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Actually I usually pick Sweden, mostly because I have friends there, or that came from there. I can sanity check what I am saying. I dont always do so, but it helps. I also tend to pick 1970 as a comparison date, why? year I was born. I do sometimes use Denmark, but not as often.
Pch1013 you're correct, I was referring to them going to the Euro standard for their money.
Now lets compare then...latvia GDP is one thing you used.
Compare it to the united states:
Latvia GDP in 2008: 33,669,367,720
Latvia GDP in 2009: 25,875,781,250
Latvia GDP in 2010: 24,054,293,524
Latvia GDP in 2012: 28,324,131,627
vs's the united states from the same source you used:
$13,898,300,000,000
$14,419,400,000,000
$14,991,300,000,000
$15,684,800,000,000
notice a difference? Yeah.
Now I could just use this and call it good, but lets both be honest with each other, this is a very complex topic. I dont think GDP growth is the whole story, and I would be surprised if you did.
So I suspect 2 unfunded wars, and massive tax cuts might just have had something to do with us having some debt. hmmm.
Also when you talk about the Latvian tax reduction, I suppose you think the current tax rate is just right? OK sure! Its 28% of GDP....the united states is 22%, we'd have to increase our taxes by another 1.2 trillion a year....which oddly enough would reduce our deficit!
See? These things arent that simple. For example-they have a personal tax rate of 25%...plus a social insurance rate of....%24.09 paid by the employee, and 11% by employer. FAR higher then ours. (Actually that surprised me)...but a personal income tax rate of 25% AND a value added tax of 21%, or 5-9% reduced rate (no idea what the reduced rate means). Heres a good review of their taxes:
Actually I usually pick Sweden, mostly because I have friends there, or that came from there. I can sanity check what I am saying. I dont always do so, but it helps. I also tend to pick 1970 as a comparison date, why? year I was born. I do sometimes use Denmark, but not as often.
Pch1013 you're correct, I was referring to them going to the Euro standard for their money.
Now lets compare then...latvia GDP is one thing you used.
Compare it to the united states:
Latvia GDP in 2008: 33,669,367,720
Latvia GDP in 2009: 25,875,781,250
Latvia GDP in 2010: 24,054,293,524
Latvia GDP in 2012: 28,324,131,627
vs's the united states from the same source you used:
$13,898,300,000,000
$14,419,400,000,000
$14,991,300,000,000
$15,684,800,000,000
notice a difference? Yeah.
Now I could just use this and call it good, but lets both be honest with each other, this is a very complex topic. I dont think GDP growth is the whole story, and I would be surprised if you did.
So I suspect 2 unfunded wars, and massive tax cuts might just have had something to do with us having some debt. hmmm.
Also when you talk about the Latvian tax reduction, I suppose you think the current tax rate is just right? OK sure! Its 28% of GDP....the united states is 22%, we'd have to increase our taxes by another 1.2 trillion a year....which oddly enough would reduce our deficit!
See? These things arent that simple. For example-they have a personal tax rate of 25%...plus a social insurance rate of....%24.09 paid by the employee, and 11% by employer. FAR higher then ours. (Actually that surprised me)...but a personal income tax rate of 25% AND a value added tax of 21%, or 5-9% reduced rate (no idea what the reduced rate means). Heres a good review of their taxes:
Bottom line however in the end is that 28% of GDP compared to our 22%. So their "austerity" would be our "wild spending"
Fascinating huh?
It should be noted that what you're referring to is tax receipts equalling 28% of GDP in Latvia, whereas they only equal 22% here. Which....if you think about it sort of validates supply-side theory. The theory typically states that tax rates either too high or too low won't raise sufficient revenue....that an amount somewhere in the middle will raise the most revenue...an effect called the Laffer curve. So effectively what Latvia has done is raise a higher percentage of revenue to GDP with a 25% flat tax replete with comparable deductions to ours as well as a lower corporate tax rate. It should also be noted that both Estonia and Lithuania have had comparable recoveries with comparable tax receipts compared to GDP with a lower marginal rate....21% I believe. Now...that doesn't factor in a VAT which Latvia has and we don't...but subtracting the VAT we are closer to being in line regarding the percentage of GDP tied to income receipts. The SS tax contributions typically aren't factored into their receipts because they're dedicated spending, not a part of the general fund. You mentioned wild spending above but none of this is indicative of spending necessarily...just the capacity to do so.
Now regarding the GDP...Latvia had a stark drop and we didn't...but my contention is at what cost? What percentage is our debt compared to GDP, versus theirs. It's held with some degree of consensus amongst economists that 90% debt to GDP starts to effect growth negatively. Ultimately all countries have debt that needs addressed...the question is of when and how. Is stark austerity and short term pain worth it to restore fiscal prudence...or is it more appropriate to exacerbate an underlying problem to shield your citizens? I believe the latter is most responsible...but there's no question that it isn't the most popular.
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