Political issues – Page 34

A number we've been looking for: 2.3%

Corporations and their propagandists are always complaining, with great shrillness, that the United States has one of the highest tax rates in the developed world (35%). To which advocates for tax fairness always reply: Nominal tax rates are one thing, but actual taxes paid, because of loopholes and shelters, is something else again. To figure out just how much in taxes big corporations (and rich people) pay is very, very difficult. It’s one of the things that they very, very much don’t want working people to know.

Here’s a number in the Washington Post story on Obama’s plan to put an end to offshore tax havens:

“The tax havens allow major U.S. corporations to pay taxes on only a fraction of their profits. According to 2004 numbers, the most recent the administration has on hand, U.S. multinational corporations paid an effective tax rate of 2.3 percent on $700 billion in profits.”

Tax rates

There was quite an outburst at the prospect of raising taxes for incomes over $250,000 a year. That’s radical, many said. “We’re running out of rich people,” said Michele Bachmann. “How Obama Will Bleed the Rich Dry” is the headline on Michael Gerson’s column this morning in the Washington Post.

The key point of fact is this: the Obama budget raises the tax rate on income over $250,000 a year from 35 percent to 39.6 percent.

Historically, that’s hardly radical. The top rate was over 90 percent during the 1940s, 1950s, and 1960s, and 70 percent during the 1970s. We never ran out of rich people.

Historically, what’s radical was Reagan’s reducing the top tax rate to 28 percent in 1986. Though there were tax cuts on high incomes, wage earners actually paid higher taxes under Reagan. Part of this project of lower taxes for the rich and higher taxes for wage earners was to teach wage earners to hate government by convincing people that higher taxes always hurt the little guy. That is just not true.

Denmark

Wikipedia

Those who say that the United States is on a course toward European-type socialist democracies could be right. Let’s take a look at Denmark…

In the past eight years I’ve made two business trips to Denmark and spent four weeks there. I helped install a Danish publishing system at the San Francisco Chronicle, so I worked closely with a Danish company, and lots of Danes, for several years. This publishing system, by the way, is the system that’s also used at the New York Times and the Washington Post. The Danes are fantastic engineers and smart, honest businesspeople.

Most of these factoids about the Danish economy come from the Wikipedia article on Denmark:

— Denmark has a free market economy.

— Denmark has a large welfare state.

— Denmark has one of the world’s highest levels of income equality.

— Danes are very productive, and Denmark’s GDP per capita is 15 to 20 percent higher than the United States.

— Denmark holds the world record for income tax rates.

— All college education in Denmark is free.

— 80% of employees belong to unions.

— Denmark spends about 1.3 percent of GDP on defense, compared with about 4 percent in the United States.

— The national health service is financed by an 8 percent tax. This is a local tax on income and property.

— According to Statistics Denmark, the unemployment rate in Denmark in January 2009 was 2.3 percent.

— In some surveys, Denmark is ranked the happiest place on earth.

— Denmark was ranked the least corrupt country in the world in the Corruption Perception Index.

— According to the World Economic Forum, Denmark has one of the most competitive economies in the world.

I realize that Denmark’s model probably would not scale up in a workable way for the United States. Still, in my opinion, we should be studying some of the European models and not let ourselves be scared by them. They work.

Carolina blue

Though the North Carolina elections board won’t release the final count until later this month, the Associated Press has called it — North Carolina is now a blue state.

As though to prove that this is a real phenomenon, yesterday Delta Airlines announced that it plans to start nonstop service from Raleigh-Durham to Paris. Last week, US Airways announced that it’s planning to start nonstop service from Charlotte to Paris.

This is not really something new. It’s a return to the norm. Lyndon Johnson, it is reported, said, “We have just lost the South for a generation” after he signed the Civil Rights Act of 1964.

It feels good to be connected to the coasts again, and to the world.