Tax Cuts Are A Bigger Problem Than Spending

Look at countries like Germany and Sweden. They spend on a single-payer healthcare system. They also spend more on their citizens in general. But, they are taxed significantly higher than us. They provide more for their society without damaging their budget. Both countries run surpluses.

German budget surplus soars as economy motors ahead | Reuters

Conservative like to tell you spending is the problem. Yet we have so many outright refutations of their "spending is the boogeyman" talking point. The problem is the Tax CUTS!




That shows you the Bush Tax Cuts costed more than both wars Bush waged on the countries credit card. You guys don't realize that a tax cut that saves you two or three thousand per year, may feel nice and give you a cushion. But, the same legislation that gave you an extra two or three thousand, is giving the top an extra quarter million. A chunk of money they do not need and has no positive benefits for society from they're acquiring it. That's money that could've been used to build roads, schools, or provide healthcare to our citizens.


Once again, Germany high tax, high spending, runs a surplus. The problem is the tax cuts. Not the spending.

Also very boneheaded and deceptive move cutting HUD and Community Development Block Grants. It's not saving you any money, because those cuts in spending will be eviscerated by giant tax cuts coming.

we'd certainly be better off with a health care system more like the rest of the first world, better public transportation, and a lot fewer global police actions. that's a big part of the reason why i think that "premier global superpower" status is more generally trouble than it's worth. perhaps "model first world nation" would be a bit more sustainable.

Winston said:

Look at countries like Germany and Sweden. They spend on a single-payer healthcare system. They also spend more on their citizens in general. But, they are taxed significantly higher than us. They provide more for their society without damaging their budget. Both countries run surpluses.

German budget surplus soars as economy motors ahead | Reuters

Conservative like to tell you spending is the problem. Yet we have so many outright refutations of their "spending is the boogeyman" talking point. The problem is the Tax CUTS!


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That shows you the Bush Tax Cuts costed more than both wars Bush waged on the countries credit card. You guys don't realize that a tax cut that saves you two or three thousand per year, may feel nice and give you a cushion. But, the same legislation that gave you an extra two or three thousand, is giving the top an extra quarter million. A chunk of money they do not need and has no positive benefits for society from they're acquiring it. That's money that could've been used to build roads, schools, or provide healthcare to our citizens.


Once again, Germany high tax, high spending, runs a surplus. The problem is the tax cuts. Not the spending.

Also very boneheaded and deceptive move cutting HUD and Community Development Block Grants. It's not saving you any money, because those cuts in spending will be eviscerated by giant tax cuts coming.

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The rich don't want everyone to have access to the economy. The more restrained public access to the economy, the more control the rich have, and the less they have to compete to earn additional income.

The worlds biggest lie was the idea that the "welfare queen" is the teat suckler of society, not so. It is overwhelmingly the rich who take the largest share of resources by definition and then insist on getting a free pay raise from the government without having to work any harder.

The poor are cheap, the rich are expensive. This should be obvious, but people are so misguided by rhetoric that they don't see it.

Helix said:

we'd certainly be better off with a health care system more like the rest of the first world, better public transportation, and a lot fewer global police actions. that's a big part of the reason why i think that "premier global superpower" status is more generally trouble than it's worth. perhaps "model first world nation" would be a bit more sustainable.

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How many other nations are we willing to let fall to other global superpowers (or even lesser but ambitious tyrants)? I have no qualms with that happening but that is likely if we behaved like Germany in our handling of international affairs.

Winston said:

Look at countries like Germany and Sweden. They spend on a single-payer healthcare system. They also spend more on their citizens in general. But, they are taxed significantly higher than us. They provide more for their society without damaging their budget. Both countries run surpluses.

German budget surplus soars as economy motors ahead | Reuters

Conservative like to tell you spending is the problem. Yet we have so many outright refutations of their "spending is the boogeyman" talking point. The problem is the Tax CUTS!


View attachment 67217813

That shows you the Bush Tax Cuts costed more than both wars Bush waged on the countries credit card. You guys don't realize that a tax cut that saves you two or three thousand per year, may feel nice and give you a cushion. But, the same legislation that gave you an extra two or three thousand, is giving the top an extra quarter million. A chunk of money they do not need and has no positive benefits for society from they're acquiring it. That's money that could've been used to build roads, schools, or provide healthcare to our citizens.


Once again, Germany high tax, high spending, runs a surplus. The problem is the tax cuts. Not the spending.

Also very boneheaded and deceptive move cutting HUD and Community Development Block Grants. It's not saving you any money, because those cuts in spending will be eviscerated by giant tax cuts coming.

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The Bush tax rates became the Obama tax rates since Obama kept 98.6% of them intact in 2013.

ttwtt78640 said:

The Bush tax rates became the Obama tax rates since Obama kept 98.6% of them intact in 2013.

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Agreed. So, conservatives lamenting a mere 1.6% GDP growth under Obama, have their own fiscal policy to blame. Right wing economics under a Democratic executive.

(I didn't vote for Obama.)

Winston said:

Look at countries like Germany and Sweden. They spend on a single-payer healthcare system. They also spend more on their citizens in general. But, they are taxed significantly higher than us. They provide more for their society without damaging their budget. Both countries run surpluses.

German budget surplus soars as economy motors ahead | Reuters

Conservative like to tell you spending is the problem. Yet we have so many outright refutations of their "spending is the boogeyman" talking point. The problem is the Tax CUTS!


View attachment 67217813

That shows you the Bush Tax Cuts costed more than both wars Bush waged on the countries credit card. You guys don't realize that a tax cut that saves you two or three thousand per year, may feel nice and give you a cushion. But, the same legislation that gave you an extra two or three thousand, is giving the top an extra quarter million. A chunk of money they do not need and has no positive benefits for society from they're acquiring it. That's money that could've been used to build roads, schools, or provide healthcare to our citizens.


Once again, Germany high tax, high spending, runs a surplus. The problem is the tax cuts. Not the spending.

Also very boneheaded and deceptive move cutting HUD and Community Development Block Grants. It's not saving you any money, because those cuts in spending will be eviscerated by giant tax cuts coming.

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Actually your example exemplifies why spending is a problem. America is busy spending more defense spending than the rest of the Europe.. in order that Germany and Sweden can spend more on their own population.

jaeger19 said:

Actually your example exemplifies why spending is a problem. America is busy spending more defense spending than the rest of the Europe.. in order that Germany and Sweden can spend more on their own population.

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You act like Germany and Sweden are on the brink of war and America is footing the bill. Our defense spending is voluntary. America spends 600 billion dollars on defense because the contractors have to get paid. If I'm hearing you correctly, you're for cutting defense. And I am too. But, I'm also for economic policy that is pro-growth, similar to what Sweden has done.

Pro-growth economic policy to me, means redistributing wealth from the top to the lower classes. There may be a time to relax the tax burden, but, all a relaxed tax burden is going to currently do, is take public funding and transfer it to private hands. The seesaw is swung far over to the rich and we need a sensible tax policy to swing it back in balance.

Winston said:

Look at countries like Germany and Sweden. They spend on a single-payer healthcare system.

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German Healthcare is a blended system

They also spend more on their citizens in general. But, they are taxed significantly higher than us.

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You are certainly correct that they are taxed significantly higher than us - but you are missing who is taxed significantly higher than us. Germany and Sweden aren't able to to afford these government programs because they levy higher taxes on upper income earners, but rather because they tax the crap out of the middle class, mostly through various forms of consumption taxes.

They provide more for their society without damaging their budget. Both countries run surpluses.

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Well, Germany, at least, has a balanced budget law, which requires them to avoid our overspending. They were able to achieve that balanced budget because they cut entitlements.

Conservative like to tell you spending is the problem. Yet we have so many outright refutations of their "spending is the boogeyman" talking point. The problem is the Tax CUTS!

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No. Spending is the problem. We are collecting more in tax revenue than ever before - yet our spending far outpaces it. As Nate Silver points out, not only is government spending growing rapidly, but the main drivers of that are our entitlement programs.

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This is an entertaining graph, because it pretends that people do not respond to incentives. Static Scoring is inherently problematic, which is why it has consistently overestimated the revenue negative impact of tax cuts and the revenue positive impact of tax increases, and why the CBO has shifted to a more accurate means of scoring proposals.

It is also entertaining, because you will note they very carefully do not tell you what revenues actually look like.

This is what income tax revenues actually look like:



You will notice that there are two big recent dips - the 2001 economic downturn, and the 2008 economic downturn. The tax cuts in 2003, however, occurred before income tax revenue rose, rather than fell.

There is a reason for that - tax revenues are less reflective of the nominal rates (because people respond to incentives) and more reflective of economic growth. Take a look, for example, at what happens when you chart out revenues against GDP:



You will see that it is actually comparatively flat - wild swings in tax rates do not seem to produce corresponding swings in revenue. In fact, the only discernible long-term impact (if you do a year-by-year it is sometimes possible to draw out 12-24 month impacts as people adjust) seems to be that the average revenue climbs just very slightly in a lower tax environment, as people rationally spend less of their time avoiding taxes and more of it producing.



We could potentially raise more income by raising taxes, sure. But history suggests that increasing top income rates will not be a successful pathway to do so. Instead, if we want to replicate Europe's revenue as a % of GDP, we will need to copy Europe's tax structure, and begin taxing the living crap out of the poor and middle class via consumption taxes. That has a lot of other problematic effects - not least, it depresses growth and income (the average German salary, for example, is significantly smaller than the average US salary, even before taxes are accounted for), but I suppose you could do it, if you were willing to accept all the damage it would do.

Winston said:

You act like Germany and Sweden are on the brink of war and America is footing the bill.

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......As I understand it, the German and Swedish systems roughly as they exist today were built in the 1970s. Could you tell me what you know about, oh, say, Germany in the 1970s?

Pro-growth economic policy to me, means redistributing wealth from the top to the lower classes.

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That's interesting. Taking resources out of the most productive and giving it to politicians to allocate according to political, vice market incentives seems to me a guaranteed way to reduce growth.

Winston said:

Look at countries like Germany and Sweden. They spend on a single-payer healthcare system. They also spend more on their citizens in general. But, they are taxed significantly higher than us. They provide more for their society without damaging their budget. Both countries run surpluses.

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And both of those countries achieved that by cutting social spending without hiking taxes.

In fact, Sweden CUT taxes.






I love you Winston. But I think you've accidentally self-pwned a bit in this thread

Winston said:

You act like Germany and Sweden are on the brink of war and America is footing the bill. Our defense spending is voluntary. America spends 600 billion dollars on defense because the contractors have to get paid. If I'm hearing you correctly, you're for cutting defense. And I am too. But, I'm also for economic policy that is pro-growth, similar to what Sweden has done.

Pro-growth economic policy to me, means redistributing wealth from the top to the lower classes. There may be a time to relax the tax burden, but, all a relaxed tax burden is going to currently do, is take public funding and transfer it to private hands. The seesaw is swung far over to the rich and we need a sensible tax policy to swing it back in balance.

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You act like Germany and Sweden are paying for the same things that we Americans are. Defense in one of our single biggest discretionary items. there is no doubt that the US is the worlds policeman.. and that other countries.. particularly in Europe.. gain substantially from the security we provide for them.

Pro-growth economic policy to me, means redistributing wealth from the top to the lower classes. There may be a time to relax the tax burden, but, all a relaxed tax burden is going to currently do, is take public funding and transfer it to private hands. The seesaw is swung far over to the rich and we need a sensible tax policy to swing it back in balance.

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Problem is.. you think that the way to do this is through taxes.. which has proven not to work. We currently have a tax burden that falls MORE heavily on the rich than it has before in American.. AND we are collecting about the same amount in taxes as a percentage of GDP. Yet income inequality as grown. Wages are stagnant for the lower and middle classes.

The issue is not taxes in America.. its spending..(and other factors like anti union laws, and illegal immigration)... i.e. What we spend money on.

As long as folks like yourself continue to think its taxes..

And before you think "redistribution to social programs works"... before you say that... think about where ultimately all that social spending ends up... I can tell you.. its not in the hands of a poor person. Cuz they are still poor. Who benefits from welfare? You think a big box store like walmart?

How about hud... wealthy contractors providing low income housing? In fact.. do a bit of research on that and you will see what a scam that is. For the wealthy.

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cpwill said:

You are certainly correct that they are taxed significantly higher than us - but you are missing who is taxed significantly higher than us. Germany and Sweden aren't able to to afford these government programs because they levy higher taxes on upper income earners, but rather because they tax the crap out of the middle class, mostly through various forms of consumption taxes.

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The taxes on consumption aren't problematic, if the middle class has the money to pay them. In order to shift the see-saw in America we need to suck the gains going to the top and redistribute them among the middle class. I'm fine with a higher tax on consumption, as long as it's going to healthcare, education, and maternity leave for mothers. If they are put in place to help lift the middle class out of poverty, by providing them windows for success and economic security, bring it on. But, first in America we need to increase the middle classes purchasing power, and if the private sector refuses to lift their wages, in proportion to CoL, the government must seize some of the gains and force them to trickle down.

https://www.taxjustice.net/2017/05/...axes-strong-unions-equal-distribution-wealth/

Well, according to Finance Minister Magdelena Andersson (an economist), the key ingredients are high taxes, strong labour unions, and equal wealth distribution. Using taxes to redistribute wealth and income, and investing in training to increase productivity and improve labour mobility between jobs, are among the key differences between Sweden and (say) the United States.

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Well, Germany, at least, has a balanced budget law, which requires them to avoid our overspending. They were able to achieve that balanced budget because they cut entitlements.

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I'm aware that Germany had healthcare costs that were running away from them. But, so does the United States and the States are too stubborn to enact policy that's good for public health, rather enact policy that benefits insurers. Cutting entitlements in the United States is not a policy that controls healthcare costs. Enacting policy that throws people off insurance will only lead to greater healthcare costs in the United States, due to people using hospitals like doctors, and being unable to afford preventable care. A conservative leader like Angela Merkel, cutting entitlements is a fair estimate of the situation. Had you a leader of one of the more left-wing parties, they may have chosen a different path to walk, notwithstanding illegal deficits.

No. Spending is the problem. We are collecting more in tax revenue than ever before - yet our spending far outpaces it. As Nate Silver points out, not only is government spending growing rapidly, but the main drivers of that are our entitlement programs.

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I think you underestimate how much revenue we are missing out on by not taxing high income earners. Bill Clinton's tax policy left Bush with a surplus. Perhaps a surplus driven by the technology boom. But, a surplus nonetheless. Because he had tax policy in place to scoop revenue on high income earners. One tax rate, I would adjust from where it currently is, is capital gains. I would move the capital gains rate to 30%. Truly wealthy people don't make their money from earned wages, they move big money around in the market. It comes down to wanting to create a fiscal policy that is a compromise between a pro-worker model and a pro-CEO model. Cutting entitlements that workers take advantage of will further damage the middle class. If you cut SSC, that damages local economies by lowering the purchasing power of seniors.

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This is an entertaining graph, because it pretends that people do not respond to incentives. Static Scoring is inherently problematic, which is why it has consistently overestimated the revenue negative impact of tax cuts and the revenue positive impact of tax increases, and why the CBO has shifted to a more accurate means of scoring proposals.

It is also entertaining, because you will note they very carefully do not tell you what revenues actually look like.

This is what income tax revenues actually look like:

You will notice that there are two big recent dips - the 2001 economic downturn, and the 2008 economic downturn. The tax cuts in 2003, however, occurred before income tax revenue rose, rather than fell.

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I'm aware of dynamic and static scoring. I don't understand how they come to conclusions and feel that is more up to learned economists. I only look at numbers, and cross-reference them with societies I feel like are performing better than the United States, and then seek to implement policies countries have had success with here at home. My rebuttal to your points about the 2003 tax cuts, I have looked at Bush's revenues before, is that his revenue was climbing because of an artificial housing bubble. The housing bubble propped up his economy. And the Tax Cuts themselves did not buy real G.D.P growth at all. I'll refer to Bruce Bartlett an economic advisor to the Bush and Reagan administrations, to prove my point:

Bruce Bartlett said:

"It would have been one thing if the Bush tax cuts had at least bought the country a higher rate of economic growth, even temporarily. They did not. Real G.D.P. growth peaked at just 3.6 percent in 2004 before fading rapidly. Even before the crisis hit, real G.D.P. was growing less than 2 percent a year."

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There is a reason for that - tax revenues are less reflective of the nominal rates (because people respond to incentives) and more reflective of economic growth. Take a look, for example, at what happens when you chart out revenues against GDP:

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I'm aware of Hasuer's Law. It says basically, despite high top marginal brackets or low top marginal brackets, revenue as a % of GDP remains roughly consistent. It's perplexing to me. And I believe that's because people pay a lower effective rate, once their accountants are done with their tax returns. However, the poor and middle classes, cannot afford to pay accountants who know of deductions and tax credits.

We could potentially raise more income by raising taxes, sure. But history suggests that increasing top income rates will not be a successful pathway to do so. Instead, if we want to replicate Europe's revenue as a % of GDP, we will need to copy Europe's tax structure, and begin taxing the living crap out of the poor and middle class via consumption taxes.

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I already expressed no aversion to taxes on consumption as long as the middle class has the ability to pay. If the private sector is failing us, then the government must step in and redistribute wealth. With the death of unions in this country, it looks like that may be the case. Considering, there have been studies showing that 1 in 2 American workers makes less than $30,000. Without a doubt to me, Bernie Sanders economic visionw as the most pro-growth of any candidate. Not by stealing money from the rich, but, by forcing them to relieve economic pressure on the lower classes, through an elaborate taxing structure that is used to relieve middle class budgets. For example, a single-payer system or a free college plan. To me, the free college plan mirrors what Sweden has cited as worker training, to allow workers mobility and the acquisiton of much needed skills in a competitive market. However, to hammer home on my point, is if we cut the middle classes healthcare bill, that directly gives them more money to spend in the private sector, which is what drives growth. The middle class spends extra money and if you increase their purchasing power you increase velocity of money, which essentially means the money turns over hands at a higher rate, which increases the demand side and the supply will follow.

The argument of this thread is an attempt to resuscitate your previous thread which insisted upon conflating federal revenues with expenditures. That's essentially what this CBPP cartoon does, and it's what CBPP has been doing for years. The graph is a comical cherry-picking of what makes up our federal outlays. Yet you swallow it whole, without the ability to grasp basic accounting, or maybe it's just a refusal because basic accounting doesn't support bad partisan arguments.

There can be no coherent argument behind this rhetoric except "vote Democrat." It doesn't even align with any liberal-leaning macroeconomic analysis. CBPP has zero objective credibility, and by association, neither do you, until proven otherwise.

Winston said:

taxes on consumption aren't problematic, if the middle class has the money to pay them

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As of 2015, Germany's average wage was 76% of the United States'. Sweden's was just under 70%.

In order to shift the see-saw in America we need to suck the gains going to the top and redistribute them among the middle class.

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Historically, that is a great way to A) not produce additional revenue while B) lowering growth which C) disproportionately harms the poor.

Furthermore, consumption taxes do not do this, since they disproportionately take from the middle class.

I'm fine with a higher tax on consumption, as long as it's going to healthcare, education, and maternity leave for mothers. If they are put in place to help lift the middle class out of poverty, by providing them windows for success and economic security, bring it on.

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Taking money from the middle class, running it through an inefficient and leaky government with massive overhead, and then giving some of it back to the middle class in the form of public purchases is not a way of lifting them out of poverty.

Nor is our middle class in poverty. Our middle class is incredibly well off.

But, first in America we need to increase the middle classes purchasing power,

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Well, if we want to have those services, we are going to need to impose large consumption taxes, which means we will be sharply reducing middle class purchasing power.

I'm aware that Germany had healthcare costs that were running away from them. But, so does the United States and the States are too stubborn to enact policy that's good for public health, rather enact policy that benefits insurers

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Eh. I would say that we are too short-sighted and stupid to enact policy that is good for the healthcare market, rather than good for insurance companies. Though at least Republicans kept the rest of us from having to bail out the Insurance Companies from the failures of Obamacare; that was a nice (though small) win.

Cutting entitlements in the United States is not a policy that controls healthcare costs

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In fact it would, just as it did in Germany and Sweden

Enacting policy that throws people off insurance will only lead to greater healthcare costs in the United States, due to people using hospitals like doctors, and being unable to afford preventable care.

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You'd think so. You'd be wrong on both counts. When we shift people to government health insurance (such as Medicaid), their use of resources grows (as does their use of expensive emergency rooms), and much preventative care is actually not cost-effective.

A conservative leader like Angela Merkel, cutting entitlements is a fair estimate of the situation. Had you a leader of one of the more left-wing parties, they may have chosen a different path to walk, notwithstanding illegal deficits.

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Sure. And their results would have been problematic.

I think you underestimate how much revenue we are missing out on by not taxing high income earners.

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Nope. That's why I went through and showed you the data on how assuming a straight static correspondence was flawed and historically inaccurate.

Bill Clinton's tax policy left Bush with a surplus. Perhaps a surplus driven by the technology boom.

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Sort of. The "Surplus" only existed if you didn't count the fact that they were spending Social Security surpluses, which we would one day have to pay back.

That being said, you know how Clinton got all those companies to dive into the tech boom, which gave us the growth, which gave us the increased revenues?

He cut taxes.


Just like Sweden did.

But, a surplus nonetheless. Because he had tax policy in place to scoop revenue on high income earners.

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This would be the tax policy that reduced capital gains from 28% to 20%? That increased the ability of high-income earners to save and invest tax-free?

One tax rate, I would adjust from where it currently is, is capital gains. I would move the capital gains rate to 30%.

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Well, your own example of the "Clinton Surplus" would disagree with that move.

Cutting entitlements that workers take advantage of will further damage the middle class. If you cut SSC, that damages local economies by lowering the purchasing power of seniors.

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You mean it would function similarly to consumption taxes?

cpwill said:

And both of those countries achieved that by cutting social spending without hiking taxes.

In fact, Sweden CUT taxes.

When Europe’s finance ministers meet for a group photo, it’s easy to spot the rebel — Anders Borg (pictured above) has a ponytail and earring. What actually marks him out, though, is how he responded to the crash. While most countries in Europe borrowed massively, Borg did not. Since becoming Sweden’s finance minister, his mission has been to pare back government. His ‘stimulus’ was a permanent tax cut. To critics, this was fiscal lunacy. Borg, on the other hand, thought lunacy meant repeating the economics of the 1970s and expecting a different result.

Three years on, it’s pretty clear who was right. "Look at Spain, Portugal or the UK, whose governments were arguing for large temporary stimulus," he says. "Well, we can see that very little of the stimulus went to the economy. But they are stuck with the debt." Tax-cutting Sweden, by contrast, had the fastest growth in Europe last year, when it also celebrated the abolition of its deficit....​

I love you Winston. But I think you've accidentally self-pwned a bit in this thread

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I may have self-pwned or overstated my position. I created the title of the thread because I knew it would get attention.

I think in order to make sense of that, we need to look at where they were at before they cut spending and taxes. Meaning, if Sweden was collecting too much revenue as a % of GDP, and costs from public programs were spiraling out of control, it would be approporiate for them to cut. But, given the United States has a problem with the middle class not feeling any gains of the economy. And the rich not even feeling any speed bumps whatsoever, we need to craft a different economic policy.

If you look at it from that perspective it makes more sense. Since, Sweden already has high taxes in place, and social spending in place, it could be appropriate to cut them. But, in the United States where we don't even have a single-payer program in place, it's hard to advocate for cuts that are just going to damage people's livelihoods with no payoff.

ttwtt78640 said:

The Bush tax rates became the Obama tax rates since Obama kept 98.6% of them intact in 2013.

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Well, it depends upon how you define "98.6%."



Source: https://www.usatoday.com/story/money/business/2013/01/02/taxes-rise-for-most-americans/1803773/

The richest households face the biggest tax hikes. The income tax rate rises to 39.6% from 35% for individuals earning above $400,000 for individuals and $450,000 for married couples.

For 2013, households making between $500,000 and $1 million will pay $14,812 more in taxes, says the Tax Policy Center analysis. Households making more than $1 million would get an average tax increase of $170,341.

"If you're rich, you're almost certain to get a big tax increase," Williams said.

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Neomalthusian said:

The argument of this thread is an attempt to resuscitate your previous thread which insisted upon conflating federal revenues with expenditures. That's essentially what this CBPP cartoon does, and it's what CBPP has been doing for years. The graph is a comical cherry-picking of what makes up our federal outlays. Yet you swallow it whole, without the ability to grasp basic accounting, or maybe it's just a refusal because basic accounting doesn't support bad partisan arguments.

There can be no coherent argument behind this rhetoric except "vote Democrat." It doesn't even align with any liberal-leaning macroeconomic analysis. CBPP has zero objective credibility, and by association, neither do you, until proven otherwise.

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I'm not sure basic accounting would agree with Reagan and Bush fiscal policy. When Reagan's revenue didn't match expectations he had to increase taxes. The argument is not a "vote Democrat" argument. The argument is to make policy decisions that use our revenue to empower the middle class rather than enrich a small few. If you don't want to raise taxes then, I have no problem with deficit spending if it's used as an investment in our middle class.

One thing that would dramatically improve our society is if we spent on education. European welfare is an agreement that I'm going to spend on your education because once you have an education you'll be able to acquire a better paying job that will pay for my healthcare. Education programs increase gradation rates. We also have evidence that for every dollar spent on an education program it has a return of $4.60

Kalamazoo Promise 'significantly' increases college graduation rates, study finds | MLive.com

The researchers also estimate The Promise yields an estimated $4.60 in benefits for every $1 invested. That means the $66 million spent so far on the program has an estimated return on investment of more than $300 million, based on the projected increase in wages over 30 years for students who wouldn't have graduated college otherwise.

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cpwill said:

As of 2015, Germany's average wage was 76% of the United States'. Sweden's was just under 70%.



Historically, that is a great way to A) not produce additional revenue while B) lowering growth which C) disproportionately harms the poor.

Furthermore, consumption taxes do not do this, since they disproportionately take from the middle class.

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I'm open to seeing data that shows high tax policy harms the poor. Taxes on consumption are regressive taxes and I generally do not support them, unless they are used to fund things that are useful to society. The tax plans I've seen that I favor make little mention of taxes on consumption. I would be highly interested in a CBO score of H.R. 676 or, the Medicare-for-all bill in Congress. I understand Sweden employs a tax on consumption as a means to raise revenue, but, I'm not sure if I support or oppose this.

Taking money from the middle class, running it through an inefficient and leaky government with massive overhead, and then giving some of it back to the middle class in the form of public purchases is not a way of lifting them out of poverty.

Nor is our middle class in poverty. Our middle class is incredibly well off.

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America?s Shrinking Middle Class: A Close Look at Changes Within Metropolitan Areas | Pew Research Center

According to Pew Research there's a stark divide ocurring between lower income people and upper-middle

Well, if we want to have those services, we are going to need to impose large consumption taxes, which means we will be sharply reducing middle class purchasing power.

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No argument about taxes on consumption. They are regressive. Perhaps they could be applied in prudent ways to minimize hardship to the lower classes. Such as a tax on purchasing vehicles above a certain price tag. I don't know, it's all stuff worth looking at with an open mind.

Eh. I would say that we are too short-sighted and stupid to enact policy that is good for the healthcare market, rather than good for insurance companies. Though at least Republicans kept the rest of us from having to bail out the Insurance Companies from the failures of Obamacare; that was a nice (though small) win.

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I didn't support Marco Rubios amendment that killed the risk corridors. I thought it was a partisan play. And I'm still sore at the way the Republicans reacted to the implementation of the ACA.

You'd think so. You'd be wrong on both counts. When we shift people to government health insurance (such as Medicaid), their use of resources grows (as does their use of expensive emergency rooms), and much preventative care is actually not cost-effective.

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The most effective method to control healthcare costs would be to axe the insurance companies out of the equation and pool our resources together and use some collective bargaining to get the prices we want. If we created a single-payer system we would roll Medicaid and Medicare into said system and save median income households in the thousands per annum. the U.S. pays more than any other country for healthcare, and we manage millions of uninsured.

Sort of. The "Surplus" only existed if you didn't count the fact that they were spending Social Security surpluses, which we would one day have to pay back.

That being said, you know how Clinton got all those companies to dive into the tech boom, which gave us the growth, which gave us the increased revenues?

He cut taxes.


Just like Sweden did.

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I'll only refer to a Warren Buffet quote to counter this bit from the heritage foundation:

I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off.

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You mean it would function similarly to consumption taxes?

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Cutting SSC after Seniors paid in there whole lives would be a disservice to them. they are hit hardest by regressive taxes. And I don't know where I stand on taxes on consumption. I'd be interested to take a look at what exactly Sweden pays for with their taxes on consumption, how they're applied to society, and who they affect.

cpwill said:

That being said, you know how Clinton got all those companies to dive into the tech boom, which gave us the growth, which gave us the increased revenues?

He cut taxes.

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Um, the 1997 corporate tax cuts caused a -$25B annual change in revenue and contributed significantly to the dotcom bust. The revenue gains were the long term result of the 1993 increases in marginal rates.

cpwill said:

German Healthcare is a blended system

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While this is correct, it neglects to mention a rather important point: people don't go broke because the become ill.

You are certainly correct that they are taxed significantly higher than us - but you are missing who is taxed significantly higher than us. Germany and Sweden aren't able to to afford these government programs because they levy higher taxes on upper income earners, but rather because they tax the crap out of the middle class, mostly through various forms of consumption taxes.

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You got it (it did take you awhile)!

They were able to achieve that balanced budget because they cut entitlements.

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The article doesn't support this statement. There are way more variables to consider in order to come to such a conclusion.

No. Spending is the problem. We are collecting more in tax revenue than ever before - yet our spending far outpaces it. As Nate Silver points out, not only is government spending growing rapidly, but the main drivers of that are our entitlement programs.

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Entitlement programs are currently funded. Their growth however is dependent upon long term changes in demographics

This is an entertaining graph, because it pretends that people do not respond to incentives. Static Scoring is inherently problematic, which is why it has consistently overestimated the revenue negative impact of tax cuts and the revenue positive impact of tax increases, and why the CBO has shifted to a more accurate means of scoring proposals.

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It is not difficult to manipulate the scoring process in order to derive an economic projection that is in line with selling policy using dynamic scoring. Calling it more accurate is dishonest, mostly because we don't have much of a comparison.

There is a reason for that - tax revenues are less reflective of the nominal rates (because people respond to incentives) and more reflective of economic growth. Take a look, for example, at what happens when you chart out revenues against GDP:

You will see that it is actually comparatively flat - wild swings in tax rates do not seem to produce corresponding swings in revenue. In fact, the only discernible long-term impact (if you do a year-by-year it is sometimes possible to draw out 12-24 month impacts as people adjust) seems to be that the average revenue climbs just very slightly in a lower tax environment, as people rationally spend less of their time avoiding taxes and more of it producing.

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You're just importing bias. The number one factor with respect to tax revenue as a percentage of GDP is the economy. You're more than welcome to confirm this by using excel regression analysis (using changes in unemployment as an independent variable to start).

We could potentially raise more income by raising taxes, sure. But history suggests that increasing top income rates will not be a successful pathway to do so. Instead, if we want to replicate Europe's revenue as a % of GDP, we will need to copy Europe's tax structure, and begin taxing the living crap out of the poor and middle class via consumption taxes. That has a lot of other problematic effects - not least, it depresses growth and income (the average German salary, for example, is significantly smaller than the average US salary, even before taxes are accounted for), but I suppose you could do it, if you were willing to accept all the damage it would do.

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You're conflating two distinct things: tax revenue and tax revenue as a percentage of GDP. We do know that raising taxes on the wealthy will increase tax revenue. We've seen it in action in the late 90's and once again during 2013.

ttwtt78640 said:

How many other nations are we willing to let fall to other global superpowers (or even lesser but ambitious tyrants)? I have no qualms with that happening but that is likely if we behaved like Germany in our handling of international affairs.

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if the first world wants a global police force then it needs to build and fund one.

Gimmesometruth said:

Um, the 1997 corporate tax cuts caused a -$25B annual change in revenue and contributed significantly to the dotcom bust. The revenue gains were the long term result of the 1993 increases in marginal rates.

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He's once again confusing cause and effect. Tech companies didn't materialize because of lower tax rates... they did so because of gains in processing power and consumer demand. Anyone who tries to tell you differently is just full of nonsense (or more accurately partisan bias).

Obviously both spending and tax cuts are problems. Tax cuts are sold to us by republicans on the myth that they will spur economic growth which will then "raise all ships". This is a flat out myth. We are no where near the level of taxation to significantly stagnate economic growth, but we are near the level of undertaxation to cause long term budget issues. I think the bigger issue than either of these though is the inefficiency with which the US government uses its tax dollars. Compared to the HIGHLY autonomous and efficient bureaucracies in the German government, we rely heavily on inefficient, piecemeal legislation that is gutted by private interests before it even passes that is then left to the courts to interpret rather than the bureaucracies themselves which results in logjams in the courts, an inability to operate effectively and quickly, and often contradictory mandates for our institutions.

Truths: Tax cuts are not going to spur enough economic growth to pay for themselves unless taxes are WAAAAYYYYY higher than they are now. This is a flat out lie from the Republicans that is the most ridiculous enduring myth of American politics.

Truths: Income redistribution is an absolute necessity in a capitalistic democratic system. Education, healthcare, welfare, etc are all forms of income redistribution and we shouldn't be afraid of increasing our levels of redistribution to match more effective democracies like Germany or Denmark.

Truths: We need serious governmental reform across the all levels of government to make ours work more efficiently so we can actually get our monies worth out of it