Public Policy and Governance – Page 213

Taxes and the Common Good

I know “real Amuricans” sneer at the notion that we might learn from the experiences of other countries. Universal healthcare? A commie plot! Decent mass transit? People who can’t afford–or don’t want– cars shouldn’t be coddled! A comprehensive social safety net? You are a commie!

Every so often, however, a “real American” finds living in a country that actually offers these and other subversive services is pretty attractive. Vox recently published an essay by one such person, whose job and that of his wife requires that they split their time between Wisconsin and “high tax” Sweden.

My wife and I have been dividing our time between jobs in Sweden and Wisconsin for the past dozen years, and I’m here to tell you that taxes in Sweden are not that high. To my surprise, I found that there are lots of things to love about the Swedish tax system. Swedish taxes are easy to pay, rational, and efficient. Best of all, rather than take away opportunities, Swedish taxes expand them.

The writer goes on to list things he loves about Swedish taxes. No kidding.

It turns out the average Swede pays less than 27 percent of his or her income in direct taxes. As I’ve written elsewhere, my wife and I pay about 22 percent of our US income in taxes. Our Swedish income tax was 31 percent. So, yes, our income taxes in Sweden were higher than in the US, but we still paid less than one-third in tax.

And you get far more for your taxes than you do in the US. In Sweden, college is free and students get a housing stipend. A colleague’s daughter, Kerstin, just completed a five-year dental program. Her family paid nothing for her education.

In Sweden, tax forms are simple, and they come already filled out. The author points out that tax-preparation services cost American taxpayers more than $32 billion per year–not to mention hours of citizens’ time and effort.

And in Sweden, there are no property taxes.

When the conservative government, favoring lower taxes, came to power in Sweden in 2006 one of its first steps was abolish the property tax and replace it with a fixed fee. The real estate fee for services is 7,112 SEK per house ($825 at current exchange rates).

This is the same for everyone no matter what the assessed value of the dwelling. The fee is $12 a month for our co-op apartment in Stockholm. If we owned the same property in Madison, our taxes would be $18,000 a year.

There are sales taxes in Sweden, and they’re high, but even then the author finds mitigating factors:

Sales taxes are high in Sweden, but you don’t see them, and that makes them easier to pay. If something costs 100 kronor, you pay the 100 kronor! Only when you look at the receipt do you see that it costs 80 kronor and 20 kronor for VAT (value-added tax). Many things are taxed at lower rates — 12 percent to have dinner out or buy groceries, 6 percent (only half a percent higher than our sales tax in Madison) for books and tickets to cultural events and in-country travel. Health related items: zero percent.

It is true that sales taxes are regressive; poor people pay a higher proportion of their income in this tax. In the US, a 25 percent sales tax would have to be offset with some kind of subsidies for our many poor. But because Sweden has a narrower income distribution, its sales tax is less regressive than in the US.

A fascinating difference between the U.S. and Sweden is that, in Sweden, if the government wants to encourage an activity, they don’t do it through the tax code.

One of the reasons US income tax preparation is so awful is that we try to reward certain activities by providing a tax deduction. If you do some good deed (like putting in a solar panel) and if you can find the receipt and documentation…, then you can list a number on Form H, line 36, that will lower your taxes.

Does this feel good? Do you feel rewarded for your solar panel? Or is it just another damn number on a tax form?

If the Swedish government wants you to do something, they give you the money. For example: Having children is good for the society and costs parents money. In the US, you get a deduction on your income tax for dependents. In Sweden, you get a check every month and you can use it to buy shoes. For one child you get $120 a month and up to $620 for four children. Every parent gets a check.

The most persuasive argument for Sweden’s approach (at least, from my perspective) is that the taxes generate income used to provide collective goods that make life better and less costly for citizens.

Not having to pay for college gives the best and the brightest the opportunity to attend any school they choose — equalizing opportunity on merit, not parents’ wealth.

It’s not just college. Public amenities like parks and hiking trails, excellent and frequent public transportation, and–oh yes– universal health care.

Paradoxically it turns out the bloated, heavily lobbied, privatized US system spends more tax money ($4,437) per person than Sweden’s socialized health care ($3,184).

This is due to Swedish efficiency rather than poor service. I do get to choose my doctor, have high-quality care a short walk from my home, same-day appointments and short waits when I walk in unannounced.

Keep chanting “We’re number one! We’re number one.” Maybe we’ll convince someone besides ourselves..

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We’re Number One! NOT.

This is my week for borrowing. But when someone says something so much more eloquently than I could, it’s hard to resist.

This time, it is a former student.

I keep in touch with a number of my former students via Facebook. I enjoy seeing their wedding photos, pictures of their children as they grow, and following their career paths. Most of them are truly admirable human beings, and I take a sort of motherly pride in reading their social and political commentaries.

In the wake of the House healthcare vote, one of those former students, –now a government employee who is for that reason understandably reluctant to “go public” with his critique–posted the following diatribe.

The United States has more citizens in prison than any country in the world. Even more than China, which has four times as many people. Republican legislators chose to focus on eroding healthcare protections.

The United States has a public education system ranked lower than Russia. Republican legislators chose to focus on eroding healthcare protections.

The United States has average Internet speeds three times slower than Romania. Republican legislators chose to focus on eroding healthcare protections.

The United States has infant mortality rates nearly twice as high as Belarus. Republican legislators chose to focus on eroding healthcare protections.

The United States has 2.5 million citizens without access to improved drinking water. Republican legislators chose to focus on eroding healthcare protections.

The United States has a youth unemployment rate of 13.4%. Republican legislators chose to focus on eroding healthcare protections.

The United States has 50 million citizens living below the poverty line. Republican legislators chose to focus on eroding healthcare protections.

The United States has greater income inequality than Morocco, Jordan, Tanzania, Niger, Kyrgyzstan, East Timor, and 95 other countries. Republican legislators chose to focus on eroding healthcare protections.

The United States is responsible for nearly twice as much CO2 emissions as the entire European Union. Republican legislators chose to focus on eroding healthcare protections.

The United States has more railways than any country on Earth, by more than 100,000 kilometers, but has virtually no long-range public transportation system. Republican legislators chose to focus on eroding healthcare protections.

The United States spends more on national defense than every other nation on Earth COMBINED, yet seems to be in perpetual warfare and has a barely functioning veteran-support system. Republican legislators chose to focus on eroding healthcare protections.

Next Election Day, please don’t forget this. And don’t ever let them forget it.

I’ve said it before and I’ll say it again: I’d turn this country over to my students in a heartbeat.

Speaking of “turnover”…as a direct result of the health-care vote, the well-respected Cook Report downgraded the 2018 prospects of twenty Republican House members. As the Washington Post’s Plum Line reports

Today, House Republicans are waking up to a big set of brutal ratings changes from the Cook Political Report. In the wake of the vote, Cook has shifted 20 GOP-held seats toward Democrats. Yes, 20. ..Cook analyst David Wasserman writes.. that the GOP passage of a bill this unpopular “is consistent with past scenarios that have generated a midterm wave.”

Meanwhile, Nate Silver takes stock of the abysmal unpopularity of the bill and concludes that the vote for it could prove “a job-killer for GOP incumbents.” And Nate Cohn draws a comparison between yesterday’s vote and the 2010 vote for the Affordable Care Act that helped cost Democrats dozens of House seats and their majority. As Cohn notes, if that history is any guide, it’s possible that those Republicans who voted for the GOP bill could lose substantial support in the next election.

Finally, let me add my voice to those of Hoosier Democrats who are trying to convince Christina Hale to run against Susan Brooks in Indiana’s Fifth Congressional District. Hale would be a formidable candidate; as she displayed during her run for Lt. Governor and her prior tenure at the Indiana Statehouse, she has energy, intellect, eloquence and integrity–and she’s a strong voice for women and girls. I hereby volunteer for her campaign!

And if the Cook Report is right, 2018 will be a very good year….

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Despicable and Inexcusable

When I sat down to write about yesterday’s vote in the U.S. House, I discovered that Paul Waldman had beaten me to it, with a column so detailed and scorching that there is no way I could equal it.

Waldman titled his piece “Every Republican Who Voted for this Abomination Must be Held Accountable.” His words fairly sizzle on the screen–and for good reason.

I won’t mince words. The health-care bill that the House of Representatives passed this afternoon, in an incredibly narrow 217-to-213 vote, is not just wrong, or misguided, or problematic or foolish. It is an abomination. If there has been a piece of legislation in our lifetimes that boiled over with as much malice and indifference to human suffering, I can’t recall what it might have been. And every member of the House who voted for it must be held accountable.

Waldman starts with process criticisms: the GOP passed this bill without holding a single hearing on it. They were desperate to hold the vote before the Congressional Budget Office could issue a report describing its effects. Hardly anyone had an opportunity to read the damn thing. And as Waldman points out, “all this despite the fact that they are remaking one-sixth of the American economy and affecting all of our lives.”

In contrast, the Affordable Care Act (which Republicans constantly claim was “rammed through”) was debated for an entire year and was the subject of dozens of hearings.

Waldman notes that every major stakeholder organization vocally opposed this bill: the American Medical Association, the American Hospital Association, the AARP, the American Cancer Society, the American Heart Association, and on and on.

But then he gets to the horrifying details. Quoting from his exhaustively researched article:

Takes health insurance away from at least 24 million Americans; that was the number the CBO estimated for a previous version of the bill, and the number for this one is probably higher.
Revokes the Affordable Care Act’s expansion of Medicaid, which provided no-cost health coverage to millions of low-income Americans.
Turns Medicaid into a block grant, enabling states to kick otherwise-eligible people off their coverage and cut benefits if they so choose.
Slashes Medicaid overall by $880 billion over 10 years.
Removes the subsidies that the ACA provided to help middle-income people afford health insurance, replacing them with far more meager tax credits pegged not to people’s income but to their age. Poorer people would get less than they do now, while richer people would get more; even Bill Gates would get a tax credit.
Allows insurers to charge dramatically higher premiums to older patients.
Allows insurers to impose yearly and lifetime caps on coverage, which were outlawed by the ACA. This also, it was revealed today, may threaten the coverage of the majority of non-elderly Americans who get insurance through their employers.
Allows states to seek waivers from the ACA’s requirement that insurance plans include essential benefits for things such as emergency services, hospitalization, mental health care, preventive care, maternity care, and substance abuse treatment.
Provides hundreds of billions of dollars in tax cuts for families making over $250,000 a year.
Produces higher deductibles for patients.
Allows states to try to waive the ACA’s requirement that insurers must charge people the same rates regardless of their medical history. This effectively eviscerates the ban on denials for preexisting conditions, since insurers could charge you exorbitant premiums if you have a preexisting condition, effectively denying you coverage.
Shunts those with preexisting conditions into high-risk pools, which are absolutely the worst way to cover those patients; experience with them on the state level proves that they wind up underfunded, charge enormous premiums, provide inadequate benefits and can’t cover the population they’re meant for. Multiple analyses have shown that the money the bill provides for high-risk pools is laughably inadequate, which will inevitably leave huge numbers of the most vulnerable Americans without the ability to get insurance.
Brings back medical underwriting, meaning that just like in the bad old days, when you apply for insurance you’ll have to document every condition or ailment you’ve ever had.

One significant item Waldman’s list omits: the measure also defunds Planned Parenthood.

Every single Indiana Republican voted to do this to the American public and the citizens of Indiana.

I expected those votes from Rokita, Walorski, Banks and Bucshon, and I’m disappointed but not surprised by Messer and “Tennessee Trey.” But I am disgusted by Susan Brooks, because I’ve known her a long time; unlike her colleagues, she’s highly intelligent–and she knows better. I’ve watched her abandon integrity in vote after vote (during her first two years, her voting record was virtually indistinguishable from that of Michelle Bachmann.) I’ve watched her hide from her constituents during the recent Congressional recess. And now, I’ve watched her obediently vote with the lunatic caucus of her party for legislation that is not only absolutely indefensible, but will disproportionately harm women. It makes me physically ill.

Again, Waldman says it best:

Perhaps this bill will never become law, and its harm may be averted. But that would not mitigate the moral responsibility of those who supported it. Members of Congress vote on a lot of inconsequential bills and bills that have a small impact on limited areas of American life. But this is one of the most critical moments in recent American political history. The Republican health-care bill is an act of monstrous cruelty. It should stain those who supported it to the end of their days.

If Hoosiers (and other Americans) don’t begin working right now to defeat every single Representative who voted for this cynical assault on decency and basic humanity, we deserve what we get.

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What Portugal Can Teach Us About The Drug War

America’s policymakers evidently didn’t learn anything from the disaster that was alcohol prohibition. (Jeff Sessions clearly didn’t!)

In fact, for a country whose citizens constantly assert a belief in individual liberty, we rank right up there on the forced prudery scale. As any historian or political scientist can confirm, America’s legal landscape is littered with religious moralism masquerading as public safety.

When it came to drug use, and our incredibly expensive and demonstrably ineffective drug war, moralism joined hands with racism, first against Asians and Opium, and then against African-Americans, as Michelle Alexander copiously documented in The New Jim Crow.

Years of criminal justice research have confirmed the futility–and injustice–of America’s approach to drug prohibition, an approach that creates drug “schedules” unsupported by evidence of harm, fails to distinguish between use and abuse, treats drug use as a criminal justice issue rather than a public health problem, and requires massive wasteful public expenditures.

Those are mistakes Portugal no longer makes.

Portugal decriminalized the use of all drugs in 2001. Weed, cocaine, heroin, you name it — Portugal decided to treat possession and use of small quantities of these drugs as a public health issue, not a criminal one. The drugs were still illegal, of course. But now getting caught with them meant a small fine and maybe a referral to a treatment program — not jail time and a criminal record.

The reactions from so-called “experts” were predictable. And wrong.

Whenever we debate similar measures in the U.S. — marijuana decriminalization, for instance — many drug-policy makers predict dire consequences. “If you make any attractive commodity available at lower cost, you will have more users,” former Office of National Drug Control Policy deputy director Thomas McLellan once said of Portugal’s policies. Joseph Califano, founder of the Center for Addiction and Substance Abuse at Columbia University, once warned that decriminalization would “increase illegal drug availability and use among our children.”

But in Portugal, the numbers paint a different story. The prevalence of past-year and past-month drug use among young adults has fallen since 2001, according to statistics compiled by the Transform Drug Policy Foundation, which advocates on behalf of ending the war on drugs. Overall adult use is down slightly too. And new HIV cases among drug users are way down.

Now, numbers just released from the European Monitoring Centre for Drugs and Drug Addiction paint an even more vivid picture of life under decriminalization: drug overdose deaths in Portugal are the second-lowest in the European Union.

Portugal has now operated under decriminalization for fifteen years, a time period sufficient to allow us to draw some conclusions. At a minimum, we can conclude that the country hasn’t experienced the dire consequences that opponents of decriminalization predicted. The Transform Drug Policy Institute, which has analyzed Portugal’s policy outcomes, says of of Portugal’s drug laws,

The reality is that Portugal’s drug situation has improved significantly in several key areas. Most notably, HIV infections and drug-related deaths have decreased, while the dramatic rise in use feared by some has failed to materialise.

Of course, there are other aspects of Portuguese society that are important contributors to these salutary results. As an article from Vice points out,

Though often narrowly assessed in reference to its decriminalization law, Portugal’s experience over the last decade and a half speaks as much to its free public health system, extensive treatment programs, and the hard to quantify trickle down effects of the legislation. In a society where drugs are less stigmatized, problem users are more likely to seek out care.

So let’s see….a country that doesn’t stigmatize or criminalize personal drug use, and provides its population with an extensive “free public health system” seems to have solved–or at least significantly moderated–its drug problem.

And of course, Portugal–like every other industrialized country— spends far less per capita on medical care than the U.S. does.

We don’t learn from our own failures, and we refuse to learn from other countries’ successes. I think that’s what’s called American Exceptionalism.

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Yep….

In the wake of November’s election, my biggest concern was the prospect of Donald Trump in charge of a unified government: with a Republican House and Senate, I was sure we would see legislation canceling progress on the environment, reversing rights for women, gay citizens and immigrants, and eviscerating public education, among other nightmares.

Jennifer Rubin, a conservative columnist for the Washington Post, recently explained why we have yet to see that legislation. Her column was titled “Here’s why, even with control of everything, the GOP can’t govern.” She began with a quote from the Wall Street Journal:

Many popular postelection wagers took a hit last month after Republicans failed to repeal and replace the Affordable Care Act, which highlighted the difficulties they could face advancing new legislation even while holding the White House and both houses of Congress.

She went on to describe the current situation.

If one had any doubt, this week’s events — a half-baked tax proposal that would not pass one let alone two houses, another failed effort at Trumpcare, White House bluffs and retreats on the budget — should have disabused observers of the notion that Trump’s agenda would sail through Congress…

Trump cannot manage to devise attractive legislation or get down in the weeds of negotiation, while House Speaker Paul Ryan (R-Wis.) seems willing to accommodate whatever group is currently rocking the boat, regardless of the likelihood of success. Neither Ryan nor Trump can lead a successful legislative effort. As a result, members of Congress figure there is little reason to stick their necks out for either one. “Members of Congress have watched with horror as Trump thrashed about in Washington with little predictability, guided by top aides with little experience in the trenches of government,” Time reports. “Staffers with decades of Hill experience find themselves sidelined by political neophytes who think barking orders can get Congress to act. More than once, White House officials have told Paul Ryan that his role as Speaker may be in jeopardy if he does not do more to help Trump.”

Rubin notes that –given his priorities–Trump’s inability to get things done is a gift; gridlock looks pretty good when balanced against this administration’s goals.

This is not to say we don’t have substantial problems or need competent leadership. However, this president and this Congress have not a clue how to proceed. They would potentially do much more harm than good. They are prisoners of extreme ideology, unrealistic expectations and their own incompetence.

Wonkblog recently came to a similar conclusion. In a column tracing the reasons that financial markets aren’t betting on a big Trump stimulus anymore, Matt O’Brian wrote

But a funny thing happened on the way to Trump’s making great deals. It turns out that everything is more complicated than anyone named Donald Trump knew. It isn’t easy to get Republicans to agree on a health-care plan when some of them think the problem with Obamacare is everything, and others think it’s just the name. Or to get the whole party to agree on which tax loopholes to close to pay for all their tax cuts. The result, according to Trump, is that health-care reform is always a week away, and tax reform, always two weeks.

In the meantime, though, the economy is still chugging along at the same 2 percent pace it has been the whole recovery. So when you add it all up — a government that’s doing nothing today, that looks as if it will be doing nothing tomorrow, and an economy that’s doing nothing different from what it has been the last decade — there’s no reason to expect the dollar to go up anymore. And it hasn’t. It has given back most of its post-election gains to now only be up 1 percent over that time.

I don’t know about you, but I’m gratified that these clowns seem unable to learn.

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