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Deficits occur when governments fail to tax corporations and the rich sufficiently.
(Remember when America was great in the 40's & 50's and the top tax rate was 80%?)
Such governments then borrow from the same corporations and the rich the money they failed to tax.
The average tax payer will then pay interest to the corporations and the rich who lent the money to the government.
What a hustle!

How dumb do they think we are?
(This question is rhetorical, I read this board, I know the answer.)

Deficits occur when governments fail to tax corporations and the rich sufficiently. - vsg.

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Deficit = Spending - Revenue.

When spending exceeds revenue, deficit occurs.

It's math.

Deficit = Spending - Revenue.

When spending exceeds revenue, deficit occurs.

It's math.

Sure. His point was the revenue part of that equation. It is inadequate, unless you want to cut Medicare and SS (which is the ONLY way you could balance the budget given current revenues).

In Reagan's time, the top tax bracket was 80%. We should probably head back in that direction. Not that 80% is a magic number. I have no idea what the magic number is. But I'm sure 35% isn't it. We also need to reform such that people who don't work for a living (i.e. live off unearned income) pay a good chunk. Those are typically the super-wealthy, clipping coupons and handing down fortunes over generations.

Okay, let's talk taxes that would raise revenue without punishing people who work their rear ends off to climb the ladder. I can't think of anything worse than somebody who works for 40 years, saves a ton of money for retirement, does everything right to live the Good Life only to have the feds say, gimme more.

So how about this: A micro transaction tax on all stock trades where the asset has not been held over X period of time?

So much of the hedge fund wealth is generated by making extremely fast trades, buying and selling assets with very short time deltas between the transactions. How about a rule that says 5% of the asset price is held as a tax if the asset has only been held for less than a certain period of time?

I can't think of anything worse than somebody who works for 40 years, saves a ton of money for retirement, does everything right to live the Good Life only to have the feds say, gimme more.

Sure. We don't want to target someone like that. If he worked 40 years, paid his taxes all that time (assuming a reasonable variable rate based on income), he shouldn't get whacked. Likely your worker will have lower income, and pay less tax on dividends and capital gains, so that's fine. That's pretty much the situation I'm in now (except I only worked for ~30 years).

So how about this: A micro transaction tax on all stock trades where the asset has not been held over X period of time?

OK. Maybe less than a week? I knew a "day trader" (he worked at my company as his day job), and he said you wanted to be out of a position by the end of the day. So he would start buying when the market opened, and would be sold out of everything by market close. Though I don't really see why we don't just tax that as ordinary income. All stock gains, all dividends. Just tally it up with any salaries, stock plans (a lot of big-wigs get paid in stock), etc, and tax it at an appropriate progressive rate.

And when the Gateses die, their kids should have to pay tax on the value of the estate. A lot of wealth gets handed-down tax-free because it's never actually liquidated to "realize" any gains. Exceptions made for smaller estates (e.g. family farms, probably you and me and everyone posting here, etc).

Just hand-wavy. Details would need to be hammered out, obviously. But, unfortunately, our system assures that Congress is in the pockets of those uber-wealthy (bribes...errr..."campaign contributions"), and the wealthy wouldn't like taxes touching them. As one of them once said, "only little people pay taxes". And she was right, the wealthy have fixed the system so that is mostly true.

OK. Maybe less than a week? I knew a "day trader" (he worked at my company as his day job), and he said you wanted to be out of a position by the end of the day. So he would start buying when the market opened, and would be sold out of everything by market close. Though I don't really see why we don't just tax that as ordinary income. All stock gains, all dividends. Just tally it up with any salaries, stock plans (a lot of big-wigs get paid in stock), etc, and tax it at an appropriate progressive rate.

Day traders and hedgies were where I was thinking of targeting this - all that stuff does is drive up volatility in the market. They don't buy it because they're in love with whatever the company actually does; they're in it because they think the stock is going to move in a particular direction at a particular time.

In other words all that investment activity drives up GDP, sure, but in a frictional way. The downstream effects of the money they spend are significant but the originating activity didn't result from something new or innovative. That's why I want them to return some of that back to the government in terms of a service fee, if you will.

Just hand-wavy. Details would need to be hammered out, obviously. But, unfortunately, our system assures that Congress is in the pockets of those uber-wealthy (bribes...errr..."campaign contributions"), and the wealthy wouldn't like taxes touching them. As one of them once said, "only little people pay taxes". And she was right, the wealthy have fixed the system so that is mostly true.

Very true. Ironically as I've climbed the ladder and been exposed to a fraction of how this works it's a shame how few things can be accessed by ordinary people. I don't think it started off with an intent to keep people out of these vehicles but it's certainly evolved in that direction.

It's also criminal that the annual savings rates for 401(k)s are so low - that ceiling should be going up every year more than it does.

Sure. His point was the revenue part of that equation. It is inadequate, unless you want to cut Medicare and SS (which is the ONLY way you could balance the budget given current revenues). - 1pg

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I agree with you in the abstract. But in the real world, the two items you mention being so huge, that all other form of profligate spending don't matter. However, we can't let that become an excuse for more spending.

Another observation is that politicians will spend 110% of whatever revenue is collected. So my position is that more revenue should be opposed until and unless politicians demonstrate some fiscal restraint. If politicians would guarantee and then lived up to their promises to freeze spending at current levels or even plus a small inflation adjustment and all new revenue above that would go to debt reduction, then I would support more taxes. There is even some low hanging fruit, eg the carried interest exclusion, but what is the point of collecting that extra $100B when the politicians will then spend an extra $110B.

And by politicians, I direct my contempt to both sides of the isle. Perhaps even more so on the Republicans since they claim to be for fiscal restraint but never get around to it. At least the democrats are open about their free spending ideology because so many needy people and they "care" so very much. You know what will help with the masses of needy people, bring in two million more poor people every year over our southern border.

And when the Gateses die, their kids should have to pay tax on the value of the estate. A lot of wealth gets handed-down tax-free because it's never actually liquidated to "realize" any gains. Exceptions made for smaller estates (e.g. family farms, probably you and me and everyone posting here, etc). - 1pg

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Or held by family trusts or closely held corporations which never die so no estate tax is ever due.

Back in the day we taxed the s#%& out of the wealthy and not only did we have money to build bridges, quality schools and space rockets,
rich people still had plenty of money left over to waste on all types of nonsense!

Under President Eisenhower, the top tax rate was 91%.

Today it's 37%. The richest got a huge tax cut. The rest of us are paying for it, with interest.

Republican solution...
Cut social security and food stamps.

How dumb do they think we are?

Under President Eisenhower, the top tax rate was 91%. - vsg

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But almost nobody paid those rates.

Today it's 37%. The richest got a huge tax cut. The rest of us are paying for it, with interest. - vsg

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Not progressive enough for you? How much is enough" Is it possible to ever pay your fair share?

https://taxfoundation.org/federal-income-tax-data-...

-The share of reported income earned by the top 1 percent of taxpayers fell slightly, to 20.9 percent in 2018 from 21 percent in 2017. Their share of federal individual income taxes rose by 1.6 percentage points to 40.1 percent.

-Since 2001, the share of federal income taxes paid by the top 1 percent increased from 33.2 percent to a new high of 40.1 percent in 2018.

-In 2018, the top 50 percent of all taxpayers paid 97.1 percent of all individual income taxes, while the bottom 50 percent paid the remaining 2.9 percent.

-The top 1 percent paid a greater share of individual income taxes (40.1 percent) than the bottom 90 percent combined (28.6 percent).

-The top 1 percent of taxpayers paid a 25.4 percent average individual income tax rate, which is more than seven times higher than taxpayers in the bottom 50 percent (3.4 percent).

bighairymike: Since 2001, the share of federal income taxes paid by the top 1 percent...

Well, first off, deductions, loopholes, and rate preferences benefit the richest Americans and corporations, enabling tax payers, for example, like Trump to pay nothing in federal income tax.

In 2020, 55 profitable companies in the Fortune 500 or S&P 500 paid no federal taxes while 26 paid nothing over the three-year period from 2018 to 2020.

Low-income Americans with less than five-figure incomes pay an effective payroll tax rate of 14.1 percent, while those making seven-figure incomes or more pay just 1.9 percent. Federal payroll taxes are the largest tax for low- and middle-income Americans, not federal income taxes.

The richest 0.5 percent of taxpayers receive 70.2 percent of all long-term capital gains and 43.3 percent of all dividends.

The SALT deduction benefits 75.1 percent of taxpayers making $1 million or more, compared with less than 1 percent of those making less than $30,000.

Not regressive enough for you?

Well, first off, deductions, loopholes, and rate preferences benefit the richest Americans and corporations, enabling tax payers, for example, like Trump to pay nothing in federal income tax. - CO

Yet, despite all those deductions, leop oles, and rate preferences, the top 1% still paid 40.1 percent of all federal taxes paid.

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like Trump to pay nothing in federal income tax.

In 2020, 55 profitable companies in the Fortune 500 or S&P 500 paid no federal taxes while 26 paid nothing over the three-year period from 2018 to 2020. - more CO

SO? Using this tired and worn out way to promote wealth envy is just the lefts way to avoid addressing wasteful or excessive spending. Things would be fine if only Trump and the evil 55 would pay up. If you confiscated all the profits from all of them, 100% tax rate, it would have little effect on the deficit since politicians can't resist adding even more to spending.

BTW, Trump and these 55 followed the tax law. If you don't like the result, don't blame them, change the law. But wealth envy scores more points at the ballot box even though it does nothing to make our economy any better, right

What "wasteful spending"? Very few people who say that can actually point to anything significant. Some will point at piddly little things that annoy them, but are insignificant to the federal budget.

Yes, the tax laws also favor the wealthy. They have loopholes and vehicles that aren't available to the lower classes, which is why the previous poster pointed out that lower income folks pay an effective rate of 14% while the wealthy pay less than 10%.

I'm with Dope1 about hedge funds and day traders, but that's just nibbling at the edges. We need more revenues, and the wealthy are the only ones who can afford it. It's also appropriate since they have reaped most of the benefits from our tax system. I think categorizing it "wealth envy" is mildly insulting. I don't envy them, and I'm sure I speak for lots of people. It's just clear that they are not paying in proportion to their benefit from our society/government. Even Warren Buffet once said he pays less tax than his secretary. That's just messed up.

I have no problem with the wealthy, but they need to pay the lion's share of tax because they have the lion's share of the wealth. While it is true that they already sort of do that, it's not enough. After loopholes, and other deductions, many effectively pay zero taxes. Plus a lot of their wealth is untouchable under current law because it is handed down generation to generation, untaxed. I suspect if you drill down a bit, the top .1% pay practically nothing, while the bottom .9% (of your top 1%) pay most of it. I'll try to verify that. We, as a household, were in the top few percent (not 1%) before we retired, and we were paying (according to TurboTax) about 22% (as I recall).

There is a lot of other stuff we should do regarding the budget. But we're just talking about taxes for the moment. I don't want to go in six different directions and lose the focus (it's hard for me not to type out other ideas and hijack the thread to appropriations and such!).

We need more revenues - 1pg

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Take in a new dollar, spend that new dollar plus another dime. This is not the road to prosperity. Like I said earlier, I have no problem with new revenue so long as it is accompanied with iron clad caps on spending growth at a level less than revenue growth with the difference going toward debt reduction, not new programs. Want a new program, fine, cancel or cutback on an old one. Not every good idea needs to be funded when we have to borrow money from China to do it.

How about clawing back all the unspent Covid relief money. Billions were allocated to upgrade and replace the HVAC system in all the schools in the country. Not sure that work was ever started to any appreciable degree but it certainly was not even close to completed. Budget it for one thing and spend it on another has to stop.

As I said, the system needs an overhaul.

I would favor a provision that every proposal passed by Congress needs to have a price tag, and a line that enacts some form of revenue (tax) associated with it. You don't specify a tax, you can't get your proposal/program. That way they can't spend that extra dime per dollar.

But it still comes down to revenue. The lower and middle class can't sustain that burden. The middle class already is creaking a bit under the strain. It's got to be the wealthy class, and we need to stop allowing them to shield their assets from taxation.

bighairymike: ..I have no problem with new revenue so long as it is accompanied with iron clad caps on spending growth at a level less than revenue growth...

Almost no one in America goes through life without borrowing money, and usually considerably more money than their annual income.

There's nothing wrong with debt, per se.

In fact, debt as a percentage of GDP is lower now than it was under Trump. And during the Biden years, the deficit has been paid down.


bighairymike: How about clawing back all the unspent Covid relief money. Billions were allocated to upgrade and replace the HVAC system in all the schools in the country. Not sure that work was ever started to any appreciable degree but it certainly was not even close to completed.

Just over half of Elementary and Secondary School Emergency Relief (ESSER) funds have been spent, according to the latest federal data. States and districts are on schedule to meet the September 2024 deadline for using the entire $189 billion allotted in three rounds of Congressional appropriations.

But you want the money back before the deadline for spending it?


bidhairymike: Budget it for one thing and spend it on another has to stop.

ESSER funds have spending guidelines. The money wasn't only earmarked for HVAC projects and it cannot be spent "on another" project at will.




https://www.future-ed.org/progress-in-spending-fed...

Almost no one in America goes through life without borrowing money, and usually considerably more money than their annual income.

There's nothing wrong with debt, per se.

And no one says there is.
But tell us. How many Americans can print their own money and have *zero* constraints on spending?

That's where your analogy falls over.

But tell us. How many Americans can print their own money and have *zero* constraints on spending?
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Perhaps America's creditors - can be given the same authority as the I.R.S has - vis a vis collecting, putting freezes and liens on assets, and making it a very arduous process to get in touch with someone about it.....

I would favor a provision that every proposal passed by Congress needs to have a price tag, and a line that enacts some form of revenue (tax) associated with it. You don't specify a tax, you can't get your proposal/program. That way they can't spend that extra dime per dollar.

PAYGO worked for a while, but has been ignored by Congress with large tax cuts and higher Medicare spending. Stronger PAYGO hurdles are needed, to discourage the easy path.

"PAYGO, which stands for 'pay as you go,' is a budget rule requiring that tax cuts and mandatory spending increases must be offset (i.e., 'paid for') by tax increases or cuts in mandatory spending. PAYGO does not apply to discretionary spending (spending that is controlled through the appropriations process)... It appears that PAYGO can no longer be considered an effective tool for imposing budget discipline."
https://www.taxpolicycenter.org/briefing-book/what...

bighairymike: How about clawing back all the unspent Covid relief money. Billions were allocated to upgrade and replace the HVAC system in all the schools in the country. Not sure that work was ever started to any appreciable degree but it certainly was not even close to completed.

Just over half of Elementary and Secondary School Emergency Relief (ESSER) funds have been spent, according to the latest federal data. States and districts are on schedule to meet the September 2024 deadline for using the entire $189 billion allotted in three rounds of Congressional appropriations.

But you want the money back before the deadline for spending it? - commonone

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Not just me. 314 Representatives, 63 Senators, and Biden think clawing back some of this money is a reasonable action in the face of current economic conditions.

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