I think a lot of the reason for the war on taxes is the exorbitant privilege [1] of owning the world reserve currency. It lets America print as many dollars as it wants, and borrow in a currency it controls entirely. In a normal country this would result in severe inflation, but because America borrows and prints a currency that is necessary abroad to conduct international trade, it is able to "export" a large part of its inflation.
In such a system, it is rational to cut taxes as much as possible and instead rely on borrowing and monetization of debt. It allows America to limit the load on its own citizens, who in turn enjoy "exorbitant privilege" in the colloquial rather than economic sense, and then have the costs spread amongst the billions of people who don't live here. Privatize the gains, socialize the losses.
The flip side is that if the U.S. dollar ever loses its reserve currency status, that is literally the end of the United States. It will no longer have the ability to fund the government, which is fed by debt that is largely snapped up by foreigners who need a place to park the dollars that move abroad from the persistent trade deficits needed to sustain reserve currency status. It will also no longer have a citizenry or economy capable of doing anything other than moving capital (finance) and jobs (tech) around in the global economy, since in the current reserve currency economy, those are the only sectors that are profitable to go into. If it happens, expect basically a collapse of society and multi-sided civil war.
> It lets America print as many dollars as it wants... its own citizens enjoy "exorbitant privilege" and have the costs spread amongst the billions of people who don't live here.
This is a popular and tearful story of privilege but it's untrue today. In order for the "privilege" to exist, the foreign holdings of US debt must increase every year by amounts equal to the yearly US shortfalls... however, since around 2015, foreign holdings of US debt have been falling to flat. Nowadays, not only there isn't any "exorbitant" privilege, there isn't any privilege at all.
The shortfalls are funded by the US population at large via internal debt and inflation.
There's a slight uptick of foreign holdings this year due to instability but any public benefit from that is dwarfed by the losses caused by inflation and tariffs.
The yearly data for foreign holdings of US debt are easily found online.
Foreign debt doesn't have to increase by the U.S. deficit if US currency used in foreign trade makes up the difference. The U.S. approach since 2009 has generally been to monetize the debt [1], having the Federal Reserve buy it and issue new money in its place. Normally this would result in inflation per the money equation PQ = MV; if you hold velocity V roughly constant, an increase in the money supply M either needs to be backed by an increase in real goods transacted Q, or it results in a higher price level P. Per the FRED graph, M2 money supply has been growing significantly faster than real GDP, and so we should've been seeing significant inflation over this time period.
But the dollar is used for 60-80% of international trade [2]. Many dollars don't stay in the U.S. to be transacted among the locals; they go abroad, and are held as foreign currency reserves or transacted between other nations for international trade. Under these conditions, the relevant Q in the money supply equation is the value of international trade denominated in dollars, which has been growing close to the increase in money supply. The dollars are getting soaked up for international transactions, preventing severe inflation at home.
I'm trying to model out what happens if the volume of dollar-denominated international trade declines, which seems to be the situation we're entering now and is the stated policy of the Trump administration. Certainly one consequence is that the stock market would crash by ~70-80%, which is the component of major S&P 500 companies earnings that are earned abroad. I suspect that this would trigger major chaotic effects (like WW3 or a revolution in the U.S.), that make future economic predictions irrelevant.
Ah your comment finally makes me understand the premise of MMT[1], which seems to presuppose that the US will always have this special status. Makes the current administration's geopolitical recklessness even more terrifying.
Going down that list, the first 9 are all tech (the "Mag 7" plus Broadcom). The first non-tech is Berkshire Hathaway at #10, but that is financial services. The top 10 together are 38.63% of the index. Then you have Walmart at #11 and 1.57% of the index, then 2 financials (JP Morgan Chase and Visa) and a pharmaceutical (Eli Lilly). The rest of the top 30 includes 6 more tech companies (Micron, Oracle, AMD, Netflix, Palantir, and Intel) and 2 more financials (Mastercard and Bank of America).
Your claim wasn’t that many of the biggest US companies by market cap are in finance and tech, but rather than nothing else is profitable. Do you see the difference?
It is even more dominated by finance and tech: the list is Alphabet, NVidia, Apple, Microsoft, Amazon, Berkshire, Meta, JP Morgan Chase, Bank of America, and then the first non finance/tech comes in at #10 with Exxon. Exxon's earnings are less than 1/4 of Alphabet's.
The reason to prefer market cap over earnings is that market cap includes investors' view of the company's future earnings power, but they both tell the same story.
I would be open to paying higher taxes if I believed it would help address the deficit and debt (instead of just enabling more spending) and if I believed that the money was being well spent.
Earlier in my adulthood, I would happily vote for almost any tax or levy, because I had faith that that money was turning directly into societal good.
In other cases, it is going to real nonprofits that are tasked with solving problems that never seem to get better, no matter how much money is spent.
In yet other cases, the money goes to building transit (something else I was previously very bullish on), but that, once built, seems to be governed by principles of limitless permissiveness (an example from a few days ago: https://komonews.com/news/local/only-8-metro-fare-enforcemen...)
It's hard to feel invested in the programs that my taxes pay for when it doesn't feel like they reflect my values.
I am also from Seattle, and the fraud and waste in the Washington state government is horrifying. The Attorney General and governor are threatening independent journalists with prosecution if they investigate it.
And California, where I lived ten years, is even worse now.
We developed chronic overspending habits when interest rates were historically low. This made servicing the debt cheap and deficit spending reasonable. Why wouldn’t the government borrow at 0.14% (!!!) with GDP growth at say 3-4%.
Now the math doesn’t work with a federal fund rate of 4-5%. And now as our debt rolls over it gets refinanced at the higher rates. Debt servicing is roughly 20% of the government budget and will soon be 25-35% in ~10 years assuming we don’t further accelerate deficit spending (which seems unlikely).
US govt needs to cut dramatically to avoid this and the otherwise likely “solution” otherwise is inflation to make the debt effectively less expensive which also raises interest rates.
We can’t tax our way out of this. Only 60% of US households earn enough to pay federal income tax. The top 1% of earners already pay roughly half of all tax revenue, top 10% is roughly 75%. Furthermore, there is profligate waste in government, inefficiency, no matter where the taxes came from even if we could materialize them.
The government needs to shrink dramatically. This type of change is best done gradually but immediately to avoid later shocks (eg: Medicare suddenly disappears)
Most (but not all) other developed countries have both a larger government and a smaller deficit per capita. A smaller government is not the only solution.
They are almost all also going bankrupt. Also, those governments may be efficient but the US is not. You do not get a more efficient government by making it larger.
Debt-to-GDP of Germany is around 63%, that is notably less bankrupt than the US at 120% which is approaching Italy (that went from 154% in 2020 to around 135% now).
According to the tables in that source, the top 0.001% pay about 25% income tax, which of course is income after they've had their accountants smooth over everything. The highest income tax percentage seems to be at the top 1% level. I assume this is due to higher income earners having better/more aggressive tax accountants.
If the people with 90% of the income pay less than 90% of the total income taxes, something is wrong. Every lower income should be paying less, as a percentage of their income.
I think we can debate on how progressive (in terms of as you earn more you pay more) the US tax brackets should be. They are already fairly progressive relative to peer nations.
However, I am skeptical that higher taxes or just taxing the rich or high earners more will solve the deficit or government efficiency issues.
Also I disagree with 90% of income should pay 90% of taxes. People who are better capital allocators than the government should be incentivized to allocate over paying taxes.
> Also I disagree with 90% of income should pay 90% of taxes. People who are better capital allocators than the government should be incentivized to allocate over paying taxes.
We've spent the past 50 years lowering the taxes on those who have the most income/wealth with only negative outcomes to show for it.
I think the mistake you're making is assuming that those best at accumulating capital are also the best at allocating it. If they were, I expect we'd see a lot more investment into new technologies and markets rather than the large increase in rent-seeking we have seen instead.
That’s not the point the point is to illustrate that right now for every tax payer 20% of every dollar collected is spent on interest. Not even on the principal just on the interest expense.
This is such a Boomer way of looking at this. First of all, hardly anyone pays that much. Secondly, the more correct way of viewing such a situation is that you make a shitload of money.
2. Do you think an ageist ad hominem improves your argument?
3. What even is your argument? That in this contrived hypothetical the person in question is making a “shitload” and that somehow invalidates that 20% of EVERY tax dollar collected is used to just pay interest on debt (not even principal, just interest)
> The top 1% of earners take in 22% of total income and pay 40% of all federal income taxes.
How misleading. Income here means AGI, i.e. taxable income as defined by the IRS. That excludes unrealized capital gains, loans against said unrealized capital gains, etc. For example, Elon Musk’s AGI was $0 in 2018 despite a massive increase in net worth. Wouldn’t call that his fair share.
> Myth No. 2: We’ll fix the budget deficit by taxing the rich
> We simply cannot. The collective net worth of every American billionaire is estimated at somewhere around $8 trillion. The projected federal deficit over the next decade alone approaches $25 trillion. Even a one-time total confiscation of every billionaire’s wealth wouldn’t come close, and you only get to do it once.
Hilarious argument. Suddenly it’s billionaires instead of the previously mentioned top 1%. Their estimated net worth is more like 40 to 50 trillion. Not to mention how much that wealth is expected grow in the next 10 years.
The entire article is similarly underhanded and clearly meant to mislead. Or perhaps to reinforce the views of readers who already agreed and weren’t going to think critically anyways. Doesn’t take a genius to guess who paid for it.
But they are part of your net worth. If somebody who becomes richer every year, passively, has "no income", then the definition of income does not match people's intuition about what constitutes fair targets for taxation.
There is a good case to be made to tax wealth rather than income, which comes closer to people's intuition about what's fair.
>Only 60% of US households earn enough to pay federal income tax.
That's the problem. It's not a spending problem per se, but the market's misallocation of resources. Too many resources are concentrated in too few hands.
That's not to say we should abandon capitalism, but rather we should change the incentives to support higher incomes more broadly, as we did in the 1950s and 1960s. It's not a coincidence that deficit spending/public debt skyrocketed when we cut the top tax brackets. That changed the incentives from encouraging paying good wages and investing in business growth to hoarding capital and the financialization of everything.
Feel free to disagree, but the historical numbers support that.
tl;dr: change the incentives to broaden the distribution of resources across the economy, strengthening the economy (70% of which is consumer spending) and increasing, in a broad-based way, tax revenues.
I am doubtful here (but eager to see data that says otherwise)
- The US median per capita income is quite high (top 2 or 3 globally IIRC). In light of that and the stat that the bottom 40% don’t pay federal income tax makes me think the tax brackets are already fairly progressive vs thinking the lower 40% is especially low earning.
- Additionally income inequality has been decreasing in recent years with lower percentile income earners increases outpacing even the relatively high inflation.
- I agree we should revert back to some policies.
- I don’t think there is much hoarding of capital, most high earners invest heavily.
>We developed chronic overspending habits when interest rates were historically low
Weird, they were historically low because the money printers went brr. So the "We" you're talking about is both Republicans and Democrats, and not much else.
So basically, the interest rate is meaningless, so everything that follows is probably just as meanginless.
>The government needs to shrink
Just because the government makes bad choices doesnt mean whatever fills the vacuum with make good choices.
Yes, both parties have objectively failed their mandate to look after the long-term interest of the American people and instead focused on short-term wasteful policies focused on their own party goals.
Governments that consistently make bad choices eventually die one way or the other.
The income tax needs to be replaced with a consumption tax. The income tax is a terrible system for an internet based economy.
To ensure that the consumption tax doesn't hit the poor too hard the govt can determine how much someone at the poverty line would pay, on average, in monthly taxes ie$200. The govt then deposits $200 monthly in to every US citizen's USG debit card.
Basically, printing money is just an IOU, so you might as well not bother with a separate "borrowing" step. If the government wants something, they issue an IOU, in the form of its own currency.
On the flip side, the government still taxes, but it's just getting back its own IOUs. Instead of pretending it's depositing those IOUs back into a bank, they just tear them up and forget them.
If your taxes match your spending, there's no inflation. The money supply remains constant. If you do spend more than you take in, you get inflation -- which is OK, if managed carefully. It encourages people to go spend their money, rather than just sitting on it.
It's counterintuitive, but it's a lot more flexible than the way we handle it now. It lets the government spend its way past crises, especially during crashes when people hold on to their money.
This has already been the case since the creation of the Federal Reserve and moving away from the golf standard.
The federal reserve gets to print money and the US government gets the first dibs on that, and the middle and lower class then get screwed shortly later by the inflation of the printing.
It started with Regan tax cuts and trickle down voodoo economics.
High corporate taxes incentivized business investment that built the middle class.
Another stupid move was legalizing stock buybacks that was previously considered stock manipulation.
Doesn't even touch that the tax code is purposefully complicated to have zillions of loopholes so the very rich pay little to no taxes while everyone else funds an out-of-control military-industrial complex and socialism for the rich.
The wildest thing to me about the 2010s, was that the war on taxes got framed as a "class war". And everyone didn't understand that to mean "a war on anyone who is not the top 1%" Even reading through this comment section, people mistrust that Taxes are useful to prevent undue power gathering in the hands of a small number of people. They also then help fund programs which can help the underclass.
But the fear and dislike of taxes has clearly been weaponized by the ruling class to wage war on minimum wage workers and immigrants, in order to funnel as much wealth and power to the elites as possible.
The war on taxes was never "America vs Taxes" it was "The Wealthy vs. The Poor" and the wealthy were able to leverage the media to trick the poor people into reacting in fear that "The gov't is coming for your money." By just parroting their own fears about the gov't coming for their money and saying "it could happen to you too."
TBF, the Media really let/fueled this happening, likely because they were captured by corporate interests.
Taxes, if not quite the price of civilisation, do give citizens a reason to care about efficient and effective government. Severing that connection, and leaving large chunks of the electorate as mere recipients of state largesse, risks deepening America’s political dysfunction.
We can't have nice things without paying for them. People who believe they are self-sufficient seem to ignore all the public infrastructure that keeps society and the economy moving (e.g. roads, emergency response/firefighters, schools, parks, libraries, etc).
Imagine how much more entrepreneurial people could be if taking big big financial risks didn't have dire consequences like not having access to health care.
No one loves paying taxes, especially when you don't agree with ways it's spent, but that means we need to fix politics and spend money better rather than denying that society needs financial contributions from almost everybody to function.
But what they do use a lot of is a reliance on educated employees, a wealthy customer base, a peaceful business environment, courts that enforce contracts, a stable currency, regulated and policed financial system, et cetera.
All of the above is highly under-rated and acknowledged IMO.
Roads and schools have been a net negative for American society. Massive amounts of public money are spent on making problems worse for no gain while simultaneously bloating spending further. (e.g. Smokey Bear, road build-out, bailouts).
Citizens shouldn't have to care about the efficiency of the Government, it should be allowed to fail like any other company. The economy wants off Uncle Sam's lap.
As much as I agree with the benefits of taxes, the Trump admin is showing one of the severe flaws with the American tax system. If the president can just freely choose how and where funds are allocated, then we don't have any actual representation for our taxes. Half the country can vote for a president whose policy is to illegally deny funding to states they don't like.
I think the only solution realistically is going to be continued balkanization of the states as they take up more of the tax burden. Which is not going to lead to the outcomes said voters want. It's a shame since I think we really need a proper national healthcare program but if the president can just shut it down on a whim then there's no point.
A big problem is that most of the checks and balances were designed around the assumption that each branch would be independent and adversarial with one another. Unfortunately, the existence of political parties cross-cutting the branches breaks this assumption, and they were created by the very founders who designed our government in the first place.
We've been limping around entirely based on the honor system, and after significant capture of the media by a few wealthy individuals, the parties have dropped any pretense of acting for the benefit of the country.
Paying taxes this year was more painful than it's ever been, because I am certain some of my money went to the billionaire grifters. If you think paying for good government is bad, try paying for horrible, corrupt government.
we need to tax (update: sorry, not wealth) income.
90% tax on all income over $100 million. That would mean anyone making $500 million would still be bringing in $40 million a year. If you need more than $40 million a year you are just greedy and want to be some kind of king.
This would also mean the power of wealth would be neutralized.
The New Deal effective tax rates on individuals and corporations plus subsidies for public college created the greatest middle class in history. It also barred banks from loaning Wall Street money for speculative and risky adventures.
In 1980 Reagan began unraveling all of the pillars of that middle class success.
46 years later you can see the damage. Housing is unaffordable even for professional couples. Public colleges are gated to the upper classes.
I really want to see (good, competitive) candidates making the case for government, and taxes to support it. Most of what people value in public life is supported by taxes (in the sense it would be impossible without them).
But the other side has been allowed to criticize taxes and government unfairly with little to no effective opposition. IMO, there is a strong case to be made that waste and corruption is quite low (as a %), and that almost all non-defense spending is spent well and has a positive impact on society, benefiting everyone.
I see a growing narrative that successful people "earned" everything they have on their own. People think "I paid my way through university, no one gave me anything", obviously complete nonsense. "I built my business from nothing, with no help from the government", and so on.
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In such a system, it is rational to cut taxes as much as possible and instead rely on borrowing and monetization of debt. It allows America to limit the load on its own citizens, who in turn enjoy "exorbitant privilege" in the colloquial rather than economic sense, and then have the costs spread amongst the billions of people who don't live here. Privatize the gains, socialize the losses.
The flip side is that if the U.S. dollar ever loses its reserve currency status, that is literally the end of the United States. It will no longer have the ability to fund the government, which is fed by debt that is largely snapped up by foreigners who need a place to park the dollars that move abroad from the persistent trade deficits needed to sustain reserve currency status. It will also no longer have a citizenry or economy capable of doing anything other than moving capital (finance) and jobs (tech) around in the global economy, since in the current reserve currency economy, those are the only sectors that are profitable to go into. If it happens, expect basically a collapse of society and multi-sided civil war.
[1] https://en.wikipedia.org/wiki/Exorbitant_privilege
> It lets America print as many dollars as it wants... its own citizens enjoy "exorbitant privilege" and have the costs spread amongst the billions of people who don't live here.
This is a popular and tearful story of privilege but it's untrue today. In order for the "privilege" to exist, the foreign holdings of US debt must increase every year by amounts equal to the yearly US shortfalls... however, since around 2015, foreign holdings of US debt have been falling to flat. Nowadays, not only there isn't any "exorbitant" privilege, there isn't any privilege at all.
The shortfalls are funded by the US population at large via internal debt and inflation.
There's a slight uptick of foreign holdings this year due to instability but any public benefit from that is dwarfed by the losses caused by inflation and tariffs.
The yearly data for foreign holdings of US debt are easily found online.
But the dollar is used for 60-80% of international trade [2]. Many dollars don't stay in the U.S. to be transacted among the locals; they go abroad, and are held as foreign currency reserves or transacted between other nations for international trade. Under these conditions, the relevant Q in the money supply equation is the value of international trade denominated in dollars, which has been growing close to the increase in money supply. The dollars are getting soaked up for international transactions, preventing severe inflation at home.
I'm trying to model out what happens if the volume of dollar-denominated international trade declines, which seems to be the situation we're entering now and is the stated policy of the Trump administration. Certainly one consequence is that the stock market would crash by ~70-80%, which is the component of major S&P 500 companies earnings that are earned abroad. I suspect that this would trigger major chaotic effects (like WW3 or a revolution in the U.S.), that make future economic predictions irrelevant.
[1] https://fred.stlouisfed.org/graph/fredgraph.png?g=1UTPn&heig...
[2] https://www.brookings.edu/articles/the-changing-role-of-the-...
[1]https://en.wikipedia.org/wiki/Modern_Monetary_Theory
https://www.slickcharts.com/sp500
Going down that list, the first 9 are all tech (the "Mag 7" plus Broadcom). The first non-tech is Berkshire Hathaway at #10, but that is financial services. The top 10 together are 38.63% of the index. Then you have Walmart at #11 and 1.57% of the index, then 2 financials (JP Morgan Chase and Visa) and a pharmaceutical (Eli Lilly). The rest of the top 30 includes 6 more tech companies (Micron, Oracle, AMD, Netflix, Palantir, and Intel) and 2 more financials (Mastercard and Bank of America).
https://www.tradingview.com/markets/stocks-usa/market-movers...
It is even more dominated by finance and tech: the list is Alphabet, NVidia, Apple, Microsoft, Amazon, Berkshire, Meta, JP Morgan Chase, Bank of America, and then the first non finance/tech comes in at #10 with Exxon. Exxon's earnings are less than 1/4 of Alphabet's.
The reason to prefer market cap over earnings is that market cap includes investors' view of the company's future earnings power, but they both tell the same story.
Earlier in my adulthood, I would happily vote for almost any tax or levy, because I had faith that that money was turning directly into societal good.
I have lost that faith. In the worst case, money seems to be grossly mismanaged (here is a local example from just last month: https://www.seattletimes.com/seattle-news/politics/fallout-f...).
In other cases, it is going to real nonprofits that are tasked with solving problems that never seem to get better, no matter how much money is spent.
In yet other cases, the money goes to building transit (something else I was previously very bullish on), but that, once built, seems to be governed by principles of limitless permissiveness (an example from a few days ago: https://komonews.com/news/local/only-8-metro-fare-enforcemen...)
It's hard to feel invested in the programs that my taxes pay for when it doesn't feel like they reflect my values.
And California, where I lived ten years, is even worse now.
Ezra Klein https://music.youtube.com/watch?v=mX5U5DNUfBc&si=4XEYfEl6lbW...
https://freakonomics.com/podcast-tag/jessica-riedl/
and other work / appearances by Riedl
Now the math doesn’t work with a federal fund rate of 4-5%. And now as our debt rolls over it gets refinanced at the higher rates. Debt servicing is roughly 20% of the government budget and will soon be 25-35% in ~10 years assuming we don’t further accelerate deficit spending (which seems unlikely).
US govt needs to cut dramatically to avoid this and the otherwise likely “solution” otherwise is inflation to make the debt effectively less expensive which also raises interest rates.
We can’t tax our way out of this. Only 60% of US households earn enough to pay federal income tax. The top 1% of earners already pay roughly half of all tax revenue, top 10% is roughly 75%. Furthermore, there is profligate waste in government, inefficiency, no matter where the taxes came from even if we could materialize them.
The government needs to shrink dramatically. This type of change is best done gradually but immediately to avoid later shocks (eg: Medicare suddenly disappears)
> The government needs to shrink dramatically
Most (but not all) other developed countries have both a larger government and a smaller deficit per capita. A smaller government is not the only solution.
> The top 1% of earners already pay roughly half of all tax revenue, top 10% is roughly 75%.
Do you have sources for this? I was looking for reliable sources on this.
You can find high-level summaries from various websites, but they might have a bias eg: taxfoundation
If the people with 90% of the income pay less than 90% of the total income taxes, something is wrong. Every lower income should be paying less, as a percentage of their income.
However, I am skeptical that higher taxes or just taxing the rich or high earners more will solve the deficit or government efficiency issues.
Also I disagree with 90% of income should pay 90% of taxes. People who are better capital allocators than the government should be incentivized to allocate over paying taxes.
> Also I disagree with 90% of income should pay 90% of taxes. People who are better capital allocators than the government should be incentivized to allocate over paying taxes.
We've spent the past 50 years lowering the taxes on those who have the most income/wealth with only negative outcomes to show for it.
I think the mistake you're making is assuming that those best at accumulating capital are also the best at allocating it. If they were, I expect we'd see a lot more investment into new technologies and markets rather than the large increase in rent-seeking we have seen instead.
Then every dollar you earn goes to the government until May 1.
In this scenario if you have to pay govt interest expense first then almost every dollar earned in January would go to paying the debt.
We are spending almost an entire month of everyone’s salary, not on providing anything of value but merely on paying for previous overspending.
2. Do you think an ageist ad hominem improves your argument?
3. What even is your argument? That in this contrived hypothetical the person in question is making a “shitload” and that somehow invalidates that 20% of EVERY tax dollar collected is used to just pay interest on debt (not even principal, just interest)
> Myth No. 1: The rich don’t pay their fair share
> The top 1% of earners take in 22% of total income and pay 40% of all federal income taxes.
How misleading. Income here means AGI, i.e. taxable income as defined by the IRS. That excludes unrealized capital gains, loans against said unrealized capital gains, etc. For example, Elon Musk’s AGI was $0 in 2018 despite a massive increase in net worth. Wouldn’t call that his fair share.
> Myth No. 2: We’ll fix the budget deficit by taxing the rich
> We simply cannot. The collective net worth of every American billionaire is estimated at somewhere around $8 trillion. The projected federal deficit over the next decade alone approaches $25 trillion. Even a one-time total confiscation of every billionaire’s wealth wouldn’t come close, and you only get to do it once.
Hilarious argument. Suddenly it’s billionaires instead of the previously mentioned top 1%. Their estimated net worth is more like 40 to 50 trillion. Not to mention how much that wealth is expected grow in the next 10 years.
The entire article is similarly underhanded and clearly meant to mislead. Or perhaps to reinforce the views of readers who already agreed and weren’t going to think critically anyways. Doesn’t take a genius to guess who paid for it.
There is a good case to be made to tax wealth rather than income, which comes closer to people's intuition about what's fair.
They pledge their unrealized capital gains as collateral for billions in loans, spend the cash, and pay single-digit interest instead of income tax.
Repeat until they die, then their heirs inherit the shares at a stepped-up cost basis, so the gains are in fact never taxed.
Again, I’d ask you to engage with this:
> I wouldn’t call that their fair share.
>Only 60% of US households earn enough to pay federal income tax.
That's the problem. It's not a spending problem per se, but the market's misallocation of resources. Too many resources are concentrated in too few hands.
That's not to say we should abandon capitalism, but rather we should change the incentives to support higher incomes more broadly, as we did in the 1950s and 1960s. It's not a coincidence that deficit spending/public debt skyrocketed when we cut the top tax brackets. That changed the incentives from encouraging paying good wages and investing in business growth to hoarding capital and the financialization of everything.
Feel free to disagree, but the historical numbers support that.
tl;dr: change the incentives to broaden the distribution of resources across the economy, strengthening the economy (70% of which is consumer spending) and increasing, in a broad-based way, tax revenues.
- The US median per capita income is quite high (top 2 or 3 globally IIRC). In light of that and the stat that the bottom 40% don’t pay federal income tax makes me think the tax brackets are already fairly progressive vs thinking the lower 40% is especially low earning.
- Additionally income inequality has been decreasing in recent years with lower percentile income earners increases outpacing even the relatively high inflation.
- I agree we should revert back to some policies.
- I don’t think there is much hoarding of capital, most high earners invest heavily.
>We developed chronic overspending habits when interest rates were historically low
Weird, they were historically low because the money printers went brr. So the "We" you're talking about is both Republicans and Democrats, and not much else.
So basically, the interest rate is meaningless, so everything that follows is probably just as meanginless.
>The government needs to shrink
Just because the government makes bad choices doesnt mean whatever fills the vacuum with make good choices.
Governments that consistently make bad choices eventually die one way or the other.
To ensure that the consumption tax doesn't hit the poor too hard the govt can determine how much someone at the poverty line would pay, on average, in monthly taxes ie$200. The govt then deposits $200 monthly in to every US citizen's USG debit card.
https://en.wikipedia.org/wiki/Modern_Monetary_Theory
Basically, printing money is just an IOU, so you might as well not bother with a separate "borrowing" step. If the government wants something, they issue an IOU, in the form of its own currency.
On the flip side, the government still taxes, but it's just getting back its own IOUs. Instead of pretending it's depositing those IOUs back into a bank, they just tear them up and forget them.
If your taxes match your spending, there's no inflation. The money supply remains constant. If you do spend more than you take in, you get inflation -- which is OK, if managed carefully. It encourages people to go spend their money, rather than just sitting on it.
It's counterintuitive, but it's a lot more flexible than the way we handle it now. It lets the government spend its way past crises, especially during crashes when people hold on to their money.
High corporate taxes incentivized business investment that built the middle class.
Another stupid move was legalizing stock buybacks that was previously considered stock manipulation.
Doesn't even touch that the tax code is purposefully complicated to have zillions of loopholes so the very rich pay little to no taxes while everyone else funds an out-of-control military-industrial complex and socialism for the rich.
But the fear and dislike of taxes has clearly been weaponized by the ruling class to wage war on minimum wage workers and immigrants, in order to funnel as much wealth and power to the elites as possible.
The war on taxes was never "America vs Taxes" it was "The Wealthy vs. The Poor" and the wealthy were able to leverage the media to trick the poor people into reacting in fear that "The gov't is coming for your money." By just parroting their own fears about the gov't coming for their money and saying "it could happen to you too."
TBF, the Media really let/fueled this happening, likely because they were captured by corporate interests.
We can't have nice things without paying for them. People who believe they are self-sufficient seem to ignore all the public infrastructure that keeps society and the economy moving (e.g. roads, emergency response/firefighters, schools, parks, libraries, etc).
Imagine how much more entrepreneurial people could be if taking big big financial risks didn't have dire consequences like not having access to health care.
No one loves paying taxes, especially when you don't agree with ways it's spent, but that means we need to fix politics and spend money better rather than denying that society needs financial contributions from almost everybody to function.
> (e.g. roads, emergency response/firefighters, schools, parks, libraries, etc).
The very rich don't use a lot of that.
But what they do use a lot of is a reliance on educated employees, a wealthy customer base, a peaceful business environment, courts that enforce contracts, a stable currency, regulated and policed financial system, et cetera.
All of the above is highly under-rated and acknowledged IMO.
Citizens shouldn't have to care about the efficiency of the Government, it should be allowed to fail like any other company. The economy wants off Uncle Sam's lap.
I think the only solution realistically is going to be continued balkanization of the states as they take up more of the tax burden. Which is not going to lead to the outcomes said voters want. It's a shame since I think we really need a proper national healthcare program but if the president can just shut it down on a whim then there's no point.
We've been limping around entirely based on the honor system, and after significant capture of the media by a few wealthy individuals, the parties have dropped any pretense of acting for the benefit of the country.
90% tax on all income over $100 million. That would mean anyone making $500 million would still be bringing in $40 million a year. If you need more than $40 million a year you are just greedy and want to be some kind of king.
This would also mean the power of wealth would be neutralized.
All it means is they would spend more on tax avoidance schemes which is wasteful.
Personally I prefer a wealth tax.
> 90% tax on all income over $100 million.
That's an income tax, not a wealth tax?
In 1980 Reagan began unraveling all of the pillars of that middle class success.
46 years later you can see the damage. Housing is unaffordable even for professional couples. Public colleges are gated to the upper classes.
There is no middle class anymore.
But the other side has been allowed to criticize taxes and government unfairly with little to no effective opposition. IMO, there is a strong case to be made that waste and corruption is quite low (as a %), and that almost all non-defense spending is spent well and has a positive impact on society, benefiting everyone.
I see a growing narrative that successful people "earned" everything they have on their own. People think "I paid my way through university, no one gave me anything", obviously complete nonsense. "I built my business from nothing, with no help from the government", and so on.