I live and work in Germany and if I look at my payslip every month there are a lot of things which are deducted which are NOT (income) tax. And to be fair some of those things are also paid by my employer, though in the end that amounts to tax on work, but that's a whole other story...
Anyway, just my two cents...
Tax burdens falling in OECD economies as crisis takes its toll
Aggregate tax burdens in OECD economies, calculated as the ratio of tax revenues to gross domestic product
So any VAT, taxes payed by employer and such are included. And if you want to look at ""net-income of poor working blokes like me decreasing" things" I think you should add ""net-income of poor working blokes like me increasing" things". But then you are looking at something else. A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!
Suppose that a country runs a public pension system, paid out of income taxes. Suppose said country decides to slash public pensions in favour of a scheme where the employer pays a percentage of payroll into a pension fund (that invests in said country's sovereign debt), and then lowers income taxes correspondingly.
The "tax burden" of this hypothetical country goes down during this exercise. But there has been no change in the aggregate cash flows involved. There has been a regressive distributional change, but that does not show up (immediately) in the aggregate flows.
(I need to write something on the micro- and macroeconomic similarity between private pension contributions and taxes...)
But then again, the harder I look at most of these macroeconomic accounting conventions, the more obvious insanity I encounter. For instance, the conventional assumption in evaluating the value of goods and services provided free of charge is that their value is equal to the cost of providing them. In other words, the public sector and most nonprofits earn no return on their capital plant.
This seems like a more or less sensible convention, until you realise that it means that a railway or a hospital that performs precisely the same functions using precisely the same supplies and manpower produces goods and services of a different value depending on whether it sells those goods and services for profit or not.
(A more sensible convention would be that capital used in the free provision of goods and services earns a return on investment comparable to that of the private sector, and then booking this return as a direct non-monetary transfer to the users, in the same way that the operational cost is booked as a direct non-monetary transfer to the users. That would ensure consistency across the (artificial) public-private divide.)
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
