America borrows it's way out of a debt crisis.

wotsthat

Thrugelmir wrote: »

The US execs that have been called in front of the select committee all bear an uncanny resemblance to Bob Diamond. In terms of culture and attitude. Hence why I prefer the UK any day.

..but in terms of poverty (which is what you eluded to in dismissing the US's wealth creating credentials) billions of people could only dream of being born in either the US or UK.

wotsthat

grizzly1911 wrote: »

The public sector isn't about investment decisions to make money. They are cost centres very often picking up the pieces that fall though the privates sector colander.

There's a big difference between the size of public sectors in the USA and UK. I would've thought that this reduces the tax burden leaving more money to invest in the private sector where it can be invested for growth.

grizzly1911

wotsthat wrote: »

There's a big difference between the size of public sectors in the USA and UK. I would've thought that this reduces the tax burden leaving more money to invest in the private sector where it can be invested for growth.

You would expect so but if you ar compelled to pay for things privately that would otherwise come out of taxation the net effect probably isn't much different on the individual or the economy.

BritAbroad
17-12-2012, 6:40 PM MoneySaving Stalwart


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Quote:
Originally Posted by drc
Yes of course but I was just surprised at how much tax and NI we pay in the UK. And then we pay even more tax in the form of council tax, VAT, car tax to name but a few. Where does it all go? How come the US and Germany can have a fairly well functioning society without high taxes? I know the Americans have to pay for health care separately but it can't be that much and presumably they get much better quality care as they can choose what to pay for and which insurance to go with?


I live in the US and in my experience we pay significantly more tax than your calculation would suggest. Also, health care costs are very, very high - think several hundred dollars a month to have the insurance, and then you still have out of pocket expenses for every visit to the doctor, hospital appointment and prescription. The quality of care is not any better than the UK either. We also pay substantially more for household and car insurance than in the UK (my house insurance last year was almost $3000 and my car insurance was around $1500), because the insurance companies require you to have cover in case of liability or health costs.

Public services here are not good - I was shocked by the number of beggars I have seen. There is no safety net here and it's not at all unusual for people to be bankrupted by medical costs. The public education system appears to be mediocre at best.

My annual property tax is equivalent to what I paid in the UK for council tax, but with fewer facilities provided. We have HOA fees (a bit like factoring), I am lucky that my HOA is cheap but some are very expensive. My gas, electricity, water and waste bills are about triple what they were in the UK and there's no choice of provider either.

Petrol here is undoubtedly cheaper - currently running at about $3.10 per (American) gallon. Car tax is about the same as I paid in the UK. We also pay sales tax when you buy a used car.

Sales taxes vary significantly here, to the point where it can be cheaper to travel to a different city or county if you're making a major purchase and have something delivered, rather than buy it locally.

Things like clothes are generally cheaper, but the quality is not great compared to in the UK. Food in the supermarket is more expensive than it is in Britain yet eating out is cheaper.

I think the point is that looking at tax and NI alone only tells part of the story. Overall, I think the cost of living in the US is about the same as the UK.

wotsthat

grizzly1911 wrote: »

You would expect so but if you ar compelled to pay for things privately that would otherwise come out of taxation the net effect probably isn't much different on the individual or the economy.

A link from the Daily Mail http://www.dailymail.co.uk/news/article-2272747/The-2-000-cost-British-Families-face-huge-cost-living-premium-compared-countries-thanks-energy-transport-costs.html

It's based on some research by the CEBR (can't find the original research).

Seems to show the cost of living is lower in the USA.

A piece from the economist about effective tax rates http://www.economist.com/blogs/graphicdetail/2012/10/focus-4

Lower effective tax rates in the USA (on the income used as an example).

A piece about median incomes in the USA http://super-economy.blogspot.co.uk/2010/04/median-earnings-higher-in-us-than-in.html

Higher median wages in the USA (quite old data).

Lower cost of living, higher incomes and lower effective tax rates.

grizzly1911

wotsthat wrote: »

A link from the Daily Mail http://www.dailymail.co.uk/news/article-2272747/The-2-000-cost-British-Families-face-huge-cost-living-premium-compared-countries-thanks-energy-transport-costs.html

It's based on some research by the CEBR (can't find the original research).

Seems to show the cost of living is lower in the USA.

A piece from the economist about effective tax rates http://www.economist.com/blogs/graphicdetail/2012/10/focus-4

Lower effective tax rates in the USA (on the income used as an example).

A piece about median incomes in the USA http://super-economy.blogspot.co.uk/2010/04/median-earnings-higher-in-us-than-in.html

Higher median wages in the USA (quite old data).

Lower cost of living, higher incomes and lower effective tax rates.

Makes you wonder why they haven't got any money and have to keep printing the stuff or rely on China.

Trickle down obviously works too.

HAMISH_MCTAVISH

bumping as a reminder for those with short memories....

Rinoa

purch wrote: »

In the 1980's it was Japan who bought a huge chunk of US debt.

It was the same situation then too. Every auction was preceeded by rumours that Japan would buy none, or only a little but everytime they came to the rescue.

Indeed. Other countries need to sell stuff to the US and will do anything to accommodate their situation. So, the US keeps borrowing and spending, and countries that rely on US imports carry on lending.

Hamish believes all countries could do the same. I have my doubts.

N1AK

HAMISH_MCTAVISH wrote: »

So as it turns out, not only is it true that you can't cut your way out of a [STRIKE]recession[/STRIKE] depression, it also turns out that you can borrow your way out of a debt crisis.

US Government spending has been falling vs GDP since 2008 and is continuing to fall rapidly because of heavy spending cuts and large tax increases; can you really have completely missed the sequester, or does it just not suit your desperate attempts to spin to acknowledge it?

UK government spending has been higher as a proportion of GDP pretty much forever and has continued to rise since 2008. We also have more debt than America as a proportion of GDP.

So what we have is a country with less debt, lower government spending and decreasing government spending that you are claiming proves that 'austerity' is the problem. Looks pretty nonsensical to me :rotfl:

angrypirate

HAMISH_MCTAVISH wrote: »

bumping as a reminder for those with short memories....

Its funny how you havent mentioned how drastically Hollande has failed in attempting to borrowing his way out of recession in France.

The US is one of the most Capitalistic economies in the world. With no National Health Service and no "ball and chain" that is the EU (amongst other factors), they have lower public spending than all of the EU countries. Just look at their 2011 figures (as they are easily at hand) of Government spending as a % of GDP
US 38.9
France 52.8
UK 47.3
Germany 43.7
Poland 43.3
Sweden 52.5

Of the developed countries, only Switzerland has lower public spending in terms of % GDP. This does arguably give the US greater room to increase public spending.

If the UK had been running a smaller structural deficit prior to the recession, I think we would all be in agreement (even the Tories) to increase public spending to help the UK out of recession. But that wasnt the case as public spending was already out of control before the recession hit.

Generali

US Government spending as a proportion of GDP (including local Government and State spending):



Interestingly, Government spending fell pretty quickly during the boom years of the second Clinton presidency as he balanced the books in between being felated by interns.


UK Government spending as a proportion of GDP (including local Government spending):



The British Government has only really spent more post WWII just before the IMF was called in and briefly during the terrible recession of the early 80s.