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.
>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.
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.
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.
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.
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.
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.
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.
> 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.
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.
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.”
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).
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.
The challenge with having any serious policy discussion in the current political climate in the US is that a sizeable amount of the executive branch's action is simply illegal and is only starting to run its course through the courts.
An administration that is actively subverting the other two branches of government (seizing payments that Congress ordered, et al) and politicizing parts of the executive that are meant to be apolitical (DOJ, Treasury, et al) should not be treated with the same type of discourse as previous ones.
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.
Oh, for goodness' sake. There are other websites. And his Randite goldbug nonsense is, quite frankly, overrepresented in American political discourse already.
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.
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…
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.
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 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.
https://archive.ph/j5FI7
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.
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.
>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.
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
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
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.
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...
Check out:
https://freakonomics.com/podcast-tag/jessica-riedl/
and other work / appearances by Riedl
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.
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.
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.
> 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?
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?
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.
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.
This is very silly. College attendance is at record highs, far above 1980.
> 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”
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.
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.
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.
> 90% tax on all income over $100 million.
That's an income tax, not a wealth tax?
Yes, sorry.
With Democrats like these...
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.
The challenge with having any serious policy discussion in the current political climate in the US is that a sizeable amount of the executive branch's action is simply illegal and is only starting to run its course through the courts.
An administration that is actively subverting the other two branches of government (seizing payments that Congress ordered, et al) and politicizing parts of the executive that are meant to be apolitical (DOJ, Treasury, et al) should not be treated with the same type of discourse as previous ones.
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.
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 :)
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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.
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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.
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…
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.
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Lol what majority do you represent there, Bender?
ohh interesting. can wars be a topic on HN? wow. didn’t know.
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).
Tax the rich!
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.
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 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.