PARTY MOVEMENT
-"True Con, but Tyler I know that your country is pretty far to the right. That scares me. In my country the right-wing lunatics today seem to want states rights, individual freedom and yet a government by a Christian God. But if they ever read their Bibles they would find that Jesus taught that government and religion should be separate and that we should take care of the poor. They don't seem to put the two together.”
"Whoever said that people are rational?”
-“Tyler, I am sure you have heard of Dambisa Moyo from Zambia, with her PhD, she is one of the world's leading economists. She might agree with you. She is very much against giving aid to Africa. She is also against the protectionism that some countries use to keep out African products. Did you know that for every hundred dollars worth of coffee sold at the retail level the Ugandan farmer who raised it gets only 66 cents"
"As a matter of fact she spoke to our people about a year ago. We agree wholeheartedly with her."
IMMIGRATION AND CITIZENSHIP
-" Do you allow immigration or are you a closed society?”
"People can come and visit but they can't stay. As you may know all of our transactions from workers pay to purchases are done by a type of debit–credit card. When people come to visit they can purchase a temporary card with a certain amount of monetary value. If they run out of money they can have more added to the card. But when the stay is completed, which is usually a maximum of three months, the card is automatically invalidated. So it would be difficult for somebody to stay illegally when they couldn't be paid anything and they couldn't spend anything.
"Of course people are invited to visit or to work here. Their cards are usable as long as they are in the country legally. Some of these people are invited to stay indefinitely. Some might even become citizens."
-“But if they have children in your country while they're working here. Are they then citizens?”
"Yours is the only country I know that allows for citizenship because the person's mother happened to be in your country for a day or two, or even an hour or two. Everybody knows that it has been common for Mexican women to cross the border to give birth to their children who then become American citizens. But did you know about the richer Chinese women who are becoming maternity tourists. They visited the States about the time they are to deliver. The child then becomes an American citizen, and since America allows dual citizenship, the child is also Chinese.
"The number of children with at least one illegal Hispanic parent is now 4 million. 73% of all children of illegal immigrants are now US citizens. They occupy 7% of all school places in the elementary and secondary levels of the US. And one third of them live in poverty. So we can assume that their parents are not paying much in taxes to take care of the children they have in school. (4) Your deeply held belief in equality for all has put you in grave financial straits.
"But you in America just see part of the problem. More than half of the world's refugees are in Asia and another quarter in Africa. They invade neighboring countries that may offer them jobs or they try to make it to an equalitarian in country, such as those in Europe."
-"Do you take refugees such as those whose lives are in danger. It would seem that your emphasis on freedom would require it?”
"Not on your life. Of course if it were a very talented scientist or business person we would probably consider it. But a poor refugee would not be able to support himself here, and we require that people be responsible for themselves. We let those welfare states that believe in equality do all of that rescuing.
"We are not like the U.S. We don't ask for 'your tired, your poor or your huddled masses yearning to breathe free,' if people want to come here they must've shown that they are special. They must have achieved in some area such as business, academics or medicine. We are a society of achievers. If you can show that you have achieved in a socially valuable area, we might give you a work permit to work with us.
“We will let you Americans bring in your illegal immigrants so they can work cheap on your farms, in your building industry and in your hotels and restaurants--then cost you more with their editorial expenses, retirements, educational costs and judicial and prison expenses. Every country who has taken in lower-class people, whether they were workers or asylum-seekers, find that their crime rates go up, the welfare costs go up, and that their assimilation into the society is next to impossible.”
- "Are you making a blanket statement that all minorities are bad for a welcoming society?”
"Well the evidence is quite clear to that effect. There are some exceptions. Upper-class people who immigrate are more likely to fit in somewhere. But they often are treated unfairly. I have seen medical doctors from India and Pakistan who have to take jobs sweeping the floors or driving the trams in Scandinavia. Prejudices always exist, even if the object of prejudice is actually of a higher social class and is a worthy contributor to the society. Then I would have to say that the Chinese and Japanese immigrants are usually very hard-working and do not cause trouble. They are positive additions to most societies. The problems are with the uneducated immigrants from Latin America, Africa, the Mideast, Southeast Asia, Eastern Europe and other overpopulated areas where education has been scant.
"As you know, people's basic motivations are their self-centered needs. But societies want to preserve their culture and language. Immigrants generally want to preserve their own language, religion and culture. These are often in conflict with their new society. The good people of the welcoming West, steeped in their democratic ideal of equality, will bend over backwards to accommodate their legal and illegal guests. In schools they may require bilingual education. In the voting booth they may print the ballots in more than one language. In their cities they allow the immigrants to band together geographically and ignore their hosts culturally. So we have: Chinatown, Koreatown, Little Italy, and the ghettos and barrios of the Jews, Blacks, and Hispanics.
“The Prime Ministers of Germany, France and United Kingdom have all said that multiculturalism isn't working. The electorates of Finland, Sweden, Norway, Netherlands have all swung to the right largely because of their unhappiness with immigration and its results. In your country the right wing Tea Party has fixing the illegal immigration situation as one of its major objectives. Being nice is now often seen as being stupid. When the prosperous countries are controlling their populations and working to provide jobs for them, why must those countries try to right the mistakes of the overpopulated underdeveloped countries that are not taking responsibility for their own citizens?
“Just look at your own country, killing itself from within by welcoming people with the same skill level that built your country 150 years ago. Chinese built the railroad eastward from Sacramento and the Irish built it westward from Omaha. The progeny of those Chinese and Irishmen have since moved up the educational scales becoming the teachers, engineers and doctors of today. But today you are not building railroads with picks and shovels. It is true that you still need unskilled labor for your farms and slaughterhouses, because your pampered citizens will not do such lowly work. Still that work could be done by temporary workers who would return home after their jobs were done.
“One thing I think you're doing wrong is allowing for multiple languages. Every language that is used as a primary language in the country tends to split the country. While it is laudable for individuals to speak two or more languages, having language divisions within a society weakens the society. Look at Canada with its English-language through most of the country, but French in the Montréal area. You see continual efforts of the French-speaking Canadians to separate from Canada. This is not the healthiest of situations. When you have multiple languages such as you may see in France or Spain, each language tends to bring with it a culture and that culture prefers not to be lost in the majority population. Look how long the Basque separatists have fought in Spain! For how many centuries have the Flemish and French speaking Belgians wanted to separate?
&nbs
p; “Multiple religions may be even worse than multiple languages. Look at the problems in Palestine and in your country where it is the evangelical Christian versus everybody else. The official religious position of China is atheistic and look at the problems that Tibetan Buddhism, Roman Catholics, and other Christians have caused. Different philosophies also bring problems, look at China's communism and the philosophy of Falun Gong or even the reactionary American Tea Party and the liberals. Every difference between groups is likely to cause problems, seldom does one group learn from another the ways to be better people.
“Minorities of any sort are likely to cause problems, with the majority often looking down on those who are different because of social class, religion, ethnic variations or cultures.
"In your country is it true that since your Black and Hispanics drop out of school far more often and are imprisoned more often than your Anglos and Asians it is merely a matter of prejudice? If this is true, should you not invest both private and public funds to raise the standards of your underclass, without attempting to slow down their birthrate?
"Do you think that when your fastest-growing population groups are the least educated, that your country will be better off because of it?
“And certainly you would want to be politically correct. Don't ever even hint that all people are not equal to all others and that their feelings will be hurt if they are told that they are not pulling their weight in society.
“Don't ever think of changing your Constitution or any law because you must conserve what you have done in the past whether it works now or not.
"I might mention here that in our country citizenship must be earned. The children of our citizens have a better chance because our education system is so much better and so much longer than in other country. Our immigration is tight, as I said. We have many educated and industrious people from many countries who come to us. Many are accepted with work permits. Most are from China, India and other far Eastern countries. But we have some from your country and from Canada and some from Europe. I have heard of one or two from the Mideast. I’m not sure we have any from Africa or South America. But we probably have.
"Citizenship is earned through being productive. If you do not make use of your work permit effectively, you are invited to emigrate. And of course you can’t refuse that invitation! We have an adjacent territory where our own children can be sent if they do not measure up to our standards. They do much of the manufacturing that is planned here in The Colonies.
"Those who are not accepted with work permits can serve in our Armed Forces for 10 years, work on their educations, and get a temporary work permit. If they make it, they can stay. Of course anyone who was invited to be a citizen must sign a contract with the state relative to taxes, overseas investments, and the eventual death tax.
"One of the best ways to prepare for citizenship is an effective education. You Americans have gone from being the best in world being very questionable."
-"Sounds like you run a very tight ship! Let's get into how you vote."
OUR DEMOCRATIC VOTING
"We have our president determined by a majority vote, not by the electoral system of the US. Your system made sense in the 1700s, but they refuse to change it because it is easier to win the presidential election by targeting the critical states, not by campaigning for all the people. Your reactionary and anti-democratic approach of not obeying the will of the majority gave you the worst president of your history in 2000 and denied you of Al Gore who probably would have been among your top five presidents. We’ll stick with the majority in our voting and let the electorate take the credit or blame for our president’s decisions.
"As you know we want a limited government. We also want more direct input into the workings of our society. We have copied some of the ideas that we learned from Singaling (5) such as direct voting on many issues. We elect representatives, like most democratic countries do, but we hold a good deal of power with the people. As you have heard, some countries give everyone one vote but give additional votes for more knowledge and political competence. We do that. Every five years there is a national televised program that gives us questions to answer about our understanding of economic issues, social issues, logic, and whatever appear to be areas of interest for the next five years. One time it might be about immigration, both legal and illegal. Another time it might be about our economic competitors. Still another time it might be about considering more equality or more inequality in our society. Those who want to increase their voting privileges, by adding one to 10 additional votes, over the next five years of elections, answer questions on their computers. A panel of experts in the various disciplines has made up the questions. They have also determined a ranking of the multiple-choice answers given on the television. The higher a person scores on the two hours of test questions, the more votes he or she will be given for the next five-year period.
“Again you see how responsibility fits into our idea of freedom. If a person keeps abreast of the problems of the world and is aware of some of the possible solutions to those problems he has shown more responsibility, so gets more freedom.
“When bills are presented to our representatives they are then sent to two committees to have them evaluated. One committee looks at all of the positives of the proposition. The other group looks at all the negatives of the proposition. They look at the possible costs and advantages or disadvantages of the proposed legislation. These findings are then presented to the citizens via television and Internet. This should make them much more aware of what they are voting for.”
-"That doesn't seem very democratic to me."
"It's at least as democratic as in ancient Athens where only free men were allowed to vote. And it is a system that we are quite content with. Do you know that every few years a thousand American citizens are given the same test that aspiring citizens must pass. 40% of your citizens failed the test. 29% could not name your vice president. 73% could name the major cause of the Civil War. Your failure rate year in and year out seems to be about the same. Do you think that these people are really qualified to vote?"
-" Let me change the subject. I know you are not a welfare state but on the international rankings I have seen you are not rated among the bottom countries in terms of inequality.
NO WELFARE STATE
"Right Ray. South Africa is the worst and Brazil is the next worst in terms of having inequalitarian societies. You probably know that in South Africa as blacks took over ownership of many of the mines the working standards of the black employees went down from what it was when there were white owners. Naturally the Scandinavian countries come up at the top of the list. But I think that our emphasis on equality of opportunity keeps us reasonably high on the list. And since our living standards are so high we are not seen as being oppressive."
“As a businessman I have been very negative to many of the welfare state perks. In California we had a 51-year-old former fire chief who was collecting a pension of $241,000. 3700 retired New York government employees were earning over $100,000 a year in pensions. All this while 47 of the states were running deficits at the end of the recession. California had a $19 billion deficit and New York a $9 billion deficit. The states are about $1 to $3 trillion short of what they have promised in pensions for their state employees."
”So many of your older people have not prepared for retirement, once they reach it and find that their reduced income doesn’t support them, they start running up credit card debt. In fact over half had credit card debt when they retired, then on their reduced income they just continued to run it up. Medical and funeral expenses were major factors. (5a) We take no pity on people like this.”
-"There are lots of perks that are nice if you can afford them, like retirement benefits and health care. The question is which are essential for a society. When 10 years ago, in 2015, the world’s public debt went up to $48 trillion, the developing nations were only accountable for 1/7th of that figure. Mostl
y it was the US, Europe and Japan that had run up the debt. There seems to be such an effort to fight inequalities in the West––inequalities of wealth, of age, of education––but there is no attempt to define why equality is either true or good for society. It seems that this fragile ideal has come from the calls of independence from Kings-- particularly in the revolutions of the US and of France. So a number of countries across the world are now transferring cash to their poorest citizens. Brazil has been a major mover in this area. Indonesia has followed suit. Countries like Brazil and Mexico are spending about a half of 1% of their GDP to run such programs. Ethiopia spends only 1.7% for its programs. But the US spends 4.4% of its GDP on welfare and 15% on healthcare. While the EU is spending about 18% of its GDP on its programs.”
"Your generous welfare countries had better follow the example of those who are trying to reform.
"Welfare mothers can work in day care, where they can bring their babies. They can work under the supervision of a licensed pre-school teacher who can fire them. They go to high school or college and leave the baby at the day care center. So they work some and study some and hopefully will get off welfare. A couple of these countries have even gone so far as to take the babies away from their mothers and put them up for adoption. After all it is the babies, not the mothers, who should have the major rights.
RESPONSIBILITY FOR OUR OWN LIVES
"The way we look at it, your life is no more important than you make it. If you don't care about your life and do dumb things, like dropping out of school, committing a crime or smoking--why should we care what happens to you?
"One fundamental difference between us and most of the Western countries is that we recognize that death is going to occur and it is not society's duty to prolong every life--or even any life. Our approach to many of the problems of government is that people will die eventually. Everyone born over 150 years ago is dead. Some of us die as embryos, some as fetuses, some during childbirth, some when crossing the street, some in wars, some are shot by friends or enemies, some kill themselves, some die on operating tables. The point is since we’re going to die today, tomorrow or sometime in the future, society doesn't have any real control over life and death. If you want to live longer you won't smoke, you won't drive recklessly, you won't participate in life threatening pursuits. If you don't want to live long you have the freedom to leave life whenever you want. You can commit suicide without having to talk to three doctors and a minister. You have the freedom to choose if and when you will die.
"If you want to live fast, die young and have a good-looking corpse, do what you will. If you want to make sure that you are taken care of if you are sick or when you are old and incapacitated just buy the right insurance.
"This solves a lot of problems that you supposed freedom loving people, who deny others their personal freedom, have to contend with. There are so many people in your society who want to keep people alive when they are terminally ill, in a perpetual coma, or have committed crimes such as murder-- and you will spend millions of dollars keeping them alive and in the court system.
"Our citizens know that we have capital punishment possibilities for treason, premeditated murder, human trafficking and rape. You have the freedom to choose your behavior. At least that's our assumption.”
- “But what about legal insanity? If a person doesn't have the capacity to choose right from wrong why should he or she be punished?”
“Like I said, we are all going to die. If you have an excess of dopamine in the part of your brain that deals with violence, that's too bad. It should've been found out before you embarked on your criminal path. If you had a lesion or a tumor on your brain that makes you act in a criminal manner, it should've been found in our extensive health evaluation facilities. If you had a genetic propensity for violence or against honesty it is not society's problem to cure you. But if you did not avail yourself of these tests, the problem is yours-- not ours. I know that makes all of you equalitarian leaning people upset because you always want to equalize people-- 90-year-olds with metastasized cancer need to be kept alive for another day even if it costs your taxpayers another $20,000. Your serial killers must not be quickly executed but should be given state paid lawyers to pursue appeal after appeal costing you millions.
"If a person dies a day earlier or seven decades earlier, it really doesn't affect the workings of our society. That person could have bought insurance to cover any of these contingencies."
-" But if you don't respect human life how can you have a solid basis for your society.”
“We respect human life probably more than you do. We want to help people to have the best life they can have. But we don't pretend to know what will make that person successful or happy. If he or she chooses to take an expensive vacation in Tahiti or sail around the world rather than buy health insurance, that is that person's choice. The only time we will qualify one's choice is when it can impact upon another person.”
- “Can you give me an illustration?”
“Well, smoking is an illustration. Smoking in a restaurant where some of the people are not smokers would not be allowed. Another negative for smoking would be if a smoker wanted to have a child. Whether a father or mother smokes, the carbon monoxide can cross the placenta and affect the embryo or fetus. Once a child is born carbon monoxide can get into the mother's milk and might have a negative effect on the child. Then there are the epigenetic factors that might affect the child.”
- “What is epigenetics.”
“Epigenetics is a reasonably new science that looks at how environmental influences can affect the DNA of a person by turning on or off elements of the genes. It doesn't change the DNA, so doesn't change heredity, but it does change how the genes work for one or possibly a few generations. Let me give you some examples relative to pregnancy.
"There are genes in the placenta that are affected by smoking and other environmental influences. This is most likely during the first three months of pregnancy but it can occur at any time during the pregnancy. (6) Smoking is a major problem in the development of cancer. It seems to cause three times more changes to the cancer suppressing gene. (7) Asthma is also far more prevalent among children who were exposed to cigarette smoke during pregnancy
"Epigenetic changes are found in children whose mothers had used acetaminophen (Tylenol) and a number of other substances such as domestic spray substances and the mother's use of antibiotics. Vitamin D deficiency can also be a factor.
"The University of New South Wales replicated a typical American diet for rats. The 43% fat diet forced the rats to put on weight and they developed insulin resistance and glucose intolerance, like type II diabetes. This was expected. What was not expected was that the daughters of the male rats developed the same problems even though they had not eaten the fat diet and their mothers were normally weighted.(8)
"But this isn't a medical lecture, we were talking about political science. If any of you want to find out more about epigenetics I would suggest that you check your Internet. It is pretty current."
-“I get that feeling that in America we are not as responsible for our own lives as many of us would like to be. I recently saw a survey of a number of countries and when the question was asked about whether the people were satisfied with their standard of living Americans came out 28th on the list. When it came to having adequate food and shelter, however, we were 11th. When it came to how optimistic we were about finding a good job, we were 86th. I just saw that last year over 100,000 people, half of whom were children, slept in homeless shelters in New York City. Is it possible that we are doing something wrong?”
"Our social scientists here have concluded that Americans are too concerned with the 'here and now.' They buy on any whim. Save little. In fact they were about 84th on that list countries you just mentioned in terms of saving. But I did see another survey that showed that among the world's largest countries you are only second behind Germany. Still it seems that most Americans think they
are on the top in everything.
“America is trying to protect the past rather than compete in the future. Back to that same survey you just mentioned, you rank 27th in terms of the percentage of workers who have who have completed high school. I don't doubt that this is why America now ranks 10th in the world in prosperity behind: Norway, Denmark, Finland, Australia, New Zealand, Sweden, Canada, Switzerland, and the Netherlands. The US was number one in just 2007.”
-"And our problems start before secondary school. We rank 79th in elementary school enrollment. We have dropped from number one to number 12 in college graduation rates among developed countries. Our infrastructure is ranked 23rd in the world, behind every advanced country. We are 27th in life expectancy and first in obesity. We have the most guns and the highest crime rate among the rich countries. Being afraid to spend money on taxes for education and infrastructure certainly has its effect on employment today."
"Your equalitarian ideas for your government employees’ pensions has been a real drag, particularly on your state and local governments. In spite of your equalitarian bent, your recent census showed that 14.3% of Americans are poor and the number is increasing. In just about every area of American business the percentage of workers is falling whether it’s in technical, sales, management or the professional areas, the trend is severely downward.
"Businesses can adjust to changes in technology and finance. They can downsize operations, move to other countries or to other areas in the same country, but the workers are limited in their options. They may not be able to move to another area or another country. Their financial obligations, such as a home mortgage, can be too high to afford if their wages are reduced. They may not want to uproot their children. And moving to China or India is out of the question for a carpenter or plumber. But it might be quite possible for a high-level management administrator, scientist or a health professional. So technology does not benefit a worker like it does the corporation.
"Along with the general cost of labor, your private health insurance coverage has gone up 59% largely because you don't have enough competition. If you're going to be an equalitarian country, you really should have had a government option for health insurance. Lobbyists for the health industries have really done a great job for their employers, while your health consumers, like I mentioned. have taken it in the neck. Then of course, like I said, pensions for government workers have increased 135% so your workers who are making less money, must make it up through their taxes. I don't know if you know this but since 1974 American wages have only gone up 19% in constant dollars. But their productivity has gone up 96%. I guess this can be explained by having to compete with lower wage workers in other countries.
"I think that your antiquated, slow-moving, government worked fine in the 19th and 20th centuries. But it is far too cumbersome now. The slowness of your legislative process and the lobbyists' corrupting influences, along with your judicial process are anchors on the nimbleness needed in today’s economic world. I suppose that part the problem is that your education process is so poor that most of the people don't understand the real problems. They believe whoever they hear and have no solid evidence to counter it. Of course watching football on Sunday morning television is a lot more fun than watching the news programs that compete for the viewers."
TAXES
-”Let me change the subject a bit. As we all know, every government runs on the taxes it collects from its citizens. When the citizens want more than they are willing to tax for-- the government borrows. It sells bonds to whoever will buy them and the future citizens will pay the bills for their parents' wishes--their ancestors who did not want to pay for what they wanted. How do you handle taxation in this libertarian country?”
"Well, there are good taxes and bad taxes. Certainly you need enough money to run the government but you don't want to discourage business and you don't want to discourage earning. For those reasons you want to keep corporate taxes and income taxes low. You also want them to be fair. In your country it is true that the rich pay most of the income taxes. But it is also true that they have huge numbers of deductions. Your deductions for religions and for contributions to them we think are ridiculous.
”Our tax needs are lower because our citizens pay for what they need from their own pocket. If you need to retire at some point, buy retirement insurance or save your money. If you want extra police protection or fire protection, buy home safety and personal safety insurance. I have already mentioned that you are responsible for your own health care and for about 75% of your children's education until they are finished with college. If you want to build a home or a building you must pay the actual cost of permits and inspections. So our needs for taxes are significantly reduced from just about every other country.
“Our economy is about the same size as Switzerland's, about a half a trillion dollars. But they pay about 30% of their GDP in taxes. We pay about 7% of our GDP in taxes. This is less than Singapore's 13% which is one of the lower taxed countries. Compare that with Denmark's at 50%, Germany's at 40% and China's at 17%. So we need about $35 billion in taxes every year.
"So what we spend from our federal budget is salaries for government employees. Most of our federal expenses would parallel what you have at your state and levels such as education and safety services. But our parents pay about three quarters of the expense of education. Our safety services are minimal because there are private companies that provide police and fire service, burglar alarms, and other things that should make you feel secure. So our government is responsible for certain services like police and fire, garbage collection, and such things. While you need about 36% of your GDP to run your country, we get by on about 10%.
“I see that Norway spends about 40% of their GDP to run their government. They have no interest on the national debt. You pay about 30% of your GDP to run your country plus the 6% interest you must pay on what you borrowed. As I remember your interest on the national debt has ranged from 4% to about 14% over the years, depending on the cost of money. But it is now over a quarter of a trillion dollars a year, which is considerable. We would never borrow to run our country.
"Your federal budget spends about 23% on Medicare and Medi-Cal, 20% on Social Security and 20 to 25% on military expenses. We don't have health insurance or Social Security so that takes a big chunk out of what we need to tax for.
"It is obvious to any thinking person that the aging societies in the West are central problem of government. Medical technologies continually being invented or improved, pharmaceuticals cure diseases and lengthen lives, and the medical profession continually increases its knowledge and skills. Since 1960 medical expenses have gone up about 2 ½ times faster than the gross national product. Then when these life- extending improvements are multiplied by the increased number of people who are aging or elderly, you can see the problem. From 2010 to 2030 your Medicare spending will double from 4.2% to 8.4%. At the same time your Medicaid expenses, for your poorer people, will triple. I don't see any of your legislators asking for a 3% increase in Medicare payroll taxes, but of course they did they would probably not be reelected. And I don't remember seeing your legislators queuing up to increase payroll taxes and decrease benefits 20 years ago.
"I don't know how long you can support the world's most expensive military. They get 20% of your taxes. We pay you $500 million a year to protect us. That's a good deal for both of us because we don't want the expense of a large military and you want money to defray your own military costs, and with you protecting us people think twice before considering attacking us. We also have a contract with Eric Prince, who started Blackwater. We pay him $1 million a year as a retainer in case we need him, then we pay all his expenses. You know he has a private militia that works around the world. Right now that are based in the Emirates. Meanwhile our kids are in college or working rather than shooting an AK-47. We don't have to spend money buying weapons from you, Israel, Russia and China. With your unemployment
problems you need military jobs available for the otherwise unemployable.
OUR TAXES
“Since our government is limited, our tax needs are much less than yours. We have a flat income tax on a person’s gross earnings of 2%. We have don't any deductions. We have a flat corporate tax of 1% of the gross earnings. Again, there are no deductions. We have a 3% value-added tax on all goods and services, including food. We have no excise taxes, personal wealth taxes, import duties or any other the other taxes you might find in other countries. One of our big sources of taxation is the nearly hundred percent tax on one's holdings at death. Let me go into a little more detail on each of these.
"Our salaries, dividends, stock earnings and other types of income amount to about $300 billion so our 2% income tax brings in about $6 billion. Our 1% corporation tax brings in about $2 billion because many foreign corporations have based themselves here because of our low tax rate. Our value-added tax of 3% brings in between $3 and $4 billion. We have become a Mecca for shoppers around the world because our 3% value added tax is so much less than is found in many countries. Most of your European countries are charging 20 to 25% for VAT. Additionally we have developed some outstanding vacation resorts. I'll talk about some of them later. So when shoppers come they use our hotels, our airports, our resorts, our restaurants, et cetera.
"Let me talk about our income tax. Since we have no deductions allowable, having more children or being married does not give you a deduction. There are no deductions for home interest or any other interest expenses. There are no deductions for charity. In your country your religious ministers get big tax breaks, for example if their home is part of their salary it is not taxed under your tax codes. So you have a source of income untaxed. This is often abused, as are so many of your other allowable deductions.
"As soon as you are paid, that 1% tax goes directly to the government. Penalties for avoiding the payment of taxes by employers is very strict. You probably know that many merchants collect as much in cash as possible so there is no paper trail to indicate how much money they actually made. But since our tax is only 1% there is not a lot of incentive to try to cheat.
"Corporate tax rates across the world are generally in the 20 to 40% range but they allow so many deductions for research and other expenses that the amount paid may be quite low. In fact last year according to the OECD, the Organization for Economic Co-operation and Development Greece didn't get any effective money from their corporate tax rate of 24%. In the U.S. 28% is the average rate but the American government got less than 3% of its total taxes from that rate. In fact many of the major companies, such as General Electric, Exxon Mobil, and Chevron paid no federal corporation income taxes to the US in some recent years. That doesn't mean they didn't spend money avoiding them in fact Chevron paid about a half a million a year in campaign contributions to legislators and about $9 million a year in lobbying expenses to keep their taxes low. During this time they got over two and half billion dollars worth of government contracts. Last year alone they made $10 billion in profits and got a $19 million tax refund. This is typical of big corporations in your country."
-"The giant companies spend a lot of money on campaign contributions and lobbying to get their taxes low, and their subsidies and government contracts high, while their profits are maximized. The last I looked at government reports, such as SEC filings, I found that the big guys were getting away with murder. For example, Exxon in the last 10 years has spent $5.7 million on campaign contributions, $138 million on lobbying and as a result got government contracts of $6.8 billion. The total profits last year were $19 billion and they paid no U.S. income taxes but got a $156 million tax rebate. Looking at banks I saw that Bank of America spent a little over $1 million a year in campaign contributions and $2 ½ million a year in lobbying. In the bailout funds during the recession it was given $20 billion and another $25 billion to buy Merrill Lynch. It made $4.4 billion last year and had a tax refund of $1.9 billion. Citigroup is another bank. It pays no income taxes. It contributes about a half million dollars a year in campaign contributions and six million in lobbying expenses. It got $45 billion in bailout funds during the recession and hundreds of billions in loan guarantees. Last year it had $4 billion in profit and paid no income tax. Goldman Sachs, the huge investment group, did pay $1.1 million in income tax on its profit of $2.3 billion. That's about five dollars for every $10,000 profit. It spends about $2 million a year in campaign contributions and another 2 million in lobbying expenses. In spite of the fact that it was one of the major causes of the housing bubble bursting in 2008, it received billions of dollars in bailout funds. The fact that two of its former executives, Henry Paulson and Robert Rubin, were Secretaries of the Treasury at different times probably didn't give Goldman Sachs any breaks!
"But oil companies and banks are not the only recipients of tax breaks. Boeing gets about $17 billion a year in government contracts for its $1 million in campaign contributions and $11 million in lobbying expenses. It paid no income taxes last year but got a tax refund of $124 million. But most of the big companies are in the same boat. Whether it is Verizon, Federal Express or Carnival Cruise Lines-- they all feed at the public trough.
"But we small business owners didn't get all those breaks so the government actually gets about 3% of its tax revenues from corporations. While the top tax rate in America for corporations is 35%, which is the second highest in the world, the average corporation seems to pay about 28% of its profits in taxes. That 3% tax income from corporations is about same internationally where governments get between zero and 4% of their operating budgets from corporate taxes. Of course you must look at the good side of corporations. They employ people. This keeps the citizens happy and gets the government personal income tax money.”
-" I think you guys might be painting a picture that's a little more bleak than it is in reality. For example General Electric pays a large number of taxes throughout the world and has traditionally paid some taxes to the states. Also in the United States nearly all states have some corporate taxes, so most businesses are paying something. The question is what is a fair tax for corporations. When you have a country like Ireland which has a rate much lower than Japan’s, it will get more corporations doing business in Ireland. Is this fair internationally? Then, should we give tax breaks for research expenses and other positive things or should we eliminate all the breaks and assume that any corporation that wants to succeed will do the necessary research to make that happen? It does seem to me, without studying all the issues, that the flat tax that they have here makes sense, even though it will put a lot of accountants and tax collectors out of business!
"It does gall me that companies can owe negative taxes because they lost so much money. It seems that if the company is losing money it shouldn't be in business. Or maybe they should fire their leadership. But if they sold nothing during the year why should they get tax credits or deductions for the next years?"
-"I remember taking an economics class about 25 years ago and seeing how few corporations paid meaningful taxes. While the maximum tax rate was 35%, we looked at the 275 Fortune 500 companies that make profits every year from 2001 2003. For these companies the average tax paid was 17%, but it varied from minus 60% for Pepco, the Washington DC utility, to 34.5% for the retail pharmacy company CVS. About a third of these 275 companies that had earned money every year paid no corporate income taxes in at least one of those years. 28 of these high earning companies paid no federal corporation tax in any of the three years Because according to the tax laws actually lost money. 46 companies paid no tax in 2003 even though their pretax profits for the year were over $42 billion. In fact they received tax rebates of about 5 ½ billion dollars. Then when the law changed making it easier to carry back excess tax losses the government had them $63 billion. I know that today corporations are paying the lowest levels taxes since World War II.
“I'm not an economist so I don't know if we should not tax corporations and have more interna
tional corporations coming to our country employing our people or whether we should tax them, and if so it should be high taxes or local tax? I just know about if we're going to tax them we are doing it all wrong. I think Tyler's approach of a flat tax on gross earnings makes a whole lot of sense.”
-" There are so many ways to beat the tax if you have a creative accountant. Accelerated depreciation is one. You depreciate your assets. I wonder if all those pro-sports fans realize that their favorite players are being depreciated by their owners. Those high salaries don't cost the club owners do nearly as much as they do the government and the other taxpayers. So those fans on the sofa with their beer and chips are paying more than they think to watch their favorite teams. Then there are the stock options for high level executives. If they do option to buy shares in the company at $10 and they exercise the option when it gets to $20, that loss is deducted by the company, just as it would a salary.
"Of course there are tax credits which are actually money in the pocket because they are deducted dollar for dollar from any tax owed. The government has put lots of tax credits into the laws so investments in affordable housing, alternative energy and such are much better than deductions. Then money can be hidden in offshore areas like Bermuda and the Caymans. The results of all these tax deductions, tax credits and creative accounting is that US corporations with the second highest tax rates in the world actually only amount to about 2.2% of the GDP but the average corporate tax amount collected in the Organization for Economic Cooperation and Development was 3.4%. So while the tax rate was high, the effective taxes collected was rather low.
- “What about the long-term capital gains taxes where you pay much less in taxes if you have held a stock for over a year. The capital gains taxes are only 15% compared to the top income tax rate of 35%. Why should people pay less in taxes from what they earned on an investment than on income that they actually physically worked for? That is just another break for the rich people. Another tax break that really irritates me is the amount that the federal government, as well as the state and local governments, give to religions.
“I tried once to find out what the loss to the federal government was from tax breaks associated with religions-- like parsonage allowances, where a minister gets part of his salary in housing but does not have to pay tax on the value of the housing. Then there are the deductions for charity that people give to churches. There must be billions of dollars lost to the government which could have helped reduce our national debt. Then there was the Supreme Court decision that we talked about a while ago that gave tax credits to people who paid for religious school tuition.
"I did see a few things that indicate the cost of religion's tax exemptions. In Los Angeles County the value of religious property is placed at just under $40 billion. At a 1% property tax rate that would yield $400 million. Then to this you would add whatever bond interest the voters had determined. The religions do not pay any part of this. This amounts to about a 10% loss in the county's property tax income. Another kind of religious tax break was found in Florida where sales tax was not charged for religious items. This costs the state about $10 million. Naturally people who are nonreligious or non-churchgoing are paying for this. And the people in small congregations are paying for the expensive Catholic, Morman, Jewish and Protestant mega-churches.”
"You give tax breaks to so many interest groups that your tax income is nowhere near what it could be. Tax breaks to churches cost you billions. Tax deductions on home mortgages are over $300 billion which costs the government about $77 billion in lost taxes. The deductions on property taxes costs the government another $20 billion. And the major beneficiaries are your rich people. The people with bigger houses or two houses are the ones that save the most money. Poor people with their smaller homes save much less in terms of total dollars. In Canada and the UK they don’t have deductions for home mortgage interest but that have the same percentage of homeowners, so it seems that the deductions don’t really increase homeownership. Another advantage of doing it the way we do, by having a simple 1% tax on all income, it reduces much of the cost of collecting taxes, which for your country is in excess of $13 billion a year to collect your 2.7 trillion dollars. Then another $250 billion is spent on preparing taxes and avoiding them.
“Then this collection process brings in about $2.7 trillion in total taxes. Half of that is in personal income taxes. Then there is your corporate income tax that takes in about $400 billion, your excise taxes of about $53 billion, your estate taxes of $25 billion and your gift taxes of $2.4 billion dollars. On top of that there is your $850 billion in employment taxes for Social Security and Medicare.
“But heck, half of your households do not pay income taxes. And I saw in your IRS statistics that your 400 people with the highest adjusted gross incomes, nearly $350 million a year, had an effective federal tax rate of only 17%. That was down from 26% less than 10 years ago. Even your average taxpayer pays less than 10% on their taxable income. You lose more than $1 trillion in your tax breaks for individuals. That amounts to about $8000 per taxpayer.
“Just look at the amount of your deductions in addition to your mortgage and property tax credits, there is: $54 billion for the per child tax credit; $40 billion in deducting state and local taxes; $35 billion in religious and charitable deductions; and $24 billion was deducted because people didn’t have to pay taxes on some of their retirement contributions.”
-"In a democracy people can vote to tax the rich more, but the rich then will vote with their feet and leave the state or the nation. It reminds me of a story.
"Some years ago ten men went to a bar to buy some beer and the bill for all ten came to $100. If they paid their bill the way we pay, it would go something like this:
“The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that's what they decided to do.
“The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. 'Since you are all such good customers,' he said, 'I'm going to reduce the cost of your daily beer by $20.' Drinks for the ten now cost just $80.
“The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?' They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so:
The fifth man, like the first four, now paid nothing—a 100% savings.
The sixth now paid $2 instead of $3--a 33%savings.
The seventh now pay $5 instead of $7—a 28%savings.
The eighth now paid $9 instead of $12—a 25% savings.
The ninth now paid $14 instead of $18-- 22% savings.
The tenth now paid $49 instead of $59-- 16% savings.
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.
'I only got a dollar out of the $20,' said the sixth man. He pointed to the tenth man, 'but he got $10!'
'Yeah, that's right,' exclaimed the fifth man. 'I only saved a dollar, too. It's unfair that he got ten times more than I got!'
'That's true!' shouted the seventh man. 'Why should he get $10 back when I got only two? The wealthy get all the breaks!'
'Wait a minute,' yelled the first four men in unison. 'We didn't get anything at all.
The system exploits the poor!'
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!
“The moral of the story is that the people pay the most taxes will get the most benefit from a tax reduction. If they are taxed too much they may just leave and move to another country. Or maybe they will put all or most of their businesses in the country where the taxes on the wages are lower. So who then gains from taxing the rich more than they can bare?"
"That's my point exactly. The tax rates will be the same but the amount collected may vary. Of course our tax needs are a lot less than yours. You Americans have a tax take for all of your government levels of around 26%. That's only about half as much as Denmark's. China's is only about 13%. Ours is about 7%. Obviously having a welfare state or a large army is going to make your taxation needs higher.
“I suppose you know that your military spending is about $700 billion a year--about six times higher than China's and 12 times higher than France or the UK. It is almost 5% of your gross domestic product. That's more than twice China's percent. But it is not quite as high as Israel's or Saudi Arabia's. I guess you think that the one with the biggest guns will win the fight. But many of us think that the one with the biggest national debt will eventually lose the war.
-"It seems like you may have something there. Something that really irritates me is people calling themselves 'taxpayers’ and wanting their rights. Because they pay a little sales tax does not mean that they are paying their fair share! If you have three children in school, are driving two cars on the state’s roads, and are using government services, are you paying $30,000 or so a year? Illegal immigrants may pay sales taxes on their nonfood purchases, but do they pay significant income taxes? It seems that citizens or noncitizens who pay the least are the ones that want the most 'rights.'
"If it is true that we are the government. If we want something we must pay for it. Ambassadors, an army, the latest weapons, social security, health care, roads, schools, electricity, farming subsidies, a reduction of illegal workers, police, prisons, fire fighters, regulation of securities and banks, bank deposit insurance, and the list goes on and on.
“Just look at the married people or the people in domestic partnerships and their children, whether homosexuals or heterosexuals, . When they are allowed to share pension, health and other ‘rights’ they must be paid for. It the wage earner works in the public sector then our taxes pay for it, if he or she works in the private sector the costs are reflected in the price of the products. In either case such insurance costs to the employer are tax-free to the individual and they are actually paid for by credits from the federal government. China doesn’t grant such rights, so their products cost less. It is just another small factor in their lower production costs.
“We seem to always be looking for a free ride in spite of the cost to the government. The Bush tax cuts were a major factor in the increased deficit of the country. The tax cuts added deficits of $230 billion a year.”
“Your fairy tale view of taxation in the U.S. has put you in a Grimm state, or should I say ‘grim’ with a small ‘g.’ Look at what happened during the recession that started in 2008. States’ outlays in health went up but their income went down. Home values went down so the property taxes were reduced. Sales taxes dropped 1%, personal income tax dropped almost 3% and corporate taxes by almost 6%. You definitely hadn’t planned for a rainy day. This, along with the traditional spending brought many states near bankruptcy. States cannot run a deficit like your federal government can. They must be funded by taxes or bond issues––which taxes your future citizens.
“Again you place your bet on the good fairy. You people in the US spend too much time trying to find tax sources that don’t affect you. And they usually don’t yield much money. For example your people on the left want to tax the rich more. Even Bill Gates and Warren Buffett say they should pay more taxes. A significant increase in taxes on the rich would yield about $40 billion, but that amounts to only 0.3% of your $14 trillion national debt. Your President Obama appointed a high-level committee to look at how to handle the debt. But the obvious necessary cuts in your Medicare and Social Security were objected to by both parties and the cuts in the military budget rejected by all who wanted to see America remain as the world’s major military power. Naturally tax increases are out of the question for politicians in America if they want to be reelected.”
-“As long ago as 2011 Social Security was paying out almost $40 billion more than it took in that year. (9) Now in 2025 it is paying out over $120 billion more than it takes in. It has been a real Ponzi scheme, assuming that more members at the bottom will pay those who reach the top and retire. Supposedly there is a $2.6 trillion dollar trust fund, but of course there isn’t. It is merely IOUs from the federal government that has been using the Social Security money to fund other projects.”
“I laugh when I hear your conservatives railing against communism and socialism when you should know that the Social Security program is a combination or socialism and communism and your Medicare program is definitely communistic.
“Social Security, the military budget, and Medicare-Medicaid each account for about 20% of your federal budget. Then you have about 14% of the federal budget, or $482 billion that is in areas that benefit families facing hardships. Then you have another 6 to 7% for federal pensions and benefits. Add to that 11% for your interest on the national debt, and you have over 60% of your national budget in socialistic and communistic programs for your citizens and the interest on the money you had to borrow to pay for them.”
-”That’s true Tyler. For the sake of argument. let’s look at the costs and benefits of Social Security and Medicare. Let’s start by looking at the average of two workers, one who ended up with a salary of $25,000 year and the other one a salary of $65,000 year. Retirement benefits are paid based on one’s recent high salary. For the sake of argument we will assume that these two people made the same income throughout their 45 year working lives. But actually their initial salaries were probably less than 10% of their ending salaries. Of course there would have been interest compounded on their lower salaries throughout their working lives, but it would still be far below the following estimates.
Life expectancy at birth is 78. But each year that you live increases your chances of living longer. So if we use the estimate at birth we would expect a 66-year-old to live only 12 more years, however as we age our life expectancy keeps increasing so the average life expectancy at 66 is actually 17.5 years. For white males it is 15.9, for black males is 14, and women generally have 18.7 more years to live after age 66. So when someone has reached 66 the average person will live to be 83.5 years.
A worker earning $25,000 a year would have contributions to Social Security from himself and his employer of $3100 a year or a total of $140,000 from his 45 year working career. His $860 monthly pension, $10,320 a year, is 41% of his ending pay. His contributions would pay for 13.5 years assuming our inflated contribution estimates. So for a white male the government would have to borrow to pay for his last four years-- about $41,000. For a black male the government will have to borrow about $5000 to pay for his last six months. For women the government will have to borrow over $60,000 to pay for their last six years.”
-”You are very generous in your calculations. since his average income was probably little more than half of the $25,000 you suggested, in actuality his contributions probably would’ve been less than $75,000 so they would have paid for a little over seven years of retirement pension. So the government would have to come up with over $100,000 if he lived out his expected 13 and a half years more of retirement.”
-”You’re right, Lee. I was just trying to make it simple. The government is on the hook for lots of d
ollars for the average Social Security retiree. Now let’s take the person who earned $65,000 a year or 45 years, he and his employer would have put in $363,000. His pension would be about $1609 which would last about 18 years. His pension would only be about 30% of his top wage, or $19,300 a year. The government would earn a little on men and lose a little on women. Of course since the above estimate on contributions is far in excess of what is really contributed, the government loses on this level also.
“What about Medicare? The employer and employee contributed about 2.90%. For the person earning $25,000 a year this would be a total of about $32,600. For the person who earned 65,000 a year for 45 years it would be about 85,000 in total contributions. According to the Kaiser Foundation the average retiree spends about $12,000 a year on medical expenses and about half of that comes from Medicare. So the person who earned $25,000 a year would have contributed enough to pay for five years of Medicare, so for men the government will have to borrow about $6000 for 11 years, or $66,000 to pay for their remaining Medicare expenses. For women it will have to borrow about $82,000.
“For the people earning $65,000 a year for 45 years they would have contributed $56,500 which would pay for about 9 1/2 years of Medicare. So the government will have to borrow about $39,000 for white males and about $55,000 for women.
“I guess the question is whether these are entitlements covered by borrowing from China or whether they should be insurance benefits that you must pay for!”
- “But I saw where the director of the U.S. Office of Budget Management said that it was not a problem for Social Security, the problem was in other parts of the budget. (9a) And I guess he is right, if we took in the same amount of taxes and only paid out Social Security and nothing else that’s in the budget, there would be no problem!”