is that the employment rate of people varies a lot in different countries; it is 73-74 % in Sweden, Netherlands and Germany, while it is below 50 % in Croatia and Greece.

It should also be noted that tax revenue to GDP is just a ratio, a number. It does not mean that taxes are a certain proportion of GDP, because a sum of all tax revenues is not a component of GDP.

Interestingly, in Portugal this ratio actually dropped from 33.2 % to 32.4 % between 2011-2012. Most countries were tightening taxes at that time. But since this number is ratio to GDP, if GDP increases and tax revenue stays the same, the ratio drops.

[0] http://en.wikipedia.org/w/index.php?title=List_of_countries_...

[1] http://ec.europa.eu/taxation_customs/resources/documents/tax...

Hi! This is late but I seem to have missed your reply but didn't want not to reply to it :)

In any case, you are probably right and it includes all taxes, including Social Security and the likes. I just find it odd, that at least on normal people's taxes (income tax + social security + VAT) the numbers don't add up. Maybe GDP in Portugal is generated a lot by non individuals (corporate, where tax is around a fixed 23%) and the income gap is quite large giving out those percentages?

I know I'm on the top percentile tax wise, but my tax percentage, if we include VAT is close to 60% (I bill through my own company, so I'm responsible for all tax). When I was working for a third party circa 2010, it was around 45% or so. Not doubting your figures at all, they may even bring to light the actual problem which is, normal folks actually pay a lot of the countries taxes (so, not exactly lazy, which was my main point a few posts ago) but a lot of the elite is syphoning the money somehow. There is a reason our former prime minister is in jail (preventive, sorta like pre-bail) for corruption charges, like most of our politicians, they seem to be able to get very rich in short amount of time while having very small tax declarations.

you can negotiate the option to pay the debt in 30 years and avoid shutting down public healthcare, or you can fire a million people and try to pay it in 3 years.

The common feeling is that the "shock cure" has not been effective in any way, cause it in turn has caused a spiraling recession.

I'm not defending either position, but it's something that has been debated ad nauseam.

Also consider that a lot of the policies post 2008 have been influenced by the "expansionary austerity" thing that has been proven to be effectively bonkers.

> you can negotiate the option to pay the debt in 30 years

The Greek repayment schedule has already been negotiated to extend to 2054. That is in 40 years.

I would say that if Greece can't handle a debt in 40 years, we can forget about it.

(With the Greek history, that is. Elsewhere there are longer debts; in Sweden, a mortgage for a house may be amortized in 100 years - but it can be handled because people pay what's due).

This post has no connection with reality, I have no clue why it's upvoted.

a) Regarding the state accounting fraud: first of all, using the past tense ("was") is misleading. As of last year, Greece was still cooking its books[0]. It remains to be seen if they have actually stopped.

You say the difference was minimal. When? When they brought in Georgiou to fix the Greek statistics service, the 2009 deficit was revised from 3.7% to 15.8%. The reaction of the government? Prosecute the guy because he refused to continue lying.[1]

b) You say banks correctly assumed they would get their money. This is nonsense. The banks lost nearly 80% of the value of their loans in the "PSI".[2] The word you're looking for is "incorrectly". They screwed up and paid dearly for it.

c) Pure nonsense. I have no clue where you're getting that from but it doesn't even deserve a response.

d) The troika has zero power when it comes to "ruling" Greece. How do you think Greece has been able to completely avoid structural reforms and pro-growth measures for 5 years now, if the troika is ruling the country? Almost none of the reforms the troika asked for in exchange for the loans have been implemented.

[0] yanisvaroufakis.eu/2014/04/24/greek-statistics-are-back-primary-deficit-presented-as-surplus-with-eurostats-seal-of-approval/

[1] http://www.spiegel.de/international/europe/chief-greek-stati...

[2] http://en.wikipedia.org/wiki/Private_sector_involvement

Thanks for bringing a bit of reality check to the previous poster.

Now i would disagree a bit with you on d) : The only power the troika had was that the greek government needed to get regular loans to repay part of the interests of their huge debt and the salaries of the greek state workers. That did give the troika the power to keep a bit of pressure on the greek government and ensure it will keep reforming the country a bit.

And the reforms started to work, because now the greek budget is balanced enough for the state to be able to pay their workers without the need for additional loans from the EU.

Unfortunately, it means now that the greeks can effectively say FU to the european troika if they plan on stopping to repay their debt, without risking an internal chaos.

The only persons that will effectively have a hole in their budget as a result are the other EU states (states and not banks, meaning citizens), mostly french and germans.

Your response is hyperbolic. I also think you seem to have misunderstood (c), which is simply stating what has happened: 1) most debt are owed to French and German banks, and in order to pay them 2) the country prioritized these repayments over all else which 3) tanked the Greek economy and made all this private debt the taxpayer's problem; 4) 250b is the amount Greece received and its government financed are about 20b.

d) the troika seems to have the power to destroy the Greek economy by demanding repayments, which until now has worked because the Greek government itself did as the troika demanded. If that's not power I don't know what is. It's certainly not "zero" power.

Ok, let me go point by point

a) you are right. I was only referring to the pre-euro accounting. Sorry if I didn't make myself clear.

b+c) I don't know the exact figure, but if I remember correctly, private loses were about 20% only.

"One estimate is that Greece actually subscribed to €156bn worth of new debt in order to get €206bn worth of old debt to be written off, meaning the trumpeted write-down of €110bn by the banks and others is more than double the true figure of €50bn that was truly written off. Taxpayers are now liable for more than 80% of Greece's debt.[219] James Mackintosh, Investment Editor at the Financial Times, noted a JPMorgan Chase estimate that "only €15bn of €410bn total 'aid' to Greece" actually went into the country's economy, the rest having been handed over to its creditors. " [1]

d) Yes, they can't 'force' any government to do as they say, but if they don't, they don't give them the money they need. They aren't open to negotiating at all. They want the gov. to sell profitable businesses and to reduce social spending. That is their 'sensible' way to deal with the issue. I don't have first hand experience of what they did in Greece, but if what they tried to do in Portugal is any indication, it was a loser's game from the start. They didn't care about economic recovery or sustainable growth. No, they were repo men trying to get as much of the money back as possible. Which is fine, it's their job and the countries accepted the money, but then, not for one second please tell me how these countries are lazy and spenders, and the damn hard worker Northern brethren has to act like a parent. Let's not forget Germany were one of the first countries to go over the 3% deficit target and got scot free through political pressure [2] [3]

[1] http://en.wikipedia.org/wiki/Greek_government-debt_crisis#An...

[2] http://www.theguardian.com/business/2003/nov/25/theeuro.poli... - sorry, its the guardian, but you can google other sources

[3] http://en.wikipedia.org/wiki/Stability_and_Growth_Pact#Refor...

Would you be happy if the your country lend them your taxes money, knowing that they decide the loan terms, not knowing when and if they will pay you back?

I wouldnt.

But it did didn't it? It's close to 1am here so too tired for sources, but if I'm not mistaken, every country in the Eurozone contributed to the bailout in a certain proportion. Not sure how the IMF works, but I would assume something like that?

Again, no sources, but if I'm not mistaken, Germany is making a profit on these loans, as they can borrow at a very reduced (even negative) rate and lend that money to Greece.

The foreign taxpayer is paying loans to the greek taxpayer, who is paying taxes to the greek government, who is repaying debt of private greek companies(mostly banks), who are repaiing debt to foreign private companies(mostly banks), who ignored or sidetracked the Basel treaty that clearly stated who can get loans or not. Deutsche Bank was one of the most hard hit from bad loans.[1]

The german media is misrepresenting their request for debt cancellation of private losses, by saying that german taxpayers would have to pay them instead, which ofcourse nobody said that but certain german politicians. (and I would not use spiegel as a credible source).

[1] http://www.forbes.com/sites/kylesmith/2011/09/28/book-review... "When Goldman Sachs helped the New York hedge fund manager John Paulson design a bond to bet against — a bond that Paulson hoped would fail — the buyer on the other side was a German bank. Iceland, Ireland, Greece — all of their profligacy came from Germany."

> a) fraud the state's accountings: True, but the difference was minimal (2.7% or so to 3.07% ...

Interested to know where those figures are from and how reliable they are. 2.7 % to 3.07 % is not exactly minimal (one seventh higher than target) but I agree that is not yet huge.

However, reports have indicated far higher actual deficits [0]:

"Greece estimated its 2009 deficit would be 12.5 per cent of gross domestic product, far above 3.7 per cent predicted in April. It revised its 2008 deficit up to 7.7 per cent from 5 per cent."

I don't agree that the troika would only care "about the deficit reduction and nothing else." I think a lot of people are trying to think how to do things without hurting the Greek people, but on the other hand, when money runs out, the money runs out. People who do pay their taxes - that are far higher than in Greece - are fed up, and that is going to show up in the upcoming elections, too.

[0] http://www.ft.com/cms/s/0/33b0a48c-ff7e-11de-8f53-00144feabd...

>At least US banks had the decency to not laugh about it publicly.

It is good to know that US Banks take seriously and in a professional manner the frauds they commit.

And applied to regular people, it's already been quite legally enshrined in the U.S. for a long time. The U.S. has forgiving bankruptcy laws (which are incidentally often partially credited for its entrepreneurial culture). Croatia doesn't, so debts are hard to discharge. In a system with a forgiving bankruptcy system, this kind of one-time amnesty wouldn't be necessary, because someone who has no assets, very low income, and high debt would simply declare bankruptcy and have the debt discharged.

Which ones? I know you're not talking about TARP because that was paid back, and the government even made a profit. So what is it you are referring to?

Actually, this law was proposed way before the elections in Greece were held, so it wasn't related in any way.. except that Croatia and Greece are in a similar positions debt wise, so similar political moves can be expected

To be fair a portion of the Greek government has been arguing - quite publicly - for debt forgiveness for a long time. That didn't begin with the Greek elections.

However, there is the significant difference that Croatia has its own currency, so it has one tool that Greece does not: devaluation.

It's of course like pissing in your pants when it's cold - only a temporary relief - but it may help sometimes.

Just nitpicking one thing:

> taxes are very high

Doesn't seem so: Croatia's tax to GDP ratio is 26.6 %. Compare that to 46.8 % in Belgium, 43.4 % in Austria, 40.6 % in Germany, 45.8 % in Sweden. 26.9 % in U.S. which is internationally known as a low-tax regime.

Surely some taxes are high, and taxation is not necessarily fair, but I'd say that Croatia's taxes overall are not high. I would also expect that the "black market" GDP is higher there than in "old" EU countries, say Germany or even France, or the U.S. Though I admit this is mostly based on just prejudice.

(Using Heritage Foundation figures in http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenu... - OECD numbers are slightly different but not that much)

The US is not regarded internationally as a low tax economy, it's regarded as a medium tax economy. There are about 110 countries with lower tax takes per GDP than the US.

Singapore (14% of GDP) and Hong Kong (13% of GDP) are low tax economies.

Japan and Australia are similar to the US, and are not considered low tax countries. The US and Japan also share the distinction of having among the highest corporate tax rates on earth.

You are right, but in comparison to European countries, U.S. taxes are low. There's only one European country (Lithuania) where tax per GDP is clearly lower than U.S.

E.g. in Scandinavia, the horrors of U.S. are attributed to its "extremy low" tax status. Horrors like that rich people only live in compounds surrounded by walls and armed guards, and the poor are dying because of no health care and no food, and the middle class does not exist. Yes, I know it sounds rather extreme but this is common rhetoric in countries where the tax rates are >40%.

Election time is never far away.

What are you talking about?

"Horrors like that rich people only live in compounds surrounded by walls and armed guards, and the poor are dying because of no health care and no food, and the middle class does not exist."

The poor have essentially universal free healthcare in the US and have for a long time. I should know, I've used it before, and it's very easy to use. The poor also have the benefit of the one of the largest welfare states on earth, including the largest food and subsidized housing programs.

The US has the world's largest true middle class, with a median income among the highest of any country. A mere 1% of US labor earns the minimum wage, and the majority of those people are below the age of 25. The US also has a higher labor force participation rate than nearly all of Europe - while simultaneously having a high median income.

The US has a lower unemployment rate than: Sweden, Finland, Denmark, the Netherlands, Belgium, France, United Kingdom, Spain, Portugal, Greece.

And while Europe rolls around in a near depression, with Europe's GDP still at 2007 levels (since 2007 the US has added $3.5 trillion to its GDP) and high unemployment, US wages are expanding at the fastest pace in a decade, while unemployment keeps falling, which will drive even faster wage growth in the next few years.

I'm talking about rhetoric that's used, particularly in the countries you mentioned in the unemployment list. I didn't say I believe the rhetoric. I just say that elections are never far away, and that kind of talk - how bad the U.S. is - gets votes.

My b.s. meter is tingling at a lot of what you said (enough that on reddit I'd accuse you of being a shill), but you're being blatantly disingenuous about healthcare. It's true that emergency rooms won't turn anyone away (and maybe you bailed on the resultant bill as a "poor" college student), but Medicaid does nothing for most and even for those who qualify it gives nothing in the way of preventative care.

I don't think you know what the word "shill" means. You can't just use it as a term for people that have a different political view than you.

I don't think you know what the word "political" means. You can't just use it as a term for people who uncritically spew whatever bullshit they were fed out their mouth hole.

You're spewing incorrect information on Medicaid. What's the saying about living in a glass house and throwing rocks?

Medicaid does nothing for most and even for those who qualify it gives nothing in the way of preventative care

What? That's patently false. Medicaid provides access to a wide range of providers and requires almost no financial contribution (you get a prescription filled and it's $3-5; if you can't pay it's free).

As for preventative care, it's actually a focus of Medicaid! There are numerous programs offered that provide preventative care for pregnant women and children. [1]

[1]http://www.medicaid.gov/medicaid-chip-program-information/by...

You're sidestepping the argument.

Qualifying for Medicaid is onerous and most are "not poor enough".

Thanks for the almost completely irrelevant link though, really managed to waste a lot of my time.

Haha. We have a lively one here!

The ACA just increased Medicaid eligibility to 133% of the Federal Poverty Level (~$40K for a family of 4). I would argue that's a pretty reasonable cutoff for those in need.

>A mere 1% of US labor earns the minimum wage Would you mind citing your source for this? It seems to me you could claim anyone making ≥$7.26 per hour - even part time workers - as "not earning minimum wage," a metric that is not particularly encouraging given the cost of living exceeds even the earnings of a person making that for 40 hours a week in most places - nevermind that people making around this wage are often kept below the number of hours that triggers mandated benefits.

>The US and Japan also share the distinction of having among the highest corporate tax rates on earth.

This is an often-repeated myth that doesn't hold up when you consider the tax breaks afforded to corporations in the U.S.

The corporate tax rate is high in number, but when you factor in exemptions, the U.S. is quite competitive in this regard. Reuters reported in 2013 that corporations utilized $180B in tax breaks. [0]

[0] http://www.reuters.com/article/2013/04/15/us-usa-tax-corpora...

The U.S. is known as a low tax regime? They have among the highest corporate taxes in the world. Taxation as a percentage of GDP is not a good measure because that doesn't address the tax burden as a percentage of income, but as a percentage of GDP. That also doesn't measure the value received for the tax burden endured. As an extreme example, if you are receiving value from those taxes (perhaps education or public transport,) then you would pay less out of pocket for those services. However if you had a low tax rate but we're required to pay for everything directly (such as paying for education,) then the real value of those taxes to the citizen is much less. So at the end of the day, you may pay lower tax, but you spend more because those taxes aren't delivering value. The raw ratio is meaningless; the value derived per dollar is much more meaningful.

And yes, the Baltics do have a bad ratio of taxes collected, versus value received.

Yes, value derived per dollar is meaningful, but it is rather difficult to measure reliably. A lot depends on how much corruption there is.

However, I'd claim taxes in proportion to GDP are a fairly good indicator of taxes in proportion to income, because income and GDP are strongly related. In fact, one way to define GDP is "the sum of primary incomes distributed by resident producer units" and the same number may be called GDI, "gross domestic income".

> The U.S. is known as a low tax regime? They have among the highest corporate taxes in the world.

Nominally, yes, but the effective corporate tax rate is much lower [1]. US income tax is at the low end for the developed world, too (both nominal and effective).

[1] http://money.cnn.com/2013/07/01/news/economy/corporate-tax-r...

What hurts people the most is VAT (Value-added tax), and Croatia has one of the highest VATs of all the EU countries [1].

The US doesn't have a VAT, but it does have a sales tax, which is pretty low compared to VAT in most European countries[2]

[1] http://en.wikipedia.org/wiki/Value-added_tax#EU_countries

[2] http://en.wikipedia.org/wiki/Sales_taxes_in_the_United_State...

> The US doesn't have a VAT, but it does have a sales tax,

As someone from Oregon... that definitely varies by jurisdiction, as your link shows :-)

VAT hurts, but not as much as taxing income. People do not like consumption taxes, but even with high VAT, they still consume, while taxing employment or corporate incomes hurts economies more because they have a stronger impact on economic activity.

Land value tax would be even better, because the land does not run away or stop working. How's that in Greece?

VAT is easier to "cheat" than income tax. Just don't buy stuff in your own country.

Land Value tax makes the rich pay a lot but hits the poorest really hard since the threshold to owning land (and creating wealth) is substantially raised.

> Land Value tax makes the rich pay a lot but hits the poorest really hard since the threshold to owning land (and creating wealth) is substantially raised.

That seems a bizarre statement. Firstly I don't see any connection between owning land and creating wealth. Secondly taxing land value is a deterrent to land ownership and should reduce the desirability of owning land and reduce the price of land. This will make it more cheaply available to productive use and reduce the incentive to hoard land unproductively. Finally the poorest cannot afford to own land anyway so are not affected by the land taxes.

Have I missed something?

BTW I largely agree about cheating VAT especially in a small country with neighbouring countries that can be cheaply visited.

What I'm trying to say is that social mobility will be severely stunted.

We can agree that the reason for owning land is to make money, yes? Planting crops would take a couple of months to return the initial investment. If I planted a forest it could take years.

If this investment possibility is removed from everyone without (massive amounts of, if the tax is high enough) capital it's going to create a further wealth gap for no apparent reason.

> Finally the poorest cannot afford to own land anyway so are not affected by the land taxes.

Yes, this is true for the poorest, bad phrasing on my part, but it is going to make the barrier of entry higher.

Also: land produces goods that everyone need the same amount of (food, wood, wool), this would increase prices in a way that wouldn't really bother the capital heavy but would seriously hurt the already poor.

Land can make money purely by rising value over time so people can speculate by owning land. There may be little incentive to actually use the land.

The ROI on a forest takes years whether or not the land value is taxed. You also said earlier that it was a tax on land value so presumably much lower for forestry land than urban land.

The primary impact of a land value tax is likely to be on the price of land itself because land will be less profitable. Introduction or increase will hurt those who own land (and its abolition would benefit land owners).

If we assume that the cost of access to land (rent) is set by the free market then we can assume that demand is essentially unchanged and the supply of land would if anything be increased (if some speculators sell or start to rent out their land) so access to land for the less wealthy should be cheaper.

I think your assumption that ownership is the way that less wealthy access land is fundamentally wrong. I think that this will also apply to the effect on prices of things made on the land on which I expect little impact (although there may be side effects on the rental market that make this more complicated).

Taxes really are quite high - not sure how good of an indicator for this is tax to GDP ratio though.

A lot of the people frequenting HN are (usually) well off IT workers - so I find the following list quite telling - it shows an effective income tax and social security rates on USD $100,000 of gross income (based on KPMG 2012 global tax rate survey): http://imgur.com/MUZlz

This is informative, even though we should remember that comparisons can be very difficult across different systems (for instance, does our IT worker have a spouse and children, and is there a child deduction in taxation, and what else there is in childrens' services and benefits).

Usually different comparisons concentrate on "average" workers, i.e. lower income.

Don't apologize. Your English far outclasses my Croatian. Interesting, from what you write it seems as though Croatia is dominated by a two-party system, like here in the U.S. Is that true?

More like two leading blocks, system is multiparty with 116 (!) registered parties. http://en.wikipedia.org/wiki/List_of_political_parties_in_Cr...

We have a multiparty system, but highly polarised society (reminiscent of your cultural war in the US) which results in two dominant parties, although we have all the infrastructure needed for pluralist democracy.

What you are describing is happening and has happened for decades in many countries and at different levels: Governments with failed philosophies buy votes en-masse from various numerically large groups of people by (a) pretending to be aligned with their interests and, (b), gift-giving to that group.

I think it is fair to say this is now happening along the entire American continent, from Argentina to the USA. I know nothing about Canadian politics so I can't comment.

The framework is the same everywhere: Socialist or socialist-leaning ideology coupled with failing policies. If you truly study history from, say, Evita Peron in Argentina to Obama in the USA the parallels are scary. It's almost like they study each other's techniques and replicate them across time and space.

Of course, this makes sense. Politics responds to evolutionary forces. It is easy to see that "survival of the fittest" converged on a solution that swaps favors to the masses for votes. The only thing that matters is the survival of the organism, in this case a politician and the party they are associated with.

Of course, what happens to the masses and the ecosytem within which they live (the country) is of no importance to the organism aiming to survive (politician and party). Again, Argentina is a perfect example of killing the host or the environment in exchange for the survival of the political species. The country goes to hell but the politicians live it up. Same in the US where not one of our populist politicians has to live by the very rules they push on us. For example, Obama and his daughters will never have to worry about healthcare because they exist on a plane far above ours.

Humanity has to come up with a way to prevent political actors from manipulating the masses for their own gains. Easier said than done.

Welcome to Democracy! :) As long as you can make fun of the politicians and not go to jail, things are nominal.

The problem is more that some of the politicians should go to jail, but don't.

Hmm. Perhaps the line can be drawn a little closer to the truth, but i'm happy with the bias toward false negatives over false positives.

In death penalty cases, when you'd expect the justice system to work its absolute best, 5% were overturned when DNA evidence became reliable. 1 in 20 on they way to die because of false positives.

Cynic in me would say that if we jailed all top-tier politicians, we'd have less than 5% false positives. I honestly don't believe that in an established democracy (as opposed to freshly formed) you can get to the level of a minister or above without doing something illegal or immoral. The dynamics of the system clearly shows that.

"illegal or immoral"

You can't be prosecuted for just the latter.

Yeah... the thing is, some of us have had a higher standard than that for generations and are now being sucked into the abyss of corruption under the flag of the EU.

FUD. Worse in fact - xenophobic FUD.

Sounds like the parent if from an EU country... so the comment cannot be considered xenophobic.

Perception and reality often differ. Xenophobia has nothing to do with reality, but instead perceived notions of otherness.

The Indian polity resorts to similar schemes, come election time.

I'm hardly surprised at WP not taking a more critical stance.

Reply on news.ycombinator.com