When they compare places I always wonder if they combine all taxes or just look at federal taxes.
THE U.S. IS A LOW-TAX COUNTRY
- Thread starter NPT
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Good. Part of the reason that the US economy has been among the strongest compared to high tax countries (particularly Europe). High tax countries have had slow growth and lack of innovation for years now.
Case in point:
Data Centers built in the US- 5381
Data Centers built by the next 10 countries combined- 3379
The US has dominated the world in investment and innovation. I have to think that low taxes assist with that.
Here is a chart of total tax revenues as %GDP for recent years:
FWIW, Mitch Daniels has long advocated for a Value Added Tax -- to go along with a flattened and simplified income tax.
He likes to use former Treasury Secretary William Simon's old quip that we ought to have a tax system that "looks like it was designed on purpose."
I agree with that.
But there's also such a thing as a tax code that is "too low." I don't think we have that as things stand.
But what we do have are a helluva lot of debts that we have to figure out how to manage. As such, we do have to figure out ways to generate more tax revenue without killing growth and productivity gains from innovation.
Well, you have nearly half of Americans pay $0 federal income tax. Maybe start with them. 10 or 15% not paying...OK. 45% is wrong.
I'd like to see almost everyone pay a little bit, just for the accountability aspect of it. Even if just a nominal amount.
A VAT would do that, net of anything refundable. I'm sure that any VAT we instituted would have some means testing on it. Which is fine.
But, honestly, we're not going to be filling much of our debt hole with taxes on the bottom 50%. I'm not opposed to it -- but only insofar as it would give everybody some more skin in the game...and hopefully make them less inclined to support spending hikes (which ultimately are tax hikes).
I know he said that. And I stand second to nobody in my admiration for Milton Friedman. In fact, it's probably pathological to the point that I should feel humiliated about it. But nobody who wrote things about ideas had more of an impact on me that that short, bald Jewish economist with the toothy grin.
That said....this is one thing I disagree with him on. Until and unless we can get spending down sufficient to put us on a sustainable fiscal path, I don't think we have any choice but to find ways to generate more tax revenue.
Those people not paying taxes are those barely scraping by. You tax them (gaining very little) and then have to turn around and provide more assistance like food vouchers. What little you gained in taxes, just got spent in assistance. Or you are aiming for higher homelessness as the goal
Compared to other countries, the obnoxiously wealthy pay very little. Only way to decrease the debt is to tax those that can most afford it
No, the only way to decrease the debt is to get spending under control. And no, I am not talking about small time cuts that amount to a couple billion here and a couple of billion there. Entitlements must be brought under control. When FDR created SS, you retired at 62 and died at 65. You had 10 people in the workforce for every one that is retired. Now you have people on SS and Medicare for literally decades, and there is 2 workers for every one retiree. Entitlement ages must go up. I am age 60, and if they raised my full retirement age from 67 to 70, I would applaud. That is the way you reduce deficits. Taxing more does not work. Once again, look at Europe.
The end result would be Europe and declining living standards.
To Jim's point though, if this VAT system was so effective, why are those countries barely growing and facing similar budget problems with their aging populations? I don't think the VAT is a unicorn. Would it be moderately more effective? Perhaps and I could buy that, but I don't think it will dramatically impact deficits and/or provide the same growth prospects.
Some definitions are in order here. How do you quantify…
- “obnoxiously wealthy”
- “very little” (as in the tax burden you believe the above group pays)
- “those who can most afford it” (where do you set the cut off line for higher taxes?)
Can we start another pandemic that preys on the gray hairs? That would be a start in the right direction
You can cut costs somewhat but that will never be enough. You can't give tax cuts to the wealthy and think you can still make any headway on the deficit.
There are 4 ways I can think of to reduce debt.
1) Get more tax revenues relative to GDP
2) Spend less money
3) Increase economic growth beyond forecasts
4) Monetize it
I think most people would agree that #3 is the best option, as that doesn’t require any obvious sacrifices.
But it’s also that option that is most beyond our control. We can, however, have policies which either encourage or discourage growth. And I’d think we’d want to have policies that encourage as much growth as possible…because the more growth we have, the less of the other 3 we need to endure.
And that’s the problem with trying to tax our way out of the hole. The fuel of production is capital. Trying to wrest too much tax from it would surely lead to some portion of it being allocated elsewhere….which dampens growth and thus puts more pressure on the other 3 ways to manage a heavy debt load.
What most countries in history have done is tried #1 first and then moved on to #4 once the ensuing economic contraction led to the higher taxes bringing in fewer revenues than they had anticipated.
What few countries have done is attacked the problem with #2. But we’re witnessing one of these right now - and it’s generating some really encouraging results thus far.
I’m curious why you think it would never be enough.
I actually agree with you on this - I don’t think our lawmakers have the will to do this, or the likelihood to gain it anytime soon. I’m not sure they even have the will to pare back growth of discretionary spending.
But, political pressures aside, why could we only cut expenses “somewhat” in a way that would “never be enough”?
IUJIM was talking about the people that currently pay nothing, which means they are not making much money. 10-15% of poverty level wages isn't going to move the needle. It will also make those people more needy in terms of assistance, which I think would erase the benefit of taxing them
Obnoxiously wealthy being people making 7 figures plus and especially those flying around in their private jets and yachts
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Short of screwing over everyone that put money into social security and canning it entirely, I don't think it will get us on track to erasing our debt.
Majority of our expenses go to SS, Medicaid and the military. Not much wiggle room to erase debt without looking at revenue as well.
So the top 1% pay approx 40% of total federal income tax revenue currently. The top 5% pay almost 65%. What percentage would you see as "fair" for top 5% to pay? 80%? 90%? all of it?
So is it hiking tax revenues “as well” or is that the “only way” to do it?
Because you’ve said both things - and they’re mutually exclusive.
I agree. In order to balance the budget we need to raise revenues by 30-40%. Which means you would have to raise taxes on the top 5% by 50% to get there. Those people would be paying somewhere around 70% effective tax rates. It’s not happening and we’d probably end up collecting less revenue as the top 1% left the country. The only way to close the gap is to raise taxes significantly on the middle class, which would just crush it more.
The people in the high tax countries of Europe are generally happier, live longer, are healthier, better educated, not MAGA dumb, and their 5th graders don't have to do active shooter drills.
It's guys like you that drive me to hang on forever. You'll be paying my SS and, after I spend all my money, Medicaid until I'm 100+.Can we start another pandemic that preys on the gray hairs? That would be a start in the right direction
I hope you croak the day you qualify for SS.
And you call yourself a patriot…
It’s examples like this why people’s belief in god is slipping
There were fabulously wealthy people when the top marginal rate was 92%. There was still a meritocracy when the top rate was 92%. America was great when the top marginal rate was 92%.
In my world, we have a lot shit breakdown. It's just comes with the territory. Sometimes the thing that breaks down is simple. You can see it. Sometimes it's internal and you have to understand what each part's function is to properly fix the problem. The best mechanics are the ones that understand what makes the machine function at a basic level. Anyone can be a parts changer.
This winter I had to kick a child off our basketball team. He was very disruptive. ADHD and his inability to control impulsive behavior was simply too much. It was hard because I knew the best thing for the kid was to remain on the team. I tried to do things to help him and work around the challenges, but ultimately he was preventing the other eleven from learning.
Having said all that, my time on the cooler is about to come to an end. I appreciate the forum. It's amazing the changes I see in it every time I come back from an extended absence. As always, thank you for allowing me to psychologically ejaculate all over your screens. I wish you guys well.
Sorry to hear that you’re leaving the forum.
Also, regarding the 91% top marginal income tax rate, it should be noted that the tax base was very different for the 12 years that was the case. As such, there really wasn’t a whole lot of difference between the average tax rate on the top earners then vs. now.
And federal tax revenues as a %GDP during that period were also not very different from what we see nowadays - ~16% GDP.
Now….you still have a good 6 weeks before you have to work. You going to Dubai or something?
Be well digressions. I’ve enjoyed your posts very much
3 40' planters and 40' excellerator to go through. 15 grain bins to haul and clean. Taxes. Travel basketball 5 days/week. Weather. Maintenance on tractors. Hopefully, everything will be ready in 6 weeks.
Sorry to hear that you’re leaving the forum.
Also, regarding the 91% top marginal income tax rate, it should be noted that the tax base was very different for the 12 years that was the case. As such, there really wasn’t a whole lot of difference between the average tax rate on the top earners then vs. now.
And federal tax revenues as a %GDP during that period were also not very different from what we see nowadays - ~16% GDP.
Don't be a parts changer.
There were significant differences. Hence the significant difference in results. We've went over this numerous times.
The author of your link is either ignorant, or deceptive.
At some point, we have to argue over the things that matter. @IUJIM had a very good post in this thread. We should argue over the proper retirement age. Not whether it should be increased or not.
Top marginal rates and brackets are too low. People need to understand that first.
And we need to acknowledge that there are people who want entitlements to fail. Paul Ryan is the poster child.
Off to work. Have a good day.
Ignorant or deceptive? Digressions, it's just raw data of tax receipts as a percentage of GDP. You can look it up yourself -- choose whatever source you want.
The reason you're reacting the way you are, IMO, is because you've been led to believe that we used to get a whole lot more tax revenue than we do today. That's why you're advocating for the 91% top marginal income tax rate.
So when you see data showing you that this isn't the case, rather than adjusting your views, you disbelieve the data.
Have a good day at work. But, if you get some time later on, I'd welcome you to use your own source to lookup historical federal tax revenues. I'm pretty sure you'll find data similar to what I showed you.
Here's a chart from FRED -- that's put out by the Federal Reserve Bank of St. Louis. Hopefully you don't think they're ignorant or deceptive, too.
Was the basketball players name Ballo?
Good luck….enjoyed your posts. Wishing you very few hangups with planting season.
The line is kinda long. Don't know how much time I have, but I've explained this before in greater detail. Tax rates do more than produce revenue.
The article is deceptive for several reasons. Of course, top earners pay a higher percentage of overall revenues. The tax code has been changed to increase income disparity. A higher percentage toward the middle class would be a positive for them. It means they earned a larger percentage of the income.
The tax shelters described weren't used extensively and you would have had to purposefully lose money to "cheat" the system in that manor.
Corporations and the wealthy avoided taxes by investing in their companies. Paying for equipment, facilities, and labor. If they didn't and paid the taxes, that money was spent on roads, schools, and bridges.
Either way, aggregate demand was being increased. How much capital was in the stock markets during that period vs today? How many times did they have to bail out investors via QE, or increasing M1 by 400%? Show those charts.
If the top marginal rate today was anything over 10M gets taxed at 92%. The BoD would have a hard time justifying paying over 10M because only $.08 cents would actually go to the CEO. Post the CEO compensation chart.
It’s not a coincidence that nominal manufacturing peaked in 1979. Disney went to all guest workers in 1991, ect. The tax code is more than revenue as a percent of GDP.
...it's my turn to dump.
