>>>> Taking taxes alone, it's quite possible. Your single mom is looking
at 15.3% payroll tax but almost $2,000 ($1,985 for 2000, to be exact)
in EITC benefits. Her payroll tax is $2,295, so her net Federal tax
is a little more than two percent of income. Even if the Texas share
is 15% (actually it's under 14%, but we can let that go), her total is
well under 20%. With two kids her EITC is higher. Her *marginal*
tax rate is 15.3 for payroll and 16 (or 21) for one child, between
incomes of $12,700 and $31,150. She doesn't hit first dollar of
income tax liability until $15,383 (higher if she has more than one child).
At that point her total marginal Federal rate is indeed high -- 46 or
51%, if not higher due to other benefit phase-outs. But high marginal
rates do not necessarily go along with high shares of income devoted
to taxes. The state number is marginal as well as average, since it
pertains to sales and property tax bases that track with income.
NN: " . . . And if you subtract medical spending and associated taxes from the European analysis (since we pay for medical care in even more regressive private ways), I've seen analysis that the level of US spending is actually not that out of line with many European states.
>>>>>>>> That's right. If you discount a good part of Euro
govt spending, it's not as high.
NN: . . . Actually, I have no presumption that public spending is better than private spending- maybe a point where we differ . . .
>>> I guess so.
NN . .. - since it depends on how the funds are managed. It also matters what the distribution of pensions are among the population, not just the total dispersed. US pensions are hardly a wonderful model but there are probably privately mandated systems that could be better than many of Europe's funded systems.
Who pays and who gets the funds matters far more than whether the government is spending a certain percentage of GDP. If the government just taxes the middle class, then hands that same middle class its money back, there seems little gain - beyond a certain amout of uniformity and social solidarity. But to the extent that the government is an engine for redistributing income, tax policy and spending equity are critical points. --- Nathan Newman
>>> This is precisely the issue the LIS tries to address.
mbs