I'm still enjoying the Life of Fred math series, as you can see from my booklist; I hope to finish all that the Daleys have before I leave here. Despite what the author claims, it's not really a complete curriculum, but it's a fun supplement, it covers a lot of math, and there's really nothing like it. It covers a lot more than math, too, as five-year-old math professor Fred Gauss makes his way through his busy days. For obvious reasons, the following excerpt from Life of Fred: Jelly Beans caught my eye:
It is not how much you make that counts; it is how much you get to keep. Taxes make a big difference.
In the United States, the top federal income tax is currently 35%. The top state income tax is 11%. The top sales tax is 10%. TOTAL = 56% (56 percent means $56 out of every $100.)
In Denmark, the top income tax is 67%, and the VAT (which is like a sales tax) is 25%. TOTAL = 92%.
If you want to keep a lot of the money you earn, Switzerland's top income tax rate is 13%, and the top VAT is 8%. TOTAL = 23%.
Yes, it's an over-simplification (the book is meant for 4th graders), but it certainly helps distinguish Switzerland from Sweden.
There are errors in this analysis most easily shown in the Danish example. If one pays 67% in tax, one has 33% left. If one then buys goods with a 25% VAT one uses 1/4 of that 33% to pay tax, or 8.25% of one's entire income, so the effective tax rate is 75.25%, not 92%.
The analysis also paints too rosy a picture of Switzerland.
Let's take Emmen, where we live. It's in Luzern, and the worst you can do there is a nominal tax rate of 5.7%. Sounds great, but here's the hitch: there's a multiplier that gets applied to that. In Emmen it's 1.6 for the Canton, 2.05 for the town of Emmen, and from 0.25 to 0.31 depending on which state church you belong to. In other words, that's en effective rate of 20.8 to 22.6% - and then you add federal taxes of 11.5% to that, topping an Emmen millionaire out at 34.1%.
Still sounds reasonable, right? That's if you don't include mandatory salary deductions for social security, pension and unemployment benefits, the mandatory minimum health insurance, and the VAT.
So while we're not as bad as Sweden, we're not the paradise people make us out to be. We actually have a country to run and Euros to buy...
