How Feds Spend More on Suburban Educ. than in Poor Schools

Max Sawicky sawicky at bellatlantic.net
Wed Apr 25 08:29:08 PDT 2001


NEWMAN! said: "I would be interested in seeing the numbers and wonder if they include local and province taxes in Europe, because while the US has a moderately progressive federal tax system (and I find in hard to believe we beat Sweden on that), our local taxes are incredibly regressive beyond belief, especially in states like Texas and others without an income tax.


>> Sweden is the exception to this rule -- progressive tax
system and big spending.

I'm not even sure how you completely compare a VAT to a sales tax, since you'd need a model for how much of VAT paid at early parts of the production cycle are absorbed as costs and how much taken out of profits.


>> VAT's are commonly assumed to have the same impact as sales
taxes -- to entirely fall on consumers. Though there is some evidence a VAT is partly on capital and labor.

You also have to figure out how to compare pension systems between countries with state spending on them versus mandated pensions at businesses versus our system of government subsidies for them. As this study showed, there's a certain sense of arbitrary measurement on "spending" versus tax breaks versus government mandates.


>>> It's true -- a mandate on the private sector could have
similar cost and distribution implications as an explicit spending program. But if the presumption is that public spending is preferred to privatization (cuz that's what it is), then the size of the revenue system is the key.

Max and you make the argument that tax fairness is less important than increasing total spending, but I think the causation is the exact opposite. It was only when massively progressive tax systems were adopted in the US back in the 1930s that social spending started to grow. And as the progressivity was dismantled starting in the 1950s and accellerating in the 1970s, including the decrease in corporate taxes as a percentage of the budget, social spending came under increasing pressure.


>> Correlation is not causation.
The income tax never pushed the U.S. public sector higher than abt 30% of GDP (Fed, state, and local; 20% for Feds), whereas the Euro's are between 35 and 55%.

The tax revolt in California and across the country was all about the failure of the Left to deal with the tax issue. -- Nathan Newman


>> Even if true, this leaves to the imagination
what the best response would have been.

mbs



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