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It's always great to see an extremely intelligent person try to rationalize a core belief that's at direct odds with the cold, hard, and unforgiving reality the

by Apes 7y ago

It's always great to see an extremely intelligent person try to rationalize a core belief that's at direct odds with the cold, hard, and unforgiving reality they live in. The amount of mental gymnastics done here are Olympian, and this guy deserves a gold medal. However, even the fanciest mental tricks are never going to change the fundamental laws of reality. In the entire article he dances around second order effects and demonstrates why they're meaningless. Great, but there's one measure that actually matters: the percentage of our annual budget spent servicing existing debt. Right now that number is at 6%, and there's some share under 100% where it will cause our country to effectively go bankrupt. The closer we get to 100%, the exponentially higher the chance of bankruptcy. Right now there's two things which make me scared this number is going to go up considerably: One, US tax revenue is going up around 2% a year, but our outstanding debt is going up around 20% a year. The debt is rapidly outpacing economic and tax revenue growth. If nothing changes, paying off the debt will be 25% of our national budget in around 20 years, and 50% in 40 years. That's well within most our lifetimes, and is well in the extreme bankruptcy risk area. Two, the US has access to unprecedented low rates of interest right now. The average rate on it's 23 trillion in debt is 1%. If that were to go up to a more historical 3%, interest repayment would jump to 24%. Due to the length of government debt, this transition would probably take around 20 years to fully happen. Now combine the two into a nightmare scenario: debt continues to rise over the next 20 years at its current rate, and interest rates return to their historical 3%; and within 20 years repaying debt will explode to 75% of our budget. There is your potential black swan event. Hopefully action is taken before any of this happens, but something has to give from where we are now, and pretending that there's no troubled waters on the horizon is absolutely insane and irresponsible.

zarro 7y ago
+1 rep
istjohn 7y ago
On the other hand, top marginal tax rates are a fraction of what they were at their peak last century. We could double tax revenue at the drop of a hat, paying down our debt and ameliorating toxic wealth inequality simultaneously.
- dpc_pw 7y ago
  I agree that in principle the inequality is causing instability and , and as much as I detest socialism, I don't see a peaceful way out of where we are not involving the "tax the wealthy... a lot". Some comments: income taxes are the most stupid taxes ever. Rich people don't have incomes, they have capital gains. Increasing income taxes hurts middle-class: the rich wannabe. We need to abolish income tax, and turn it into asset tax, or at very least increase the capital taxes significantly. Tax people that are already rich, not the ones that are motivated to try to get there! Once they get there - then you can tax them. Having said that - the taxes can't be too high, because people don't like taxes and rich people have plenty of resources to run away with their wealth. So... there's no really easy way to get out of this mess.
  - eee_honda 7y ago
    >as much as I detest socialism, I don't see a peaceful way out of where we are not involving the "tax the wealthy... a lot" Socialism != taxing the wealthy a lot. Maybe part of your "hatred" of socialism comes from a misunderstanding of it? I make the suggestion because the rest of your comment pretty much outlines some of the many major problems with unlimited accumulation and concentration of wealth.
- bpt3 7y ago
  Effective tax rates haven't changed that much over time [0]. Doubling the tax rate on the rich is unlikely to double tax revenue, and could easily decrease income tax revenue. If we want to increase tax revenue to fund our current and future liabilities, the money is almost certainly going to have to come from tax increases on the middle class (who don't pay meaningful amounts of federal income tax for the most part) in the form of a VAT, as almost every other developed nation has already determined. [0] https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/ https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/
- turk73 7y ago
  Did anyone actually pay those top rates ever? It seems to me that the wealthy had enough brains and resources to avoid ever landing in those absurd 90% tax brackets or whatever they were.

by Apes 7y ago

zarro 7y ago

+1 rep

istjohn 7y ago

On the other hand, top marginal tax rates are a fraction of what they were at their peak last century. We could double tax revenue at the drop of a hat, paying down our debt and ameliorating toxic wealth inequality simultaneously.

dpc_pw 7y ago
I agree that in principle the inequality is causing instability and , and as much as I detest socialism, I don't see a peaceful way out of where we are not involving the "tax the wealthy... a lot". Some comments: income taxes are the most stupid taxes ever. Rich people don't have incomes, they have capital gains. Increasing income taxes hurts middle-class: the rich wannabe. We need to abolish income tax, and turn it into asset tax, or at very least increase the capital taxes significantly. Tax people that are already rich, not the ones that are motivated to try to get there! Once they get there - then you can tax them. Having said that - the taxes can't be too high, because people don't like taxes and rich people have plenty of resources to run away with their wealth. So... there's no really easy way to get out of this mess.
- eee_honda 7y ago
  >as much as I detest socialism, I don't see a peaceful way out of where we are not involving the "tax the wealthy... a lot" Socialism != taxing the wealthy a lot. Maybe part of your "hatred" of socialism comes from a misunderstanding of it? I make the suggestion because the rest of your comment pretty much outlines some of the many major problems with unlimited accumulation and concentration of wealth.
bpt3 7y ago
Effective tax rates haven't changed that much over time [0]. Doubling the tax rate on the rich is unlikely to double tax revenue, and could easily decrease income tax revenue. If we want to increase tax revenue to fund our current and future liabilities, the money is almost certainly going to have to come from tax increases on the middle class (who don't pay meaningful amounts of federal income tax for the most part) in the form of a VAT, as almost every other developed nation has already determined. [0] https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/ https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/
turk73 7y ago
Did anyone actually pay those top rates ever? It seems to me that the wealthy had enough brains and resources to avoid ever landing in those absurd 90% tax brackets or whatever they were.