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What would the effective tax rate per person have to be in order for no cuts to be necessary?
I don't know, but they would have to be pretty high. Too high. You would have to raise enough to equal half of what we take in now, so about $1-trillion more a year. So most would be around 40-60% or more. It's not possible to only tax our way to a balanced budget.
This post was edited by TroyTide 14 months ago
Isn't there a saying " you can't out earn stupidity".
WADR, it doesn't work like that. The government has a planned amount of outlays, roughly 3.8 trillion per year and has been holding steady last few years. So, it spends money into the economy based on forecast overall size of the economy, roughly 20% of GDP. Then, depending on wages, and consumer and business spending that is occurring, a certain % is returned in taxes. The deficit is nothing more than the money saved in the private sector, beyond what was taxed. So, the deficit is money that households, businesses, banks are saving. Each year the private sector saves, which is the deficit, and the accumulated amount of deficits overtime is the debt. Government debt is an equal amount of net private sector savings overtime. We rarely ever achieve a government surplus, and it is not the goal. Whatever amount the annual deficit is, we tend to issue securities in an equal amount so that individuals, corporations, and various other individuals can safely park their extra cash into. This is mainly done as a means to control inflation and/or interest rates. So, we are experiencing high deficits right now, not due to extreme government spending, but because of a financial crisis which caused consumers and businesses to slow spending. Households are deleveraging from underwater mortgages etc. Wages are lower and thus, less taxes returned. If you raise taxes on people trying to spend, then you just make the problem worse. Make sense?
RIP Lil Julio
No I realize it not feasible. Trying to wrap my mind around how the defense to spending cuts is higher taxes, when they're not exclusive counterpoints.
facts are facts. stop watching the news. we have pretty much spent the same the last 3-4 years.
Here we go with this nonsense again.
My best guess is that Obama wants to raise taxes on wealthier individuals not because of revenue alone, but perhaps to suppress much of the speculative activity fueling the financial sector. Wealthy people aren't the spenders which drive the production of real goods and services. What you hear in the media is not necessarily the real story or the real strategy, but how it's played out in the political arena and what emotion it creates amongst the population. Just a thought..
grow up. nothing i have said is political. this is the process and it is fact.
It's a pretty terrible ROI
Facts don't matter unless they support TroyTide's opinion.
when you create an economy off of speculative bubbles and then the bubbles pop, you realize you're not left with much. Another consideration. ...If you divide the economy into 3 distinct sectors, Private, Public, and Foreign (trade balance), all 3 net to zero. Since we run a trade deficit of 400 billion or so, any government deficit less than 400 billion, means that it will make up the difference by taking savings from the private sector.
You are saying that deficits exist because the government doesn't tax us more and are completely ignoring that if the government spent less we would still have your "savings" but also wouldn't have the deficits. It's a ridiculous way of looking at it. It's saying that Obama should just come out and say "hey don't worry about those deficits, just think we could be covering that with your taxes, so we are saving you money by not doing so".
You also overlook that all those accumulated "savings", what rational people know as debt, eventually has to be paid down. Debt can't increase forever, even in the fiat system, and even though we are the reserve currency. At some point you have to pay the bank. And even if you can manage to borrow for long periods without ever hitting a wall, you are devaluing your currency overtime, which obviously you can only do so much.
If things are as you say they are, then Europe wouldn't be having any problems, and Brussels backed by Berlin would have just happily paid off Greek debt with nary a complaint. And Westminster and Madrid wouldn't be ordering up austerity measures, and France wouldn't have raised taxes in a desperate and misguided attempt to close their deficits. And the US would have seen no need to pay down its post war debt in the 50s, 60s and 70s. So clearly there comes a point when debt has to be curtailed. Unless you are going to tell me that all of Europe's leaders and our past governments are wrong and you have all the answers.
Higher Individual tax rates would not limit speculative investments.
Accountability might. but not higher taxes certainly wouldnt
Agreed. The real reason Obama wants higher taxes on the wealthy is to "close the gap" between rich and poor. Also if the rich are less rich they have less power, keeps the ruling class firmly in position.
European countries do not have their own currency boss.
And the US NEVER paid down their debt in the 50's-70's. Get your facts straight.
But the EU does, that is why I was saying the EU wouldn't have minded taking on Greece's debt if what you say is true, which obviously was not the case. Same with France, under you theory the EU could just be all of Europe's sugar daddy forever and ever and ever. But again that is clearly not the case.
The problems associated with borrowing too much money are real, whether you want to believe it or not.
You are correct there, the ratio changed because of growth so we were able to grow our way out of it, a luxury we do not have today.
if you go back to my original statement, where did I say that we can run trillion dollar deficits forever? you are making ASSumptions. ....but to offer some points of reference. UK has had debt:gdp levels above 200%. Japans's is currently 250%. We were at 120% or so after the great depression. Not saying we want to go there. We need tp rebalance and rebuild a new REAL economy.
why are you giving up? why do you not think we can do this again? ....yee of little faith.
So I am confused as to what you have been advocating then, because it looks an awful lot like "debt is good, more more more" lol.
And yes we need to rebuild our economy, but we haven't fixed our problems that caused the recession yet so don't hold your breath.
with 17 trillion dollars saved in the private sector, i would say all we need is some new products with a plan on how to organize and we are ready to roll.
Nothing positive seems to be developing. Then we had baby boomers and were the only relatively unscathed country in the developed world. Nothing of the sort this time around.
Some okay numbers here and there sometimes, but doesn't seem a major boom is on the way.
LOL. Good lord.
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