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.
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?
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.
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.
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.
> 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.
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)
>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.
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.
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.
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.
At one point there was an article or podcast (freakanomics?) that said most Americans are proud of paying taxes, and have a higher pay rate than most countries. I thought that was interesting. Curious where that’s trending.
>there is a strong case to be made that waste and corruption is quite low (as a %),
This is even worse, not better. If what we see around us were due to corruption and waste, then the corruption might be rooted out and the waste might be curtailed. But if instead what we see is unavoidable as some intrinsic characteristic of bureaucracy and overhead, then your opponents won't be satisfied until they burn it all down and dance naked in the ashes. And I'd be inclined to celebrate with them.
IME, what we see (when we see things we don't like), are things we don't understand. When you take the time to actually dig in and see what's going on, it makes more sense and is neither wasteful or ineffective.
The government is about as effective and efficient as the median large corporation, IMO.
Also why would you expect a large corporation to not be completely bogged down by bureaucracy and inefficiencies? That’s been my experience. The case against large government also applies to large business, it’s just that one has a monopoly on violence and the other has to compete in the market.
>When you take the time to actually dig in and see what's going on, it makes more sense and is neither wasteful or ineffective.
I'm not disagreeing. So what? It's not wasteful, and it is effective at what the bureaucrats intended it to do. The Baby Stomping Machine 9000 is a marvel of efficiency and stomps babies much more effectively than the old way of stomping on babies. I get that. You're really, truly, factually correct when you say that.
And yet, I don't support it. I oppose it strongly, and I want to see it gone. And if the people who made it are punished afterwards, that's just a bonus. If they are heartbroken and forlorn with it being gone from the world, their tears are sweet nectar.
I get this. Why can't you? I can see it from your perspective. You can't see it from mine.
Large problems often require large groups of humans to address them. Large groups of humans are inefficient. That does not mean we should give up on addressing large problems, or doing the best we can to reduce the inefficiency.
The benefit from addressing the problems outweighs the cost in inefficiency.
The issue is that it’s actually very difficult to make that pro-taxation argument, because that position doesn’t have much merit. Pretty much everyone’s experience with things ran by the government is purely negative. They waste billions (trillions?) and then print even more money and inflate the currency. And then you end up with completely subpar services at best.
Fun fact, Americans pay more in healthcare taxes than most Canadians. Our healthcare is free. Well, kinda, about ~75% is free, for Americans it’s more like %40.
But there is absolutely no argument that can be made that if we just raise taxes a little bit we can solve all our problems. The math just doesn’t work out.
Personally I favour the thinking of Adam Smith, John Locke, Rothbard and Friedman, the classical liberal tradition, and as governments balloon across the west, more and more people are coming to that same conclusion. Give us a small efficient government, stay out of the market as much as possible with little to no interference, stop printing money and trying to control the economy it from the top down, stop being technocrats, let people live their lives the way they wish.
> Most of what people value in public life is supported by taxes
Citation needed. If you value something paid for by taxes you should pay for yourself. Feel free to pool your money with all the other people of value the same thing - should be easy if it's most people.
The tax cuts are fine, the only issue is funding them by deficit spending. The government services/entitlement should be cut instead.
There are plenty or examples of people getting together and running fiber in their town, or building a road themselves.
If does not need to scale across the entire country, let people self interests drive the decisions instead of a faceless government body that doesn't give a damn about you and has a monopoly on voilence to make sure yoh pay your taxes.
Unfortunately the slopulist wing of the Democratic party now mostly favors magical tax-cut-and-programs electoral platforms. For example, all but two of the candidates for governor of California from the Democratic party have tax platforms similar or identical to those of the two Republicans in the race.
Yeah, getting flashbacks to Clinton era Democratic politics. Adopt the core of the Republican position so you can get into power and then do some stuff around the edges.
Wait, didn't Clinton actually balance the budget? That gets props from me; no government since then has actually given Americans an honest picture of what it actually takes to run a balanced budget, which will require some combination of higher taxes and/or decreased spending.
“If we just do a slightly lighter version of exactly what our opponent does everyone will vote for us. Sure, it didn’t work in the past. Sure, most people don’t realize that the ACA was basically Republican policy. Sure, we will never get any credit if we are tough on the border. But this time it will definitely work.”
You naively assume that there would be nothing else to fill the gap that would be created if the federal/state government just stopped existing tomorrow.
It's same argument as "who would build the roads if the government didn't exist??". Which is also quite naive, because the government doesn't actually build the roads. It forcefully takes tax payer money and then hires a contractor like any other business would to build the roads. If the government stopped existing businesses and individuals would still need a way to transport their goods, so they would just get together and hire contractors to pave roads so they can deliver goods to customers.
Same goes for just about every government program in existence. Before government welfare people would go to their local church or their community for assistance.
Government run schools have had dropping reading scores for decades even though they have more money being shoveled into them then ever before.
College Tuition costs are through the roof because the government got involved with giving out student loans.
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.
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.
The non-college educated working class was greatly reduced (in size and wealth), but mostly by trade and automation. In its place we have a smaller white-collar (college educated) middle class.
There is a middle class, but it is the worst place to be. The best two places to be are rich or poor. The middle class are all suckers, they are making the rich richer and are supporting the poor.
The traditional economist/polisci view is that laws favor the middle class (the largest voting group) at the expense of the poor (who don’t benefit from most services) and rich (who pay most taxes).
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.
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.
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.
Safeguarding against what or whom? I’d imagine that you just want to disenfranchise your opponents, not unlike how Europe does to preserve establishment candidates.
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.
Oh, for goodness' sake. There are other websites. And his Randite goldbug nonsense is, quite frankly, overrepresented in American political discourse already.
And not saying anything interesting, in any case. It's easy to say "cut more, tax less." Zero effort. Let's see some thought behind it -- what are we going to cut, and why? What are we going to fund, and why?
I feel like a lot of people don't really understand where the money 1) comes from, and 2) gets spent. Balancing the USG budget is a very, very big task.
He’s a self appointed representative of the majority. I guess he doesn’t care about democracy at all and probably views empathy as a defect or something…
There’s a bit of a double edged sword here. Removal of taxes leads to more coupled private/government relationships. Where external interests fund politicians to protect their own monopolistic interests. That money needs to come from somewhere. Wealthy people don’t want to pay taxes. But they sure do like to pay money to members of the government to further their own interests. Remember it was about taxation without representation. Wealthy people pay a lobbying ‘tax’ and get representation. In this way they are just paying a tax in a different way, where they get benefits and you get very little to nothing.
You're speaking on behalf of a minority of nutjobs who don't want to pay any taxes at all and wrap that in whatever logic suits them at the moment... bringing up the American Revolution and world wars in response to your desire to have more money and imagining that you'd be wealthier if you didn't have to pay taxes instead of everything being more expensive and everybody being worse off.
I still think the American people want the government to pay their bills. If a candidate ran on an actual “Balanced Budget” and campaigned on it, boomers would eat it up!
I don't think that would stay true as soon as voters were faced with a detailed explanation of what a balanced budget (achieved by tax cuts alone) would look like. People say they don't like government. They say most of the spending is wasted. But when you point out specific spending programs (and what they actually do), they like them.
> I still think the American people want the government to pay their bills.
Not a comment on you, as I don't know you, but in my life experience all of the conservative-minded people I've known who bought into and parroted variations of the "welfare queen" myth were always the first in line for corporate welfare like subsidies, PPP/EIDL loans, and ZIRP benefits.
And actual American people I know who are not part of the top 10% work extremely hard and just want essential safety nets (of the type that nearly all other first-world countries manage to offer) so they don't have to worry about being homeless if they get an unexpected medical bill.
So I've always seen the idea that the non-well-off are just looking for handouts to do nothing as pure projection of the well-off as to what their mindset would be if they were less fortunate in their life circumstances.
Is there some small set of people who abuse the system (any system)? Yes, but I'm absolutely convinced a lot more people abuse the system at the high-end (for far greater overall cost) than at the low-end. And only people on one side of the scale are likely to ever face legal consequences for systemic abuse.
Yeah, there are tons of examples, some more direct than others.
Likewise the index averaged stock market is now basically free money forever for people who already have enough to make significant investments.
Yeah, sure, it could crash down in theory, but we've all seen how much effort will go into protecting the money if that actually happens, primarily at the expense of the less-well-off (who are far more impacted by inflation than the wealthy, and will suffer the most as we continue to cut safety nets rather than raise taxes on the wealthy to deal with the debt created by the financial engineering involved).
I couldn't read the article but at least agree with the title. Taxes should be 1:1 linked with spending. The xx trillion dollar deficit is IMHO unfixable without substantial, painful changes.
The thing is, in isolation, balancing the budget looks pretty easy. It's only because you have to deal with particular interest groups and a populace who has come to believe that any tax increase means they're getting shafted. I was able to balance that budget with the following changes:
1. Top one percent effective tax rate goes from 24 to 30 percent.
2. Higher income goes from 12.26 to 14.26.
3. Upper middle income goes from 7.7 to 8.7.
4. Middle income goes from 4.8 to 5.8.
5. Lower middle income goes from .1 to 1.1
6. Lower income goes from -4.1 to -3.1
7. Social payroll taxable maximum goes to 90% of taxable income.
Those changes alone, with absolutely no spending changes, balance the budget. Now, I'm not proposing that those changes are politically viable, and you can certainly fiddle with my distribution if you think something else would be fairer (I think it's fair because the rich have done much better than everyone else over the past 40 years so I think they can afford to pay more, but I also think that everyone should have to contribute something more or else you get the current problematic belief that the issue can be solved just by taxing somebody else), but I would strongly disagree if you wanted to argue that those changes would result in any substantial change in standard of living for anyone.
I think, numerically, the problem can pretty easily be solved just by taxation alone (though I think it would make sense to add some spending cuts), just not politically.
Site looked interesting, so I was just like "what would it look like to have a top tax rate like we did in the 1950s-1980s (Before Reagan dropped it)?" [1] And the hilarious thing is the propaganda it spews without any backing of data:
>At a certain point, increases in tax rates will not raise more revenue. Once someone's tax rate becomes sufficiently high, they might work less or try harder to evade taxes. Based on existing evidence, this simulation assumes that increasing this group’s tax rate beyond your current level is unlikely to raise more revenue.
And then it pretends like the maximum amount of income you can get out of the richest 1% is $203B.
This is rich people's propaganda that we've bought into by pretending that Rich people don't need this country. But that's a lie. If it were true, they would just move, instead of fighting tooth and nail for tax cuts in every single election.
Also the breakdown of spending categories and the way they're represented are pretty clearly politically motivated, and the Numbers look a little suspicious to me. They don't even align with the CBO numbers.
Another really obvious thing missing is a "Capital Gains Tax"
Which is currently pegged to like 20%, and how CEOs get all of their income. So If Capital Gains was taxed as income, I think that would at least start to make the Income tax realistic.
> Those changes alone, with absolutely no spending changes, balance the budget.
I tried out the calculator and put in all your changes, and the budget wasn't balanced, there was still a 1.4T deficit (as opposed to the current 1.9T deficit). The app only claims the budget is "sustainable" now because it assumes GDP keeps growing at the same rate (which might not be true), and if so we'll hit a 3%-of-GDP "deficit target" in 25 years. Also adjusting a negative tax rate kind of seems like it is, in fact, reducing spending (i.e. the federal government reduces the amount of tax credits it gives out). This also assumes the federal government will not introduce new programs, new spending, etc. So really all you did was reduce the deficit by .5T along with a hope and a prayer that the economy will continue to grow at the same rate for the next 25 years (while at the same time the federal government does not increase spending). I personally think it's bad to have a deficit at all and that we should work towards zero deficit and eventually surplus (yes, I know there are all sort of growth hacks and such you can do with debt, but historically politicians have succumbed to slippery slope deficit increases and so for that reason alone I think holding politicians to a zero deficit standard is best -- do it for a few generations and now there's a precedent that protects us from getting into the situation we are currently in). To me a "balanced budget" is that your spending is <= your income.
Anyway, interesting calculator app. I do see the value in raising taxes for sure, but it's not easy politically to raise taxes and it's also not easy politically to cut spending (whichever group likes the thing you cut will scream), so ultimately it might have to be a hybrid solution where democrats increase taxes without increasing spending when they are in power and republicans cut spending without decreasing taxes when they are in power. When I say that out loud though it seems like a pipe dream, sigh...
It's more likely both are true. We can afford to do more for the people, but at the same time we are over-spending. Streamlining some of these functions would be nice. One area we are vastly over-spending is highway and roadway construction, for example. Even if we can afford it, we shouldn't pay for it. There are other more politically hot topics here and both general sides of the debate have merit, but we should try to not be dogmatic about it and instead think in systems terms and long-term outcomes. When I see a city or state spending $400,000/each on units for housing homeless people, well, that's obviously a misuse of funds. That's not sustainable. We shouldn't do it even if we can afford it. When we spend $50 billion in a week of the Iran war (which I support but just as an example), well, that $50 billion could have paid off a lot of mortgages - so maybe we should or could do that instead.
Maybe start with universal healthcare and rezoning laws so Airbnb can’t sit on housing. Make public college free. Reduce military spending drastically. Force billionaires to pay a 25% tax on net worth (they’d still increase their wealth).
I don't like or valorize billionaires, I guess (I mostly don't care about them), but I don't understand what's "inhumane" here. There aren't very many billionaires. Billion dollar companies are far more salient to ordinary people than billionaires are. And, obviously, you can't fund universal health care by liquidating the billionaires!
I've never really understood why people are so het up about billionaires. The distinction between them and decimillionaires seems mostly like comic book lifestyle stuff; like, OK, they fly their pets private for visitation with their ex-spouses or whatever, I guess that's offensive aesthetically?
Far, far more damaging to ordinary people is the Faustian bargain struck between the upper middle class and the (much smaller) upper class, which redistributes vast sums of many away from working class people into the bank accounts of suburban homeowners.
(Because fundamental attribution error guarantees threads like this will devolve into abstract left vs. right valence arguments, a policy stake in the ground: I broadly favor significantly higher and more progressive taxes, starting with a reconsideration of the degree to which we favor cap gains.)
I really applaud the work McKenzie Scott is doing. A lot of billionaires play the "aw shucks if only someone would tax me" - nothing is stopping them from just donating to the government if they really thought that. We have a housing problem, why not play Sim City in real life and build houses for people or something? Personally I think it would be a blast.
Similarly though, there's nothing stopping you personally from taking $50, $100, whatever and walking over to a shelter or food bank and donating. You don't need to wait for the government to stand up a program. Lead by example like McKenzie Scott is. We donate money to local organizations - again, no barriers here.
I don't care if someone is a billionaire, though of course we should tax them "appropriately". But if you're really mad about billionaires and you want these programs, you should be giving away your own money too and there's nothing stopping you. Waiting until you get just the right program or tax the right person is a bad strategy if you really care about some of these issues.
Yeah, it's always funny to see how MMT is a perfectly acceptable way to create tax cuts and enable corporate welfare but if you suddenly want universal medicare or childcare suddenly we care about budgets or MMT is suddenly impractical.
This should actually allow for a balanced budget and still affording everything. The problem is, the USA has the best government money can buy and it wasn’t bought by the people.
Yes, the scale is different. This means that the debt problem can go on for far longer without being apparent. It can even be put off until the current slate of politicians are out of office, until they're dead of old age and beyond accountability. Scale can hide things, by making them so big your field of vision doesn't allow you to see it all at once.
There isn't much juice to squeeze when you make one of the most progressive tax systems in the world even more progressive. Normalizing the idea that the middle class should pay very little tax makes it impossible to raise the necessary revenue as a matter of math.
AIUI, most EU nations (the ones with the great social benefits the left says it wants for America), have a flatter tax burden, where the middle class pays a higher percentage of the total.
Exactly. The tax platform that we need the most is that dentists are not paying their share. Penny-ante local landlords are not paying their fair share. There is too much focus on the ultra rich, you can and should take all their stuff but it doesn't amount to a whole lot.
Something I have noticed about tax and spend advocates is they have shifted their messaging from "these taxes will pay for great services" to "these taxes will hurt the rich". It's telling that even they have lost faith in the ability for tax increases to provide meaningfully better services as an advertisement. I suppose no one, including myself, would seriously believe it.
I am referencing only the American zeitgeist, I assume other countries might have better systems.
"The government shouldn't help people" is such a bizarrely popular American attitude, that so many people take as gospel. Therefore "The government can't help people" emerges as reality. It doesn't have to be this way, but we make it this way due to the majority's stubborn choices.
You look at a lot of places and between unions, procurement rules, or an obsession with certain classes of contractors, government capacity is badly hobbled from the start.
https://archive.ph/j5FI7
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.
[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.
[dead]
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.
[1]https://en.wikipedia.org/wiki/Modern_Monetary_Theory
What’s the basis is for claiming that only finance and tech are profitable sectors in the US economy. Energy? Healthcare? Manufacturing?
Here's the list of S&P 500 companies by market cap & weighting:
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).
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?
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.
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.
[dead]
Everything you need to know about the US tax system in one convenient, incredibly disconcerting package:
Ezra Klein https://music.youtube.com/watch?v=mX5U5DNUfBc&si=4XEYfEl6lbW...
Fantastic share. I've heard this explained in pieces from people a few times now but this just finally made it click for me. Thank you!
Check out:
https://freakonomics.com/podcast-tag/jessica-riedl/
and other work / appearances by Riedl
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)
> 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.
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.
They are almost all more solvent than the US.
I would need more data here. The US is highly solvent because of the global dollar as well as being a hegemonic military superpower.
The US is in the process of throwing away both advantages, so you have to judge simply by debt/deficit levels.
> 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.
Yes, IRS SOI tables. https://www.irs.gov/statistics/soi-tax-stats-individual-stat...
You can find high-level summaries from various websites, but they might have a bias eg: taxfoundation
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.
Just stumbled across this: https://www.latimes.com/opinion/story/2026-04-16/debunking-a...
> 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.
Put another way if your tax rate is 33% and you had to pay the government first.
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.
In order to pay an effective federal tax rate of 33% you'd need to be making like seven figures and do nothing to reduce your taxable income.
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.
1. I am not a boomer.
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)
>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.
We might be unintentionally moving to a system where paying for government is done mostly through inflation.
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.
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.
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.
At one point there was an article or podcast (freakanomics?) that said most Americans are proud of paying taxes, and have a higher pay rate than most countries. I thought that was interesting. Curious where that’s trending.
>there is a strong case to be made that waste and corruption is quite low (as a %),
This is even worse, not better. If what we see around us were due to corruption and waste, then the corruption might be rooted out and the waste might be curtailed. But if instead what we see is unavoidable as some intrinsic characteristic of bureaucracy and overhead, then your opponents won't be satisfied until they burn it all down and dance naked in the ashes. And I'd be inclined to celebrate with them.
IME, what we see (when we see things we don't like), are things we don't understand. When you take the time to actually dig in and see what's going on, it makes more sense and is neither wasteful or ineffective.
The government is about as effective and efficient as the median large corporation, IMO.
How are you coming to that conclusion? Vibes?
Also why would you expect a large corporation to not be completely bogged down by bureaucracy and inefficiencies? That’s been my experience. The case against large government also applies to large business, it’s just that one has a monopoly on violence and the other has to compete in the market.
Right, all large human organizations have a base-line of inefficiency and corruption, with some amount of variance.
I'm not arguing that is great, or that we should simply expect it. But, that it's somewhat dishonest to portray government as unique in this.
>When you take the time to actually dig in and see what's going on, it makes more sense and is neither wasteful or ineffective.
I'm not disagreeing. So what? It's not wasteful, and it is effective at what the bureaucrats intended it to do. The Baby Stomping Machine 9000 is a marvel of efficiency and stomps babies much more effectively than the old way of stomping on babies. I get that. You're really, truly, factually correct when you say that.
And yet, I don't support it. I oppose it strongly, and I want to see it gone. And if the people who made it are punished afterwards, that's just a bonus. If they are heartbroken and forlorn with it being gone from the world, their tears are sweet nectar.
I get this. Why can't you? I can see it from your perspective. You can't see it from mine.
Large problems often require large groups of humans to address them. Large groups of humans are inefficient. That does not mean we should give up on addressing large problems, or doing the best we can to reduce the inefficiency.
The benefit from addressing the problems outweighs the cost in inefficiency.
The issue is that it’s actually very difficult to make that pro-taxation argument, because that position doesn’t have much merit. Pretty much everyone’s experience with things ran by the government is purely negative. They waste billions (trillions?) and then print even more money and inflate the currency. And then you end up with completely subpar services at best.
Fun fact, Americans pay more in healthcare taxes than most Canadians. Our healthcare is free. Well, kinda, about ~75% is free, for Americans it’s more like %40.
But there is absolutely no argument that can be made that if we just raise taxes a little bit we can solve all our problems. The math just doesn’t work out.
Personally I favour the thinking of Adam Smith, John Locke, Rothbard and Friedman, the classical liberal tradition, and as governments balloon across the west, more and more people are coming to that same conclusion. Give us a small efficient government, stay out of the market as much as possible with little to no interference, stop printing money and trying to control the economy it from the top down, stop being technocrats, let people live their lives the way they wish.
Can you outline how you would apply that to healthcare?
Apply what to healthcare?
"Give us a small efficient government, stay out of the market as much as possible with little to no interference"
> Most of what people value in public life is supported by taxes
Citation needed. If you value something paid for by taxes you should pay for yourself. Feel free to pool your money with all the other people of value the same thing - should be easy if it's most people.
The tax cuts are fine, the only issue is funding them by deficit spending. The government services/entitlement should be cut instead.
Where have you seen that be effective at a large scale?
There are plenty or examples of people getting together and running fiber in their town, or building a road themselves.
If does not need to scale across the entire country, let people self interests drive the decisions instead of a faceless government body that doesn't give a damn about you and has a monopoly on voilence to make sure yoh pay your taxes.
Unfortunately the slopulist wing of the Democratic party now mostly favors magical tax-cut-and-programs electoral platforms. For example, all but two of the candidates for governor of California from the Democratic party have tax platforms similar or identical to those of the two Republicans in the race.
Yeah, getting flashbacks to Clinton era Democratic politics. Adopt the core of the Republican position so you can get into power and then do some stuff around the edges.
Wait, didn't Clinton actually balance the budget? That gets props from me; no government since then has actually given Americans an honest picture of what it actually takes to run a balanced budget, which will require some combination of higher taxes and/or decreased spending.
“If we just do a slightly lighter version of exactly what our opponent does everyone will vote for us. Sure, it didn’t work in the past. Sure, most people don’t realize that the ACA was basically Republican policy. Sure, we will never get any credit if we are tough on the border. But this time it will definitely work.”
I long for an actual progressive Democrat party whose ambitions go beyond being the Light Beer version of Republicans.
You naively assume that there would be nothing else to fill the gap that would be created if the federal/state government just stopped existing tomorrow.
It's same argument as "who would build the roads if the government didn't exist??". Which is also quite naive, because the government doesn't actually build the roads. It forcefully takes tax payer money and then hires a contractor like any other business would to build the roads. If the government stopped existing businesses and individuals would still need a way to transport their goods, so they would just get together and hire contractors to pave roads so they can deliver goods to customers.
Same goes for just about every government program in existence. Before government welfare people would go to their local church or their community for assistance.
Government run schools have had dropping reading scores for decades even though they have more money being shoveled into them then ever before.
College Tuition costs are through the roof because the government got involved with giving out student loans.
Etc. Etc. Etc.
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.
> (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.
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.
With Democrats like these...
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.
There is no middle class anymore.
The non-college educated working class was greatly reduced (in size and wealth), but mostly by trade and automation. In its place we have a smaller white-collar (college educated) middle class.
> There is no middle class anymore.
There is a middle class, but it is the worst place to be. The best two places to be are rich or poor. The middle class are all suckers, they are making the rich richer and are supporting the poor.
(I am poor.)
The traditional economist/polisci view is that laws favor the middle class (the largest voting group) at the expense of the poor (who don’t benefit from most services) and rich (who pay most taxes).
See “Director’s Law”
This is very silly. College attendance is at record highs, far above 1980.
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.
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.
This would have barely any actual effect since the number of people with such high income is nearly zero.
All it means is they would spend more on tax avoidance schemes which is wasteful.
I guess you think this high marginal tax rate would hold for unrealized capital gains? Otherwise your conclusion don't really hold.
Personally I prefer a wealth tax.
> 90% tax on all income over $100 million.
That's an income tax, not a wealth tax?
Yes, sorry.
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.
What the US needs is constitution amendments and safeguards, so that what is happening does not happen again.
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.
Safeguarding against what or whom? I’d imagine that you just want to disenfranchise your opponents, not unlike how Europe does to preserve establishment candidates.
[dead]
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.
Gift link: https://www.economist.com/leaders/2026/04/16/america-will-co...
Ah sorry looks like they limit the number of accesses per gift link
Thanks for trying :)
[flagged]
Agreed. It's not conducive to discourse.
Oh, for goodness' sake. There are other websites. And his Randite goldbug nonsense is, quite frankly, overrepresented in American political discourse already.
[flagged]
Your not speaking on behalf of the majority if Americans.
And not saying anything interesting, in any case. It's easy to say "cut more, tax less." Zero effort. Let's see some thought behind it -- what are we going to cut, and why? What are we going to fund, and why?
I feel like a lot of people don't really understand where the money 1) comes from, and 2) gets spent. Balancing the USG budget is a very, very big task.
He’s a self appointed representative of the majority. I guess he doesn’t care about democracy at all and probably views empathy as a defect or something…
There’s a bit of a double edged sword here. Removal of taxes leads to more coupled private/government relationships. Where external interests fund politicians to protect their own monopolistic interests. That money needs to come from somewhere. Wealthy people don’t want to pay taxes. But they sure do like to pay money to members of the government to further their own interests. Remember it was about taxation without representation. Wealthy people pay a lobbying ‘tax’ and get representation. In this way they are just paying a tax in a different way, where they get benefits and you get very little to nothing.
You're speaking on behalf of a minority of nutjobs who don't want to pay any taxes at all and wrap that in whatever logic suits them at the moment... bringing up the American Revolution and world wars in response to your desire to have more money and imagining that you'd be wealthier if you didn't have to pay taxes instead of everything being more expensive and everybody being worse off.
You don’t speak for the majority.
[flagged]
Lol what majority do you represent there, Bender?
ohh interesting. can wars be a topic on HN? wow. didn’t know.
Tax the rich!
I still think the American people want the government to pay their bills. If a candidate ran on an actual “Balanced Budget” and campaigned on it, boomers would eat it up!
I don't think that would stay true as soon as voters were faced with a detailed explanation of what a balanced budget (achieved by tax cuts alone) would look like. People say they don't like government. They say most of the spending is wasted. But when you point out specific spending programs (and what they actually do), they like them.
Ross Perot comes to mind, but I think he wanted to balance the budget mostly be cutting spending.
> I still think the American people want the government to pay their bills.
Not a comment on you, as I don't know you, but in my life experience all of the conservative-minded people I've known who bought into and parroted variations of the "welfare queen" myth were always the first in line for corporate welfare like subsidies, PPP/EIDL loans, and ZIRP benefits.
And actual American people I know who are not part of the top 10% work extremely hard and just want essential safety nets (of the type that nearly all other first-world countries manage to offer) so they don't have to worry about being homeless if they get an unexpected medical bill.
So I've always seen the idea that the non-well-off are just looking for handouts to do nothing as pure projection of the well-off as to what their mindset would be if they were less fortunate in their life circumstances.
Is there some small set of people who abuse the system (any system)? Yes, but I'm absolutely convinced a lot more people abuse the system at the high-end (for far greater overall cost) than at the low-end. And only people on one side of the scale are likely to ever face legal consequences for systemic abuse.
What is the primary role of the police? To protect life and property, right?
Who owns most of the property they are protecting? The police are a welfare program for the wealthy.
Yeah, there are tons of examples, some more direct than others.
Likewise the index averaged stock market is now basically free money forever for people who already have enough to make significant investments.
Yeah, sure, it could crash down in theory, but we've all seen how much effort will go into protecting the money if that actually happens, primarily at the expense of the less-well-off (who are far more impacted by inflation than the wealthy, and will suffer the most as we continue to cut safety nets rather than raise taxes on the wealthy to deal with the debt created by the financial engineering involved).
I couldn't read the article but at least agree with the title. Taxes should be 1:1 linked with spending. The xx trillion dollar deficit is IMHO unfixable without substantial, painful changes.
It's not fixable with taxes alone though; the government also has to spend less than it brings in by cutting programs and budgets
This isn't correct when you look at the numbers. You can try it yourself at https://us.abalancingact.com/federal-budget-simulator.
The thing is, in isolation, balancing the budget looks pretty easy. It's only because you have to deal with particular interest groups and a populace who has come to believe that any tax increase means they're getting shafted. I was able to balance that budget with the following changes:
1. Top one percent effective tax rate goes from 24 to 30 percent.
2. Higher income goes from 12.26 to 14.26.
3. Upper middle income goes from 7.7 to 8.7.
4. Middle income goes from 4.8 to 5.8.
5. Lower middle income goes from .1 to 1.1
6. Lower income goes from -4.1 to -3.1
7. Social payroll taxable maximum goes to 90% of taxable income.
Those changes alone, with absolutely no spending changes, balance the budget. Now, I'm not proposing that those changes are politically viable, and you can certainly fiddle with my distribution if you think something else would be fairer (I think it's fair because the rich have done much better than everyone else over the past 40 years so I think they can afford to pay more, but I also think that everyone should have to contribute something more or else you get the current problematic belief that the issue can be solved just by taxing somebody else), but I would strongly disagree if you wanted to argue that those changes would result in any substantial change in standard of living for anyone.
I think, numerically, the problem can pretty easily be solved just by taxation alone (though I think it would make sense to add some spending cuts), just not politically.
Site looked interesting, so I was just like "what would it look like to have a top tax rate like we did in the 1950s-1980s (Before Reagan dropped it)?" [1] And the hilarious thing is the propaganda it spews without any backing of data:
>At a certain point, increases in tax rates will not raise more revenue. Once someone's tax rate becomes sufficiently high, they might work less or try harder to evade taxes. Based on existing evidence, this simulation assumes that increasing this group’s tax rate beyond your current level is unlikely to raise more revenue.
And then it pretends like the maximum amount of income you can get out of the richest 1% is $203B.
This is rich people's propaganda that we've bought into by pretending that Rich people don't need this country. But that's a lie. If it were true, they would just move, instead of fighting tooth and nail for tax cuts in every single election.
Also the breakdown of spending categories and the way they're represented are pretty clearly politically motivated, and the Numbers look a little suspicious to me. They don't even align with the CBO numbers.
Another really obvious thing missing is a "Capital Gains Tax"
Which is currently pegged to like 20%, and how CEOs get all of their income. So If Capital Gains was taxed as income, I think that would at least start to make the Income tax realistic.
[1] https://web.stanford.edu/class/polisci120a/immigration/Feder...
> Those changes alone, with absolutely no spending changes, balance the budget.
I tried out the calculator and put in all your changes, and the budget wasn't balanced, there was still a 1.4T deficit (as opposed to the current 1.9T deficit). The app only claims the budget is "sustainable" now because it assumes GDP keeps growing at the same rate (which might not be true), and if so we'll hit a 3%-of-GDP "deficit target" in 25 years. Also adjusting a negative tax rate kind of seems like it is, in fact, reducing spending (i.e. the federal government reduces the amount of tax credits it gives out). This also assumes the federal government will not introduce new programs, new spending, etc. So really all you did was reduce the deficit by .5T along with a hope and a prayer that the economy will continue to grow at the same rate for the next 25 years (while at the same time the federal government does not increase spending). I personally think it's bad to have a deficit at all and that we should work towards zero deficit and eventually surplus (yes, I know there are all sort of growth hacks and such you can do with debt, but historically politicians have succumbed to slippery slope deficit increases and so for that reason alone I think holding politicians to a zero deficit standard is best -- do it for a few generations and now there's a precedent that protects us from getting into the situation we are currently in). To me a "balanced budget" is that your spending is <= your income.
Anyway, interesting calculator app. I do see the value in raising taxes for sure, but it's not easy politically to raise taxes and it's also not easy politically to cut spending (whichever group likes the thing you cut will scream), so ultimately it might have to be a hybrid solution where democrats increase taxes without increasing spending when they are in power and republicans cut spending without decreasing taxes when they are in power. When I say that out loud though it seems like a pipe dream, sigh...
This is the lie. Our economy generates 27 trillion gdp.
We can afford everything. We choose not to.
It's more likely both are true. We can afford to do more for the people, but at the same time we are over-spending. Streamlining some of these functions would be nice. One area we are vastly over-spending is highway and roadway construction, for example. Even if we can afford it, we shouldn't pay for it. There are other more politically hot topics here and both general sides of the debate have merit, but we should try to not be dogmatic about it and instead think in systems terms and long-term outcomes. When I see a city or state spending $400,000/each on units for housing homeless people, well, that's obviously a misuse of funds. That's not sustainable. We shouldn't do it even if we can afford it. When we spend $50 billion in a week of the Iran war (which I support but just as an example), well, that $50 billion could have paid off a lot of mortgages - so maybe we should or could do that instead.
Maybe start with universal healthcare and rezoning laws so Airbnb can’t sit on housing. Make public college free. Reduce military spending drastically. Force billionaires to pay a 25% tax on net worth (they’d still increase their wealth).
Then create universal basic income.
Our economy would skyrocket.
Just to note. McKenzie Scott has given half of her divorce settlement away and still has more than when she started.
No one needs to be a billionaire. It’s inhumane.
I don't like or valorize billionaires, I guess (I mostly don't care about them), but I don't understand what's "inhumane" here. There aren't very many billionaires. Billion dollar companies are far more salient to ordinary people than billionaires are. And, obviously, you can't fund universal health care by liquidating the billionaires!
I've never really understood why people are so het up about billionaires. The distinction between them and decimillionaires seems mostly like comic book lifestyle stuff; like, OK, they fly their pets private for visitation with their ex-spouses or whatever, I guess that's offensive aesthetically?
Far, far more damaging to ordinary people is the Faustian bargain struck between the upper middle class and the (much smaller) upper class, which redistributes vast sums of many away from working class people into the bank accounts of suburban homeowners.
(Because fundamental attribution error guarantees threads like this will devolve into abstract left vs. right valence arguments, a policy stake in the ground: I broadly favor significantly higher and more progressive taxes, starting with a reconsideration of the degree to which we favor cap gains.)
I really applaud the work McKenzie Scott is doing. A lot of billionaires play the "aw shucks if only someone would tax me" - nothing is stopping them from just donating to the government if they really thought that. We have a housing problem, why not play Sim City in real life and build houses for people or something? Personally I think it would be a blast.
Similarly though, there's nothing stopping you personally from taking $50, $100, whatever and walking over to a shelter or food bank and donating. You don't need to wait for the government to stand up a program. Lead by example like McKenzie Scott is. We donate money to local organizations - again, no barriers here.
I don't care if someone is a billionaire, though of course we should tax them "appropriately". But if you're really mad about billionaires and you want these programs, you should be giving away your own money too and there's nothing stopping you. Waiting until you get just the right program or tax the right person is a bad strategy if you really care about some of these issues.
Yeah, it's always funny to see how MMT is a perfectly acceptable way to create tax cuts and enable corporate welfare but if you suddenly want universal medicare or childcare suddenly we care about budgets or MMT is suddenly impractical.
This should actually allow for a balanced budget and still affording everything. The problem is, the USA has the best government money can buy and it wasn’t bought by the people.
Not if you believe the (obviously wrong) laffer curve zealots
Eh, the way the US does a lot of things have significant cost problems.
Public spending on healthcare is around 8-9% of GDP once you add things up.
So you have already paid for a public healthcare system in many ways.
There are really 4 possible positions on deficit spending:
- it does not matter at all, as long as inflation is under control (MMT)
- it's fine, as long as the long run average is ~zero (a cyclic argument)
- it's fine, as long as the long run average is a small stable % of GDP
- we have to balance the budget every year, no matter what
I don't think any serious person holds the last position.
> it's fine, as long as the long run average is a small stable % of GDP
I think this is theoretically viable only if debt % is lower than growth rate. Recently US debt % of GDP has been higher than growth rate.
A lot of US states and municipalities work that way. Can argue whether it is wise, but it is certainly common.
Most US states are not global superpowers with hundreds of millions of citizens.
The scale is completely different. Economics do not simply scale up and down, the math changes drastically when the numbers get bigger.
>The scale is completely different.
Yes, the scale is different. This means that the debt problem can go on for far longer without being apparent. It can even be put off until the current slate of politicians are out of office, until they're dead of old age and beyond accountability. Scale can hide things, by making them so big your field of vision doesn't allow you to see it all at once.
>I don't think any serious person holds the last position.
And yet, that's the only position that (were it followed) would see us free from ruinous debt. What are we paying in interest every year again?
There isn't much juice to squeeze when you make one of the most progressive tax systems in the world even more progressive. Normalizing the idea that the middle class should pay very little tax makes it impossible to raise the necessary revenue as a matter of math.
AIUI, most EU nations (the ones with the great social benefits the left says it wants for America), have a flatter tax burden, where the middle class pays a higher percentage of the total.
Most people suggesting taxing the rich more aren't saying that the middle class should pay very little tax
Exactly. The tax platform that we need the most is that dentists are not paying their share. Penny-ante local landlords are not paying their fair share. There is too much focus on the ultra rich, you can and should take all their stuff but it doesn't amount to a whole lot.
how much of the revenue is necessary?
No idea, my point was more that the math doesn't math regardless of if they are spending it well or poorly.
Something I have noticed about tax and spend advocates is they have shifted their messaging from "these taxes will pay for great services" to "these taxes will hurt the rich". It's telling that even they have lost faith in the ability for tax increases to provide meaningfully better services as an advertisement. I suppose no one, including myself, would seriously believe it.
I am referencing only the American zeitgeist, I assume other countries might have better systems.
"The government shouldn't help people" is such a bizarrely popular American attitude, that so many people take as gospel. Therefore "The government can't help people" emerges as reality. It doesn't have to be this way, but we make it this way due to the majority's stubborn choices.
You look at a lot of places and between unions, procurement rules, or an obsession with certain classes of contractors, government capacity is badly hobbled from the start.