Friday, January 1, 2016

Despite What Hillary and Bernie Say, College Tuition Won't Ever Be Free for the Young ... Down the Road, It Will Prove to Be Unaffordably Costly for Those Being 'Helped' in the Here and Now

Free lunches are never free, despite what the politicians may say. In the end, somebody always pays, and the ones doing the eventual paying invariably are those being 'helped' by the government in the here and now.

That said, offering free stuff in the short term is a sure vote getter, and let's face it --- too many of us, including voters, choose not to look past next week and see what's ahead if we don't clean up our act today.

Why we continue to follow European welfare states to bigger and bigger government spending which will result in unsustainable debt loads, lousy employment opportunities and slow economic growth is beyond my ability to comprehend, but that's exactly what We the People are doing.

Of course, paying fully in the short run for promises made isn't and never has been in the populist politicians' playbook. Those payments will only come later, and perhaps much later.

But come they will and after today's politicians have left office. Then today's young 'beneficiaries' will have grown to be older and forced to pay in the form of taxes and lost opportunities for what they were 'given' by their pandering and beneficent government gurus --- such as 'free' college tuition.

Free college tuition promised by Democrats is one big illusion says this about the merits of free college tuition:

Sen. Bernie Sanders and former Secretary of State Hillary Clinton, Democratic candidates for president, keep calling for the European model of expanded benefits. They just don’t tell us that it takes sky-high payroll and value-added taxes to pay for them. . . .

Sanders said: “It is an extraordinary investment for this country. Germany, many other countries do it already.” Clinton is calling for free community college tuition, debt-free four-year college, and free federally funded universal pre-school.

Yet . . . in Germany, the payroll tax is 33%, more than double the 16% for the U.S. Plus, Germans pay a value-added tax of 19% on most products they buy. Residents in European countries that offer free tuition pay for the privilege out of tax dollars. It would be politically impossible in the United States to levy an additional 17% payroll tax and a 19% sales tax so that some can go to college.

Nor should all Americans be paying higher taxes for free tuition for some. As University of California professor Armen Alchian wrote in the 1970s, a college education is an investment that results in a stream of benefits in the form of higher earnings. Why should those without college educations pay for others to go when the uneducated will not reap the rewards?...

Germany is not alone in its high payroll taxes. According to the Organization for Economic Co-operation and Development, France’s payroll tax rate is 38% — 12 points higher than the European average of 26%, the highest in the OECD. Its value-added tax is 24%. France’s top tax rate on personal income, 54%, is also one of the highest in the OECD. Only Denmark, Sweden and Portugal maintain higher personal income taxes. . . .

Income taxes are about the same in Europe as in the United States. The average effective income tax rate for a worker earning the average wage in Europe is 15%, and it’s 16% in the United States. But payroll taxes and VATs are far more regressive than income tax rates because everyone pays them, regardless of income. Such taxes finance not only free college in Europe, but also early retirement, unemployment benefits and, depending on the country, sick leave and maternity leave.

Payroll and value-added taxes are insidious because they are practically invisible. Payroll taxes are removed from the paycheck before it is received by the worker. And unlike the United States, where the sales tax is a separate item on a receipt, in Europe the VATs are invisible, added into the cost of the product. This makes it easy for policymakers to gradually raise these taxes without people protesting.

In “The Almost Nearly Perfect People: Behind the Myth of the Scandinavian Utopia,” Michael Booth argues that the Scandinavian countries that are frequently cited by Democrats as examples of progress are far from ideal. In addition to their high cost of living, the countries have some of the highest tax rates in the developed world. Across Europe, to varying degrees, governments are spending heavily on public programs they can only fund by taxing their people, the middle class included, at astronomical rates. . . .

Presidential hopefuls can paint as rosy a picture of Germany and Europe as they wish, yet no amount of praise can obscure the plain truth that “free” education and maternity leave is anything but free. Government programs impose a real cost on taxpayers, the middle class included. If the American people want to avoid excessive levels of taxation for benefits more efficiently provided by the free market, then they will have to look past debate rhetoric to take a long look at those countries that have already fallen to prey to the lure of “free” government programs."

Summing Up

To repeat, there are no free lunches --- except for politicians, of course.

Sooner or later, we'll have to pay the bills for all this free stuff, college tuition included.

But since it will probably be later when the payments are finally made, the ones doing most of the paying will be the youngsters we're purportedly 'helping' today.

And eventually when they wise up, they won't be at all pleased with what we, including our elected officials and politicians, have assisted them in doing to themselves.

That's my take.

Thanks. Bob.

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