That should be counted as well. But the main thing is actually the cost of health insurance. As that is covered by taxes in most (all ?) European countries, it makes sense to count the premiums paid as “taxes” for US citizens if you’re going to compare apples to apples. I’m sure that’s in excess of 10%.
“Could be” isn’t really the same thing as “is”, though, is it?
To arrive at the 57.5% rate, they’re including social security (which tends to be a flat or regressive tax) and VAT (which tends to be regressive). Doing this will tend to flatten the tax curve - i.e. reduce the difference between the average rate for poorer taxpayers, and the average rate for richer taxpayers.
So, while it’s not impossible that there are people in France who pay 70% of their income in tax, I’m going to go out on a limb and say that there are vanishingly few such people.
Federal Expenditures = 18-21% of GDP
US Health Expenses = 17.1% of GDP
France Gov’t Expenditures = 20-24% of GDP*
France Health Expenditures = 11.5%
Unfortunately, we pay far too much of a percentage of our GDP on health care compared to other nations (50% more than France) and I’d bet the large majority of that is pure profit, as our health care system is designed for large scale corruption and profiteering.
France can pay roughly half of their budget for health care and get away with it. Unfortunately, the US system is so out of control it would consume 85% of our federal budget at current tax rates, and 70% of it if we went to French levels of taxation.
- France: Government spending as percent of GDP: For that indicator, The World Bank provides data for France from 1960 to 2015. The average value for France during that period was 20.86 percent with a minumum of 16.63 percent in 1967 and a maximum of 24.09 percent in 2014.
Well of course - anyone who says “oi, those taxes across the pond!” should consider that the US peoples don’t consider their $10,000 of medical premiums - and co-pays and deductibles - equivalent of the taxes others pay for “free” medical care. But indeed, it is a tax of a different colour… sorry, color.
This was my thought as well. In Canada, usually “mid-way” between American and European systems - you have to be making a damned good salary to pay over the typical marginal rate of about 43%, but it can reach 50%. GST plus PST (sales tax) can be somewhere between 5% to 13% - but a LOT of stuff is exempt - rent, insurance payments, grocery food and some goods deemed medical or essential… So it’s a lot less than 13% on your total disposable income.
Also, for most provinces, the federal government pays “transfer payments” - equalization payments from federal taxes for the provinces - basically all of them, to help pay for medical services and post-secondary education. it’s a fairly large amount, but the feds would rather shell out money thanlet the provinces levy those taxes themselves.
The Beatles put it succinctly in “Taxman” about the British tax system:
Let me tell you how it’s going to be, ♫
One for you, nineteen for me,
'cuz I’m the Taxman, yeah… ♪
I got into an argument once with a fellow from Canada’s national party of socialism, the NDP - so I looked it up. He said that was BS, it was nowhere near that high. In fact, the top marginal tax rate for Brits was 84% until Margaret Thatcher came along. No wonder Lennon wanted to live in the USA.
On an income of just under $C90,000 I paid about $21,500 in taxes. My wife, less so - since she had deductions for pension savings, etc. I’d be curious how USA and Europe compared. I had a discussion, many many years ago with some fellow who worked in the New York office - and he paid about the same level of taxes, counting NYC income tax. (I din’t ask about health insurance, but that was a while aog.)
Some countries may have rates at that level on the very top slices of some people’s income (but you’d have to be doing very well to be those brackets), but not many. Suggesting that the average person would face a 70% income tax to pay for universal healthcare is, to put it politely, alarmist nonsense. Or, as we would say (and as one audience member was heard to say on TV in response to Theresa May’s claims on her government’s expenditure plans for the NHS), “bollocks, complete bollocks”.
It’s hard to get an exact comparison, because every country changes its rates and the balance of taxes between income, wealth, sales/consumption and so on, every year at least.
Here’s one very recent set of comparisons with a range of European countries, Australia and the US (complete with caveats).
FWIW I did some back-of-an-envelope sums, and reckon that, since something like 18% of our government expenditure goes to the NHS, you could work out contributions to it as being roughly this:
-
Everyone pays (18% x 20%=) 3.6% on any VAT-able purchases, and on whatever you might spend on incidental duties, such as on alcohol, fuel, airport departures and insurance premiums.
-
Median household income is £26400, therefore
- income tax payment to NHS is (18% x 20% x(26400-11000)=) £554.50 p.a.
- National Insurance contribution to NHS is (18% x 12% x (26400 - 8060)=) £396.13 p.a.
TOTAL £950.63 p.a.
Plus employers’ NI contribution is (18% x 13.8 x (26400 - 8060) =) £455.56 p.a
-
On £40k a year: £1044 income tax and £690 NI: TOTAL £1734 p.a.
(employers’ NI contributions: £793 p.a.) -
On £100k a year: £3204 income tax and £959 NI: TOTAL £4163 p.a.
(employers’ NI contribution: £2284 p.a.) -
On £150k a year: £5004 income tax and £1039 NI: TOTAL £6043 p.a.
(employers’ NI contribution: £3526 p.a.)
Just another thought: that if you wanted to spend as high a proportion of GDP on healthcare as you do at the moment, but do so through government expenditure and taxes, then maybe a simple substitution like that would suggest similarly high tax rates (I haven’t done the sums, so I wouldn’t know - I’d certainly argue that our contributions to the NHS are too low for current and likely future needs).
The missing factor in comparing with other countries would be cost control systems.
You can hit over 46% marginal federal tax rate if your earnings are decent and on Social Security.
Many states also get in on the act as well. So definitely over 60% marginal rate if you include both.
Note: and this is for AGIs in the $30-$50k-ish range for single people. If are earning more the marginal tax rate goes down.
Interesting discussion, all. Thanks for all the info.
Also consider that a lot of very wealthy people have income from capital gains; typically this is taxed much less than earned income. (IIRC, in Canada at half the rate of wages). Plus, the truly wealthy know all the tax dodges to avoid paying income. Note that Warren Buffet famously said he paid a smaller percent of his income in tax than his secretary did.
Trump’s plan intends to continue this trend: (but note this break for the wealthy is typical of most countries already)
Australia can tell you the answer for the tax burden for universal health care alone. We have a specific tax for it called the Medicare levy that is quite separate from other taxes that go to fund roads, social security, etc.
It’s 1.5 - 2.5 percent. You are in the higher range if you have a substantial income and don’t have private health insurance.
They are currently thinking about tweaking it a half percent or so. They occasionally boost it temporarily for one off purposes like the gun buyback.
We have never had extortionate private systems charging $40 for a band aid or whatever, so the broken cost system in the US might force a higher rate unless it’s fixed.
Bull.
Australia’s healthcare spending is on the order of 160B/year.
Number of taxpaying citizens in Australia is around 12M.
That makes it about 13K per taxpayer.
And you think that 2.5% tax covers that? Not unless average income in Australia is 520K/year.
Gerard Depardieu gave “my taxes in France are 65% of my income now” as the reason to move residency to Belgium (IIRC a lot of it was from investments in real estate), but I suspect most French don’t have his income level.
My anecdotal experience moving from Sweden to the US:
I moved through my employer and did the same job and in the internal accounting my hourly cost to the company stayed roughly the same (actually a bit lower in the US).
Even though my hourly cost was similar my gross salary doubled as it now included the money that had previously been paid as employer fees directly to the Swedish government and never showed on my salary statements.
Next my income tax rate went from over 30% to 15%.
My net pay almost tripled compared to Sweden while doing the same job for the same company.
On top of that housing was much cheaper and there was an 8% sales tax instead of 25% VAT.
Yeah, my standard of living took a huge leap.
Sometimes people leave stuff out to shorten the statement. This is common. I am pretty sure what was meant is that some Euro nations have a 70% tax rate as opposed to the USA top rate of 40%. And that, while likely over simplification, is not far from the truth.
Quite a few Euro nations have rates darn close to 70%:
Sweden= 67%
Greece =66%
UK= 72%
So it’s simplistic but not very wrong.
https://www.fedsmith.com/2015/07/23/how-much-does-the-average-american-worker-pay-in-taxes/
The average American worker faces a total tax burden of 31.5%…
But that’s the top rate, i.e., for the top slice of high incomes, not people on average incomes. Not so much simplistic as misleading.
The ones who stay are Gerard Depardon’ts.
Ok, the average French worker pays 57.5% of their salary, the average American worker faces a total tax burden of 31.5%.
25% more. And since it’s certainly not military, it’s social programs and medical.
It’s not medical. France spends half of what we do per capita on healthcare.
You are oversimplifying the analysis. Only about $40 billion of Australia’s health expenditures come from Medicare. 17% of expenditure is out-of-pocket. Australia - like many universal coverage systems - has a robust private supplemental health insurance market, and apparently some private providers charge above what Medicare pays for. There are also costs borne by entities like liability insurers and injury compensation funds. Plus, some medical providers will effectively operate at a loss in certain years due to capital investments. This summaryexplains it.
Regardless, Australia’s healthcare spending per capita is about half of what we spend in the US, yet has far better health outcomes (even correcting for things like lifestyle), like most First World countries.