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Some things are already starting to give way pretty loudly, and others are yet to come. You simply cannot maintain a democratic society (for whatever nominal value of democracy you want) with these levels on inequality and non-shared misery.

I’m not sure what the next decade holds for the US, but it’s either gonna be some major-scale reinvestment and redistribution or it’s gonna get pretty damn unstable.



Given that the duopoly is beating the war drums again, I'm figuring "pretty damn unstable" is a lot more likely than any sort of focus on pesky trifles like "national infrastructure" or "healthcare".


As soon as the vaccine is distributed on a mass scale, things will start to become normal.

Stability is directly proportional to the strength of economy. When people struggle, they take up on the streets. Not to take away anything from the BLM movement (I support it obviously), but my guess for its stronghold and how it became mainstream is because of the pandemic. 2 months into the pandemic in May 2020, a lot of anger was pent up. It was all released in the unrests we saw in pretty much all major cities. Same goes for far-right extremists, Boogaloo boys, QAnon, etc.

There hasn't been as many protests in the world in pretty much every country as much as we had in 2020.


Of course it was because of the pandemic.

Too bad people are more focused on social identities than poverty. If the unrest was more about poverty there would be a lot more people involved, and people would have a harder time painting it as thing for restless black people. If the demonstrations were about poverty, and every group could see “people who look just like me” I bet there would be more success.


Prior to Covid the unemployment rate was the lowest it’s been in 40+ years and wage growth was 6%+ in 2019.

The issues this article highlights are not systemic, they are because of the pandemic.


Wage growth and gdp increases don't really do much for a lot of people if inequality is high.

Unemployments statistics also differ heavily on what the specific statistic consider unemployment to be.


https://www.census.gov/library/publications/2020/demo/p60-27...

6.8% increase in median household income from 2018-2019. Look at the stats, most of that growth went into the lower quintiles.

And no, even if income inequality increases, higher incomes for low wage workers have real, immediate benefits.


Not discounting the pandemic. But how good it was before could be debated further around how much those income gains were slurped up by rising education/healthcare/housing costs.

Furthermore income isn’t everything. If wealth inequality wasn’t so great than even those unemployed would be able to weather C19 must more comfortably.


The US has the most progressive tax system in the world - far more than Europe. The middle and lower classes pay basically 0 tax, or even get refunds (negative taxes), while the rich pay basically all taxes https://www.economist.com/united-states/2017/11/23/american-...

The middle and lower classes in Europe pay very high tax rates, but get a lot in return. The left in America is promising European-style safety nets without any tax raises - but the rich simply can’t afford this amount of safety net. Bernie was at least honest in that he plainly said new, broad-based taxes would be necessary to fund his proposals.

Edit: HN is hilarious because people downvote facts they don’t like. At least admit reality to yourself - or post a comment that refutes the statistics.


Is it not the case that taxpayers in the U.S. can write-off interest on their mortgages? That's insanely regressive.

My understanding is that it's all the deductions that make the US system on the whole quite regressive.

In any case US taxpayers don't appear to be getting good value for their money.

They do have a pretty insane military though...

The Economist article is paywalled so I can't read beyond the intro. But the headline is intriguing: "gov't spending is not." That seems to be me to be the crux of it; Canada's tax system isn't terribly effective and we've been running deficits for seemingly forever, but at least all that debt is on the whole focused on things like health and education; while the US has an absolutely huge debt that seems to produce little of value for its population.

EDIT: I'll add that Canada is no worker's paradise. Inequality here is still very pronounced, and the gov't is also involved in all sorts of stupid subsidies on failing industries, and seems unable to effectively build new infrastructure. And our housing market just gets more and more irrational every year.


> Is it not the case that taxpayers in the U.S. can write-off interest on their mortgages? That's insanely regressive.

With the 2018 tax changes, a lot of the itemized deductions are capped and the standard deductions raised. I think I've read now that 90% of the filings are for standard deductions.


I agree that’s a handout to the rich that should be eliminated, although it was drastically curtailed with the expansion of the “standard deduction” which made it irrelevant for the majority of taxpayers.

The most hilarious thing of all is that Trump passed a tax cut, and one of the very few tax increases as part of it was to eliminate the ability to deduct state taxes from federal above 10k. The only people this affects are rich people in high-tax blue states. And the democrats are bitching and moaning to remove this, because again, no one likes paying taxes, even those who pretend to love tax increases https://www.cnbc.com/2020/05/12/house-democrats-stimulus-bil...


Don't forget about FICA, which is 7.65% that is only taken out of wages (not investment earnings), and only paid on the first ~$140K of wages.

I was astonished to discover earlier in my career, after a pay raise, that I got to stop paying FICA at a certain point. I didn't even realize there was an upper limit. It's a tax that only applies to "lower" income workers. Highly regressive.

Also, US income taxes are only nominally progressive. There are so many loopholes that very wealthy people (most infamously the POTUS) can end up paying no taxes whatsoever. Tax dodging is a science and an art. Didn't Warren Buffett say he paid a lower rate than his secretary?


In the US, there is the fiction that FICA pays for your Social Security pension, somewhat proportional to your contribution, though high contributors don’t get benefits in proportion to contribution. There is a legitimate fear by the government that if it becomes viewed as just another income tax that political support for the tax will evaporate. It is really important for it to be viewed as a pension contribution of sorts, which is obviously capped by how much it pays out.

If you did not limit the taxes and they explicitly became income taxes (in appearance), many upper-middle class Americans would find themselves paying upwards of 50-60% taxes on income for vanishingly few benefits. That has political ramifications that the government would rather avoid.

The challenge for the US is that the taxes on the middle class are very low relative to e.g. Europe. But they cannot squeeze enough taxes from the top 20% that pay most net taxes to make up the difference.


That’s because social security isn’t a “tax” - it’s funding pensions, and you pay into it now to get a pension later, which is capped at maximum payout, which is why you don’t have to pay above a salary amount because above which you won’t increase your income in retirement.

However to reform social security so it can actually be maintained, I agree we should increase the limits or remove them entirely. But keep in mind social security is not seen as a tax - it’s a retirement pension. If we are going to change it so that rich people pay more and get less, we should also reform Medicare so that rich people pay for their own healthcare in retirement. Tons of old age programs give handouts to the rich - that’s not what they are for.


They are absolutely not pensions, and you are not paying into it now to fund payment later. It's a tax. You pay it now to cover those taking it now, and the social contract says future generations will do the same.

This is a very important distinction, so I'll repeat it. Social security in the United States is not a pension, it's just a government program. We're told it will continue, but that's only because the current government says it will. A future government could just decide to stop payments, and there would be no recourse because it's not a pension. If you live in the United States, please plan accordingly.


You're right that it's not a pension, it's a tax, and the more one contributes the less they see in returned benefit.

> A future government could just decide to stop payments

A future government could just decide to go to war with Canada and the recourse for citizens would be the same.


> The middle and lower classes pay basically 0 tax, or even get refunds (negative taxes)

This is a common misunderstanding of how taxes work, or specifically what refunds mean. Getting a refund does not mean you paid zero or negative tax. Getting a refund simply means that you had more tax withheld than you should have. The tax withheld from your regular paycheck is not authoritative, it's just a prepayment of your estimated tax bill for the year, and it is almost always slightly inaccurate.

You can see this for yourself assuming you earn above the poverty line. Your tax return has three fields related to this: total tax withheld, total taxable income, and the tax owed given your taxable income. Getting a refund just means the tax withheld is greater than the tax owed. The total tax owed on your tax return is the tax you actually paid for the year, and for the vast majority of people it is >$0 even if they get a refund. In fact, the approximate tax paid on the median US household income (~$68k) would be ~$13k (assuming the household files a joint married return) which is decidedly non-zero.


Getting a refund does not necessarily mean that you paid zero or negative tax, that's true, but when you pay zero or negative tax you do get a refund too. E.g. you can get negative taxation through https://en.wikipedia.org/wiki/Earned_income_tax_credit


This is absolutely not true, many people get refunds in excess of their payments, and many people in this category pay no taxes and still get refunds as a result. This is by design.


Which just goes to show you can't tax your way out of inequality. You need better incentive structures.


What high marginal tax rates do is make upward mobility far more difficult.


Please pardon the HN behavior. Downvotes doesn't mean you're wrong, just as you said, it doesn't resonate with what people experience, hear and read. I am sure most people here would agree with the facts. We read you in a slightly gray font, it's fine.


That's interesting about the progressive taxation. My quick look at income tax rates in the US is that there is a lot of progressiveness in the income ranges of the top 5% rather than through the income levels that the bell curve of Americans live in. I am not an expert or spent anytime I must say so I'm not arguing just my first look.

What income range do you define as middle class? And What's lower class in the US income wise?

Also for a bit of context what government services do people receive welfare for in the US? What are the big sercices that are driving those net negative tax payments?


One difference from here than other developed countries is that America has a lot of rich people. Not just super rich that you hear about on the news, but tons of millionaires. The software salaries at FAANG are true, but basically every industry has a cream at the top that makes absurd money compared to what they would make in other countries. Doctors, dentists, lawyers, military contractors, salesmen, stock traders, fast food franchisees - every state in the US has a sizable pool of millionaires. And while the tax rates that someone making $800k salary vs. $80k salary aren’t hugely different, 37% of $800k is a hell of a lot more total than 30% of $80k. And that’s where the bulk of the taxes are made - not from the poor, or the middle class, or even the super rich that often game everything, but the upper middle class / “normal” rich.


Thank you I appreciate the comment back and with facts and figures and back to your original point it is totally not possible to bring the things that American progressives want without lifting taxes - there are not just enough of the 'rockstars' you mention above to pay for those services even if they paid huge percentages of tax which wouldn't be ideal for the regressiveness of doing so.

It's only going to be done with all tax payers increasing their contribution (or maybe all but the lowest).


> Edit: HN is hilarious because people downvote facts they don’t like. At least admit reality to yourself - or post a comment that refutes the statistics.

The HN guidelines [1] mention:

> Please don't comment about the voting on comments. It never does any good, and it makes boring reading.

[1] https://news.ycombinator.com/newsguidelines.html


I pay 30% of my paycheck in taxes. Where do I go for free taxes?




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