Coearth wrote:
@Reub: In Singapore, there is a 7% Goods and Services Tax (GST) for all product purchases and services. Resident's personal income tax max out at 20% for income of S$320,000 and above. No capital gains tax for personal investment, no bonds and bank savings interest tax, no estate duty tax since 2008, and dividends are taxed as part of personal income only.
I am presuming that when you say that the income tax rate maxes out at 20% there are much lower rates for lower income levels (i.e. it is not a flat 20% tax) and that there are personal exemptions as well. For instance, how much would someone who made, say, $50,000 SGD (just over $40,000 USD at the exchange rates at the time of this post) pay in income tax?
Also, since capital gains and interest are completely untaxed don't people and companies try to set up tax shelters to convert regular income into capital gains and/or interest? They most certainly do in the United States...at least if they are wealthy enough to hire good accountants and tax attorneys.
Singaproe does not manufacture cars. Rather, the government authority sells certs called Certificate of Entitlement (COE) which people have to buy from government in order to be entitled to own a car - due to limited COE supply, currently each COE cost all time high of S$60k to S$80k, and on top of that buyer still have to pay for the price of the car, some of which are now cheaper than the COE itself. The government collects considerable road toll everyday through the islandwide Electronic Road Pricing (ERP) gantry systems which automatically deducts money from each car passing through the gantries during peak hours. I guess the government is somewhat efficient when it comes to tax collection matters.
Doesn't this mean that only the wealthy can afford to own cars and everyone else has to take the bus and MRT? Seems rather class-biased and regressive to me. I can understand why the Singapore government would not want more cars on an already crowded island's roads but why would they not set the tax as a flat percentage of income instead of as a flat amount, so as to discourage the rich (including the government ministers who make millions a year) as much as the poor from driving private cars? If any politician tried to implement such a classist and unfair scheme in the US (in any state) he/she would be out of a job the very next election.
Singapore does not implement welfare system. Emphasis is on self reliance and the social safety net is varied but not really thick
What is ComCare and the PA Scheme, then? It looks to be rather more restrictive than most of our states' welfare systems or our Federal government's SSI (supplemental income if you are old, disabled, or crazy) but it does seem to me to be a form of government-provided welfare. Here in the US our welfare system is funded by the national government but controlled by each state so every state has different rules. In my state (Georgia) and in most of the southern US for that matter there are cash benefits, heating and electricty assistance, free medical care (Medicaid), free lunches at school, education assistance, and food stamps if you are very poor and have children but if you are an unmarried childless adult male you are entitled to basically nothing except to be homeless.
Laid off workers do not receive automatic benefits, rather there are schemes to partial or fully subsidize laid off workers to train them in new skills
When you are laid off in the US you can receive anywhere from 4 months to a year or so (two years in some states but that will end this year as far as I know unless renewed) of unemployment benefits IF you worked for enough time (usually 90 days or 180 days; varies by state) and your employer tells the labor department you were laid off "without cause". If they say you were laid off "for cause" i.e. you were fired (even if you were truthfully not fired for performance and were only laid off through no fault of your own) then you get nothing. Of course if your employer lied about this you can appeal it though teh labor deparment and courts if necessary but that can get time-consuming and expensive and there's no gurantee of any success. To be fair, though, most employers are honest and don't try to lie like this.
Unemployment compensation is not typically seen as "welfare" here since it is more like social insurance that was paid (in the form of Federal and state unemployment insurance taxes) with money that would have been paid to a worker as wages if it wasn't taxed away...and also it is not seen as welfare because if you don't work (or couldn't find a job in the first place) you are obvioulsy not entitled to it.
Food stamps are available to the needy when they applied for it and are qualified.
Here (in my state anyway) they are available with little or no time limit if you have children. If you are childless you can receive them for three months; after that you can just go and starve to death. This seems more than a little unfair since a childless adult will pay far MORE in Federal and State income taxes (thanks to EIC and the refundable child credit which reduce or eliminate tax liability for those who have children) than an an adult with a kid or two even if both make the exact same income or even if the person with children makes a good bit more than the one without.
The government sometimes returns budget surplus to Singaporeans in the form of cash handouts or rebates on municipal services.
Utility rebates? Service and conservancy charge rebates? Growth dividends (was there a growth dividend for 2012 and how much was it)? The only state that does something like that here in the US is Alaska; they have a permamnet fund that pays dividends every year to every Alaskan (usually somewhere between $1000 and $2000 per person per year...so if the dividend was $1200 and a there were four people in a household they would get $4800 in total...and it isn't means-tested; rich, middle-class, and poor get it alike).
n Singapore, the Central Provident Fund (CPF) is a compulsory comprehensive social security savings plan for working Singaporeans and permanent residents primarily to fund their retirement, healthcare and housing needs. Typically, 20% of a person's pay is contributed to CPF every month - only the first S$4500 of monthly salary are liable for CPF contribution. Employer contributes another 14.5%
34.5% of income between the employer and employee sounds very steep until you realize that in the US a worker who mkaes, say, $40,000 USD a year will probably have the employer (if his employer provides health insurance...not all do) paying about six or seven thousand USD per employee every year in health insurance premiums (and the employee has a thousand or two thousand dollar deductible and/or co-payment for any major hospital care or diagnostic tests), plus have about 6% of his own income put into a 401K (tax-deferred savings plan) with another half of that matched by his employer; on top of that, there is a Federal payroll tax for old age and disability social insurance (Social Security) and for Medicare (healthcare provided by the government after you turn 65) that is split between the employer and employee with each paying about 7.6% (although after about $110,000 a year most of the payroll tax no longer applies i.e. it only applies on the first $110K of income...and capital gains, dividends, and interest are payroll tax exempt since it only applies to earned income). It probably works out to just as much or more than what a Singaporean pays.
How much does one have to have in the Ordinary Account invested in the g
Portions of CPF are reserved exclusively for potential medical expenses, which include a compulsory basic hospitalisation insurance and a term insurance insuring against death. It would be advantageous for people to apply to upgrade their hospitalisation insurance scheme so that they become liable for minimal or zero percent of hospital bill. The medical system, hence, is not socialized here.
How much does one have to set aside in a CPF Special Account for medical expenses before it is considered "full" and you can start adding any additional surplus to the Ordinary Account? Also, I was unaware of the term insurance rquirement but was told (about three years ago by a cowworker who was from Singapore) that while CPF and Medisave contributions were mandatory by law that buying the basic insurance policy (Medishield) was not compulsory but only strongly encouraged and done in an "opt-out" (i.e. if someone does not specifically choose not to participate he/she is automatically in the scheme...the "default option" is being enrolled, not being unenrolled) manner to take advantage of behavioral inertia (many 401Ks and employer-provided health insurance policies here work this way). We will have compulsory health insurance here statrting in 2014 and is is NOT popular and may very well be repealed by this time next year.
What interest rates are paid on the Special Account and Ordinary Account and are they fair (at least equal to inflation) or are they kept at below-inflation levels to allow the government a cheap source of credit (financial repression)? How much (last I checked it was $20,000 in the Ordinary Account and more than that in the Special Account) is one mandated to keep in the Special and Ordinary Accounts earning the government-set interest rate before one can start investing in risk assets like mutual funds, unit trusts, bonds, or gold?
How much does one of the upgraded "Enhanced Shield" insurance schemes cost for a healthy 25 or 30 year old? I know when i looked at what Medishield cost it seemed ridiculuosly cheap (the premiums for a whole year for someone my age were less than what my health insurance at work cost for one week) although the maximum annual and lifetime benefit were laughable ($150,000 lifetime benefit IIRC...you could-although it is not too likely-exhaust that in one hospital stay here if it was for something very serious).
Finally, you say it is "not socialized" which is true (since it's not a purely socialized system like Britain's NHS or our Veterans Health Administration) but doesn't the government run some of the hospital groups and polyclinics (I know Singapore has quite a few private clinics and hosptals as well) and subsidize medical care rather heavily for those who use the C-class wards? Didn't this start costing your government too much money since more than a few middle class and even some wealthier people were choosing the C-class wards so now they are means-testing them?
The CPF is typically used to buy people's first house or apartmetns, so most people own their home instead of rent it.
Do they actually own (freehold title in fee simple once the mortgage is paid off) it or is it on a 99-year or 100-year leasehold from the government?
Iisn't it also true that HDB and BTO apartments are unavailable (execpt in special circumstances or by a very limited lottery scheme) to single childless adults so they are forced to pay market prices for housing (which have soared with the last ten years' property bubble and with Singapore''s population growth due to the huge influx or Permanent Residents) since the Singapore government wants to encourage people to breed more children since the population replacement fertility rate is among the lowest in the world?
Finally (and this isn't related to housing or CPF or healthcare or anything else in your post but I wanted to ask a Singaporean about this)...why does your nation still use conscription to man its army? To most in the United States the very idea of forced military or public service is thoroughly loathsome and right up there with slavery. I would imagine a country as free-market oriented as Singapore would have taken Milton Friedman's advice (I'm pretty sure you know who he was but if not he was a famous economist, vociferous defender of the free market and voluntary exchange instead of government controls, and the intellectual father of the all-volunteer military in the United States) and created a national defense force composed of willing volunteers rather than slaves (anyone who is forced to serve under penalty of caning and prison is no freer than a slave in my opinion). Why has this not been done yet? Would it cost that much more to pay market wages to soldiers when a country can afford to pay its government ministers millions a year?
