6 ms·

USA paying more interest on its $33T debt than on defense – who holds the IOUs

39 points by pg_1234 3y ago

ChumpGPT 3y ago
If only rich people and corporations payed taxes, just a 15% flat tax across the board and all the loop holes gone. The debt would turn into a surplus......
- czbond 3y ago
  You understand that the rich pay a majority of the taxes in the US?
  - gumballindie 3y ago
    People that call for “the rich” to pay more taxes usually mean those earning above 100k. At least thats how it is in the uk. At some point it will become more convenient to just earn a low wage or none at all.
    - harimau777 3y ago
      In my experience, they are generally calling for a wealth tax targeted at the 1% or even the .1%.
    - jjoonathan 3y ago
      "Tax Assets" is the rallying cry I've seen, and that one actually does hit the "capital gains" class.
    - smcl 3y ago
      That’s … not how UK income tax bands work. I’m not sure thats how taxes work anywhere actually.
      - secondcoming 3y ago
        It’s not just income tax. You lose certain allowances when your salary exceeds a certain level, such as childcare. There definitely are scenarios when a pay rise can actually make you poorer.
    - nielsbot 3y ago
      Really? You'd rather earn less than earn more and pay tax on some of it? Personally I'd go for earning more (if it's a choice) and paying the higher taxes instead of voluntarily lowering my income.
      - charcircuit 3y ago
        Not everyone wants to constantly earn more money. Especially when the government will steal a portion of it for themselves. If the work to benefit ratio is not good people are not going to bother earning more. If society only pays 10% more for 100% more effort people are not incentivized to do it.
        harimau777 3y ago
        That doesn't necessarily seem like a bad thing. I'm not sure that we need everyone to be working 50 hour weeks.
      - bigyikes 3y ago
        It’s about the incentives and marginal change. Sure, you’d go for earning more, but now you’re less incentivized to do so. It might not matter to you, but it matters to the people at the margins — the people who are just on the edge of being willing to make an upward move but will decline to do so if their potential gross is lower than it otherwise could’ve been.
        Dylan16807 3y ago
        Sure, that's fine though. Being less motivated to push for higher income is a far cry from deciding you don't want it and would rather have a lower income. Also I haven't seen any plans that would remove particularly much motivation below a million dollars, and by the time you're making a million dollars I wouldn't say there needs to be motivation to go for more.
        harimau777 3y ago
        The problem in the parent's post is that people advocating for "taxing the rich" aren't actually talking about people who are being payed $100K. They are talking about people whose wealth comes from owning property. In that case, I'm not sure that our intuition about the effect of marginal incentives necessarily applies to the same degree. E.g. if a wealthy industrialist decides not to invest in a some piece of capital, it's not as though the capital ceases to exist; it will just be used by someone else. E.g. if an industrialist decides not to invest in a gold mine, then it's not as though the gold disappears. The land will simply be developed by someone else.
    - ec109685 3y ago
      That’s not how it is in America. When taxes are contemplating being raised it is only dollars earned per year above $400k: https://www.cnbc.com/amp/2022/03/02/biden-reiterates-400000-tax-pledge-to-fund-agenda.html https://www.cnbc.com/amp/2022/03/02/biden-reiterates-400000-...
    - JumpCrisscross 3y ago
      > People that call for “the rich” to pay more taxes usually mean those earning above 100k A rule of thumb in these discussions: you can tell a person's salary by where they define rich.
    - dopidopHN 3y ago
      Above 100k is nothing.
      - harimau777 3y ago
        I don't think you will find many people advocating that the relevant point be 100K. Even setting aside that many people are advocating wealth taxes rather than income taxes, the breakpoints I see advocated for increased income taxes are generally 250K or 400K.
    - ChumpGPT 3y ago
      >People that call for “the rich” to pay more taxes usually mean those earning above 100k. Good Lord, 100k? I was making more than that in 1999. When I say rich, I am saying anyone who makes more than 1 - 1.5 million a year. 100k is just over poverty these days...
      - dragonwriter 3y ago
        No, 2.5× the median personal income isn’t “just over poverty”.
        harimau777 3y ago
        That depends on whether the median person is living in poverty or not. There are definitely places in the US where it would be very difficult to raise a family or buy a home on the median income.
        dragonwriter 3y ago
        > That depends on whether the median person is living in poverty or not. Well, no, even if we stretched the definition of poverty to cover people making the national median personal income, people making 2.5× that still wouldn’t be in or just over poverty, but, sure, if you redefine poverty to include the wealthy than the wealthy are “poor”. But there are people actually in poverty by its common definition, and people making $100k/yr—which was asserted to be on the edge of poverty generally these days upthread—have more in common with people making $1 million/yr than with those people in actual poverty. > There are definitely places in the US where it would be very difficult to raise a family or buy a home on the median income. “It’s difficult to buy a home” isn’t poverty, and the subject wasn't people earning the median personal income but $100k/yr.
  - jjoonathan 3y ago
    ...on way more than a majority of the money, lol.
  - Guvante 3y ago
    Only because everyone pretends that payroll taxes don't count. Individual income tax is $1.96T but payroll taxes are $1.48T.
  - throw0101c 3y ago
    Lies, damn lies, and statistics: > To wit, “The Stat” is that the highest-earning one percent of taxpayers pay 40 percent of all income taxes. […] The first problem with The Stat is that it makes no reference to the proportion of income the rich earn. The juxtaposition between one percent and 40 percent is meant to convey the idea that a small number of people are carrying a gigantic and disproportionate burden, but the figure lacks any context when it omits how much money they earn in the first place. > Indeed, it turns the fact that rich people account for a massive share of the income pool into a reason to see them as mistreated. One common move for polemicists brandishing this figure is to note that the share of taxes paid by the rich is “up sharply” over the past couple decades — which it is, on account of rich people claiming a larger share of the national income. The logic implied by The Stat is that the bigger the proportion of income earned by the richest one percent, the more imperative it is to reduce their tax rates, so that they don’t pay too high a share of the tax burden. * https://nymag.com/intelligencer/article/fact-check-richest-1-dont-pay-40-of-the-taxes.html https://nymag.com/intelligencer/article/fact-check-richest-1... > Between 2014 and 2018, the 25 wealthiest Americans collectively earned $401bn, but paid just $13.6bn – about 3.4% of that – in taxes, according to a bombshell ProPublica investigation into the finances of the wealthiest Americans released on Wednesday. […] > Billionaires in tech pay the lowest tax rate, an average of 17% of their income, largely because their wealth comes from such investment income. Bill Gates, whose income from 2013 to 2018 was an average of $2.85bn a year, paid an average effective federal income tax rate of 18.4%. Lauren Powell Jobs, the widow of Apple co-founder Steve Jobs, earned an average of $1.57bn and paid an average tax rate of 14.8%. Ten of the top 15 earners on the list are billionaires who made their money in tech. > In comparison, the average single worker earning $45,000 paid an average tax rate of 21%. A married couple with one child who earns $200,000 paid a rate of 26%. In 2018, the highest top rate on ordinary income, which excludes investments, was 37%, yet the average tax rate for the 400 wealthiest Americans was 22% from 2013 to 2018. * https://www.theguardian.com/us-news/2022/apr/13/wealthiest-americans-tax-income-propublica-investigation https://www.theguardian.com/us-news/2022/apr/13/wealthiest-a... When you grab most of the income generated in the economy (leaving little for the folks at the bottom), then of course you pay most of the income taxes.
- deadly_syn 3y ago
  33 trillion dollars is a lot of money. Even unresonable levels of tax expansion across the would take forever to make that back, not to mention that that doest stop additional spending which still would likely be in excess of what we would collect extra.
- kacesensitive 3y ago
  Can we go back to taxing the richest at near 90%?
  - b8 3y ago
    Rich Americans would move elsewhere and renounce their citizenship probably to avoid that tax %.
    - 2OEH8eoCRo0 3y ago
      They are bluffing, they didn't when taxes were higher. Where would they go?
      - LadyCailin 3y ago
        I hear Pakistan has low taxes.
    - dopidopHN 3y ago
      And move to Canada, yeah. We know the story.
  - VirusNewbie 3y ago
    The effective tax rate for the rich has stayed very flat over time, and it has never been 90%. That is an internet myth that is somehow floated around that most people don't bother to check up on.
    - harimau777 3y ago
      It looks like effective tax rate may have stayed mostly the same overall but fallen for the rich: https://www.taxpolicycenter.org/taxvox/effective-income-tax-rates-have-fallen-top-one-percent-world-war-ii-0 https://www.taxpolicycenter.org/taxvox/effective-income-tax-...
      - VirusNewbie 3y ago
- the_third_wave 3y ago
  A flat tax on... what? Income? What is income? Capital gains? Realised or unrealised capital gains? Also, what are "rich people"? Is it the "millionaires and billionaires" Bernie Sanders used to talk about before he became a millionaire himself or only the "billionaires" he now speaks about? Not to single out Sanders the question is an important one since one man's "rich man" is another man's servant. To the homeless bum on the street you will be "rich", to you Sanders is "rich", to Sanders Musk is ¨rich". Who gets to pay? Flat taxes sound great in theory but they end up having a far larger impact on those for whom the tax directly cuts into their ability to pay for basic necessities. Will there be an minimum guaranteed spendable income limit below which the tax will not be taken?
  - harimau777 3y ago
    I think that a good definition of "the rich" might be: People who make money based on what they own rather than on the labor that they perform.
    - secondcoming 3y ago
      The problem with that is not all labour is the same. Should a weathly farmer be taxed less than a hairdresser? It’s a more physically demanding and dangerous job.
      - harimau777 3y ago
        Neither of them would meet that definition of "the rich" since they are both income gained through labor. Therefore, neither of them would have their taxes raised by a policy of "taxing the rich".
        secondcoming 3y ago
        Right, but why do they both incur the same tax rate even though the labour required to do each job is vastly different?
  - Dylan16807 3y ago
jeffbee 3y ago
It is a point of view (a bias) to say that the deficit was largely caused by large spending bills such as ARPA, but not mention the equal or large contribution to the deficit of tax cuts, such as the 2017 Tax Cuts and Jobs Act. https://www.americanprogress.org/article/tax-cuts-are-primarily-responsible-for-the-increasing-debt-ratio https://www.americanprogress.org/article/tax-cuts-are-primar...
- bradleyjg 3y ago
  President Donald Trump’s signature tax bill,26 enacted when Republicans gained control of the White House and both houses of Congress in 2017, will have cost roughly $1.7 trillion by the end of fiscal year 2023. It seems pretty reasonable on magnitude grounds to mention something that cost $1.9 trillion in a single year while and omitting something that cost $1.7 trillion over five.
  - cmdli 3y ago
    > Taken together, the Bush tax cuts, their bipartisan extensions, and the Trump tax cuts, have cost $10 trillion since their creation and are responsible for 57 percent of the increase in the debt ratio since then. They are responsible for more than 90 percent of the increase in the debt ratio if you exclude the one-time costs for responding to COVID-19 and the Great Recession. I don't 100% agree with this article, but I think you are somewhat misrepresenting it. If taxes were at the level they used to be then we would be in a better position debt-wise than we are now. Whether you disagree with raising taxes or not, it does seem reasonable to examine cost-increasing measures like tax cuts.
    - bradleyjg 3y ago
      If you are going to aggregate all the tax cuts going back to 2000, you could also aggregate all the spending increases. I don’t think either is a reasonable thing to do. The OP article includes this paragraph: “Getting the debt under control will require taking a serious look at health care, Social Security and the tax code,” CRFB president Maya MacGuineas said in a news release. which mentions taxes. I don’t see what the big problem is with specifically mentioning the ARPA given how absolutely enormous it was. My objection wouldn’t have been not mentioning specific tax cuts, but instead not mentioning CARES which was even larger at $2.2 trillion.
sandworm101 3y ago
There are ways around this. But things have gotten so bad that i think the US debt is now more of a government welfare program than actual debt. It is a way to shovel taxpayer dollars towards large note holders. It is just moving money around, a sort of reverse welfare. It is an american institution no more killable than medicare or charitable tax deductions. https://en.wikipedia.org/wiki/Trillion-dollar_coin https://en.wikipedia.org/wiki/Trillion-dollar_coin
- lumost 3y ago
  The US effectively uses government debt to avoid large asset holders from eating up the entire money supply. Using deficit spending to redistribute funds works when the money hits the right places, and is horrendously inefficient otherwise.
  - JumpCrisscross 3y ago
    > US effectively uses government debt to avoid large asset holders from eating up the entire money supply What does this mean?
    - bratwurst3000 3y ago
      If money isn’t debt it would be for example gold. So a person could hold all the gold in the world and in this sense also the power over money. Now money is there for the transfer between values so it represents the economics
      - JumpCrisscross 3y ago
        > a person could hold all the gold in the world and in this sense also the power over money Then something else becomes money. This has happened, in the past, when metal money was scarce. More realistically, if one person hoards a money, i.e. accumulates and doesn't meaningfully spend it, it gets taken.
    - lumost 3y ago
fuoqi 3y ago
And a huge amount of public debt matures in the next 1-2 years, e.g. it's $7.6T (31%) just in the next year [1]. Imagine how the interest will balloon after this debt will be re-borrowed with the current interest rate. The recent spike in long-term rates does not help to say the least. I expect the Fed will drop the interest rate and/or will re-start QE somewhere in the next year, so expect new waves of inflation similar to 70s. [1]: https://markets.businessinsider.com/news/bonds/us-debt-maturing-bond-yields-treasury-bills-federal-reserve-qt-2023-9 https://markets.businessinsider.com/news/bonds/us-debt-matur...
- JumpCrisscross 3y ago
  > I expect the Fed will drop the interest rate and/or will re-start QE somewhere in the next year, so expect new waves of inflation similar to 70s Side note, this has been Silicon Valley's take for a decade. It's wrong. It results from a series of fundamental misunderstanding that caught start-ups, VCs and even Silicon Valley Bank flat footed by the Fed's rate rises occurring and persisting.
  - fuoqi 3y ago
    Yes, many analysts have expected this to happen this year, but they underestimated stimulating effect of the COVID stimulus checks and the huge deficit spending by the government (e.g. Inflation Reduction Act, lol). To be fair, the banking system has started breaking, but, instead of lowering the rate, the Fed has temporarily masked it by the BTFP. When the program will end, banks will end up with huge holes in their balance sheets (discounted paper + accumulated interest on BTFP funds). So we either end up with a huge banking crisis, or the Fed will prolong the program, thus effectively making it a form of QE.
    - JumpCrisscross 3y ago
      > many analysts have expected this to happen this year They expected the economy to cool thereby causing rates to fall. Because what we're going through--rising rates, falling inflation and persistent growth--is literally the first time an economy of note has managed the opposite of stagflation. The Fed being constrained by the federal deficit (or even interest expenditure) is a different beast. Nobody serious thinks the Fed would lower rates to finance the government thereby causing inflation. If the Fed is lowering rates, the economy is cooling. That's deflationary. If the economy is doing well enough that lowering rates would cause inflation, there is no need to lower rates. Stagflation is real. But it's never happened in the way this theory describes (deficits --> lower rates --> inflation amidst recession). And there are simple, well-tested reasons to find that causation ridiculous. > banks will end up with huge holes in their balance sheets It's a trivial hole to fill: let banks borrow at the discount window against the face instead of market value of their Treasuries. (At a penalty rate, I would add.) The persistent problems in banking come from credit risk. That's happening in commercial real estate. But not rates.
delehal 3y ago
I do have concerns about debt, but this is essentially clickbait. The headline also seems to be factually incorrect. If you check out the Treasury report that they linked, the outlay category "net interest" is actually lower than "national defense".
- roenxi 3y ago
  > The headline also seems to be factually incorrect. 69 v 70? If anyone wants to try and seriously use that as a debate point I wish them the best but don't like their chances of landing a good rhetorical hit. And signs suggest it'll sound a hollow in 6 months at the rate the spending is chugging along. Also the headline is presumably correct. Gross interest would be higher than net.
roenxi 3y ago
Usually I'm pretty happy to go in to any debate and argue for strong property rights and the importance of honouring debt agreements. However, at this point if the US government arranges some sort of default and anyone objects the responsibility really sits more with the creditors. The US government has been signalling that this headline was coming for ... Decade? Decades? Even if this isn't the most well telegraphed debt crisis in the history of the States it will be near the top of the list.
wudangmonk 3y ago
Deficit aside, how does a nation "borrow" money and must therefore pay interest on it, which rich trillionaires are financing the U.S?. Paying interest on money that only exists because others trust you seems too stupid to actually be true, right?.
- unboxingelf 3y ago
  the fed literally prints it out of thin air. fiat currency is a game of trust.
- nemothekid 3y ago
  >Paying interest on money that only exists because others trust you seems too stupid to actually be true, right?. This is essentially how a bank works, so I'm not sure how stupid it actually is.
- crooked-v 3y ago
  > money that only exists because others trust you This is literally the fundamental basis of all modern monetary systems.
- verteu 3y ago
  > Deficit aside, how does a nation "borrow" money and must therefore pay interest on it They sell treasury bonds, mainly to other nations and corporations.
- phkahler 3y ago
  >> Deficit aside, how does a nation "borrow" money and must therefore pay interest on it, which rich trillionaires are financing the U.S?. One large creditor is the Social Security Administration. They have invested trillions in treasury bonds. Sometimes when you hear SS is hav8ng a crisis its really just them needing to pull money out of that investment and people in congress being unhappy they have to pay back money borrowed by previous congress people. Fortunately even some high level folks from the federal reserve have educated them that it is in fact real debt and not some type of funny money they can just ignore.
JaceLightning 3y ago
Defense is a relatively small part of our total tax dollars.
- thrill 3y ago
  It's twelve percent of the total budget but still remains "discretionary" and yet is the only thing in the budget that the Constitution explicitly calls for with everything else made up as supposed "general welfare"
ec109685 3y ago
A better measure of debt is to compare it with GDP (intuitively makes sense given GDP normalizes for size of economy). By that measure, Japan is in way worse shape at 294%: https://tradingeconomics.com/country-list/government-debt-to-gdp https://tradingeconomics.com/country-list/government-debt-to... Someone like Peterson, as quoted in the article, has been saying the same thing since the 80’s, warning people of impending doom. In 2004: https://www.thriftbooks.com/w/running-on-empty-how-the-democratic-and-republican-parties-are-bankrupting-our-future-and-what-americans-can-do-about-it_peter-g-peterson/430724/ https://www.thriftbooks.com/w/running-on-empty-how-the-democ... And before that in 1993: https://www.thriftbooks.com/w/facing-up_peter-g-peterson/1260558/ https://www.thriftbooks.com/w/facing-up_peter-g-peterson/126... From the article: “As we have seen with recent growth in inflation and interest rates, the cost of debt can mount suddenly and rapidly,” Michael A. Peterson, CEO of the Peter G. Peterson Foundation, said in a statement. “With more than $10 trillion of interest costs over the next decade, this compounding fiscal cycle will only continue to do damage to our kids and grandkids.” While now might be different, the economy has been in good shape in aggregate over the last 30 years, with debt scolds sounding the alarm all throughout.
- throw0101c 3y ago
  Some historical context as well (#5, towards bottom): > Debt service as a share of federal outlays peaked at more than 15% in the mid-1990s, but generally falling interest rates have helped hold down payments even as the dollar amount continues to grow. * https://www.pewresearch.org/short-reads/2023/02/14/facts-about-the-us-national-debt/ https://www.pewresearch.org/short-reads/2023/02/14/facts-abo... Also, out of the ~$6T of spending in 2022, about $4T was mandatory (Social Security, Medicare, etc): * https://en.wikipedia.org/wiki/United_States_federal_budget https://en.wikipedia.org/wiki/United_States_federal_budget With $1.7T being discretionary, and $0.5T being interest.
- anm89 3y ago
  Absolutely f**ing rubbish. No. This is dead wrong. You are speaking authoratively but you don't know what you are talking about. There is nothing inherently superior about debt/gdp. It is one good metric for tracking debt but is in no way the one true metric or intrinsically superior to other debt metrics and importantly it cannot give you a reasonably complete picture of the fiscal situation of a country because it is lacking the key component of incorporating rates and flows. Japan has more than double our debt to GDP but this is able to not catastrophically blow up in the short term because their interest rates and therefore interest expense is low. Again, really sad , but not rrally surprising to see low quality drivel stated authoratively as the top answer
phkahler 3y ago
>> ...signed into law this summer to prevent a national default could result in a $1.5 trillion decrease to the deficit over the next decade. I find this infuriating. Why over 10 years? Why not now? Because the deficit is on the order of $1T per year and saying it'll be reduced by 150 billion dollars a year sounds pathetic. The economy is booming, stop spending money you don't have!
- MuffinFlavored 3y ago
  this is probably a dumb take, but I’m going to guess if you look at the budget of the federal government, you’re going to run into two problems that conflict with each other other. The first one being, there’s lots of spending that you really can’t lower easily. The second being that you really cannot increase revenues/income without some serious negative effects.
- JumpCrisscross 3y ago
  > Why over 10 years? Why not now? Tell me what you'd cut. Every politician railing for deficit reduction is also curious silent on what they'd axe.

39 points by pg_1234 3y ago

If only rich people and corporations payed taxes, just a 15% flat tax across the board and all the loop holes gone. The debt would turn into a surplus......

czbond 3y ago
You understand that the rich pay a majority of the taxes in the US?
- gumballindie 3y ago
  People that call for “the rich” to pay more taxes usually mean those earning above 100k. At least thats how it is in the uk. At some point it will become more convenient to just earn a low wage or none at all.
  - harimau777 3y ago
    In my experience, they are generally calling for a wealth tax targeted at the 1% or even the .1%.
  - jjoonathan 3y ago
    "Tax Assets" is the rallying cry I've seen, and that one actually does hit the "capital gains" class.
  - smcl 3y ago
    That’s … not how UK income tax bands work. I’m not sure thats how taxes work anywhere actually.
    - secondcoming 3y ago
      It’s not just income tax. You lose certain allowances when your salary exceeds a certain level, such as childcare. There definitely are scenarios when a pay rise can actually make you poorer.
  - nielsbot 3y ago
    Really? You'd rather earn less than earn more and pay tax on some of it? Personally I'd go for earning more (if it's a choice) and paying the higher taxes instead of voluntarily lowering my income.
    - charcircuit 3y ago
      Not everyone wants to constantly earn more money. Especially when the government will steal a portion of it for themselves. If the work to benefit ratio is not good people are not going to bother earning more. If society only pays 10% more for 100% more effort people are not incentivized to do it.
      - harimau777 3y ago
        That doesn't necessarily seem like a bad thing. I'm not sure that we need everyone to be working 50 hour weeks.
    - bigyikes 3y ago
      It’s about the incentives and marginal change. Sure, you’d go for earning more, but now you’re less incentivized to do so. It might not matter to you, but it matters to the people at the margins — the people who are just on the edge of being willing to make an upward move but will decline to do so if their potential gross is lower than it otherwise could’ve been.
      - Dylan16807 3y ago
        Sure, that's fine though. Being less motivated to push for higher income is a far cry from deciding you don't want it and would rather have a lower income. Also I haven't seen any plans that would remove particularly much motivation below a million dollars, and by the time you're making a million dollars I wouldn't say there needs to be motivation to go for more.
      - harimau777 3y ago
        The problem in the parent's post is that people advocating for "taxing the rich" aren't actually talking about people who are being payed $100K. They are talking about people whose wealth comes from owning property. In that case, I'm not sure that our intuition about the effect of marginal incentives necessarily applies to the same degree. E.g. if a wealthy industrialist decides not to invest in a some piece of capital, it's not as though the capital ceases to exist; it will just be used by someone else. E.g. if an industrialist decides not to invest in a gold mine, then it's not as though the gold disappears. The land will simply be developed by someone else.
  - ec109685 3y ago
    That’s not how it is in America. When taxes are contemplating being raised it is only dollars earned per year above $400k: https://www.cnbc.com/amp/2022/03/02/biden-reiterates-400000-tax-pledge-to-fund-agenda.html https://www.cnbc.com/amp/2022/03/02/biden-reiterates-400000-...
  - JumpCrisscross 3y ago
    > People that call for “the rich” to pay more taxes usually mean those earning above 100k A rule of thumb in these discussions: you can tell a person's salary by where they define rich.
  - dopidopHN 3y ago
    Above 100k is nothing.
    - harimau777 3y ago
      I don't think you will find many people advocating that the relevant point be 100K. Even setting aside that many people are advocating wealth taxes rather than income taxes, the breakpoints I see advocated for increased income taxes are generally 250K or 400K.
  - ChumpGPT 3y ago
    >People that call for “the rich” to pay more taxes usually mean those earning above 100k. Good Lord, 100k? I was making more than that in 1999. When I say rich, I am saying anyone who makes more than 1 - 1.5 million a year. 100k is just over poverty these days...
    - dragonwriter 3y ago
      No, 2.5× the median personal income isn’t “just over poverty”.
      - harimau777 3y ago
        That depends on whether the median person is living in poverty or not. There are definitely places in the US where it would be very difficult to raise a family or buy a home on the median income.
        dragonwriter 3y ago
        > That depends on whether the median person is living in poverty or not. Well, no, even if we stretched the definition of poverty to cover people making the national median personal income, people making 2.5× that still wouldn’t be in or just over poverty, but, sure, if you redefine poverty to include the wealthy than the wealthy are “poor”. But there are people actually in poverty by its common definition, and people making $100k/yr—which was asserted to be on the edge of poverty generally these days upthread—have more in common with people making $1 million/yr than with those people in actual poverty. > There are definitely places in the US where it would be very difficult to raise a family or buy a home on the median income. “It’s difficult to buy a home” isn’t poverty, and the subject wasn't people earning the median personal income but $100k/yr.
- jjoonathan 3y ago
  ...on way more than a majority of the money, lol.
- Guvante 3y ago
  Only because everyone pretends that payroll taxes don't count. Individual income tax is $1.96T but payroll taxes are $1.48T.
- throw0101c 3y ago
  Lies, damn lies, and statistics: > To wit, “The Stat” is that the highest-earning one percent of taxpayers pay 40 percent of all income taxes. […] The first problem with The Stat is that it makes no reference to the proportion of income the rich earn. The juxtaposition between one percent and 40 percent is meant to convey the idea that a small number of people are carrying a gigantic and disproportionate burden, but the figure lacks any context when it omits how much money they earn in the first place. > Indeed, it turns the fact that rich people account for a massive share of the income pool into a reason to see them as mistreated. One common move for polemicists brandishing this figure is to note that the share of taxes paid by the rich is “up sharply” over the past couple decades — which it is, on account of rich people claiming a larger share of the national income. The logic implied by The Stat is that the bigger the proportion of income earned by the richest one percent, the more imperative it is to reduce their tax rates, so that they don’t pay too high a share of the tax burden. * https://nymag.com/intelligencer/article/fact-check-richest-1-dont-pay-40-of-the-taxes.html https://nymag.com/intelligencer/article/fact-check-richest-1... > Between 2014 and 2018, the 25 wealthiest Americans collectively earned $401bn, but paid just $13.6bn – about 3.4% of that – in taxes, according to a bombshell ProPublica investigation into the finances of the wealthiest Americans released on Wednesday. […] > Billionaires in tech pay the lowest tax rate, an average of 17% of their income, largely because their wealth comes from such investment income. Bill Gates, whose income from 2013 to 2018 was an average of $2.85bn a year, paid an average effective federal income tax rate of 18.4%. Lauren Powell Jobs, the widow of Apple co-founder Steve Jobs, earned an average of $1.57bn and paid an average tax rate of 14.8%. Ten of the top 15 earners on the list are billionaires who made their money in tech. > In comparison, the average single worker earning $45,000 paid an average tax rate of 21%. A married couple with one child who earns $200,000 paid a rate of 26%. In 2018, the highest top rate on ordinary income, which excludes investments, was 37%, yet the average tax rate for the 400 wealthiest Americans was 22% from 2013 to 2018. * https://www.theguardian.com/us-news/2022/apr/13/wealthiest-americans-tax-income-propublica-investigation https://www.theguardian.com/us-news/2022/apr/13/wealthiest-a... When you grab most of the income generated in the economy (leaving little for the folks at the bottom), then of course you pay most of the income taxes.
deadly_syn 3y ago
33 trillion dollars is a lot of money. Even unresonable levels of tax expansion across the would take forever to make that back, not to mention that that doest stop additional spending which still would likely be in excess of what we would collect extra.
kacesensitive 3y ago
Can we go back to taxing the richest at near 90%?
- b8 3y ago
  Rich Americans would move elsewhere and renounce their citizenship probably to avoid that tax %.
  - 2OEH8eoCRo0 3y ago
    They are bluffing, they didn't when taxes were higher. Where would they go?
    - LadyCailin 3y ago
      I hear Pakistan has low taxes.
  - dopidopHN 3y ago
    And move to Canada, yeah. We know the story.
- VirusNewbie 3y ago
  The effective tax rate for the rich has stayed very flat over time, and it has never been 90%. That is an internet myth that is somehow floated around that most people don't bother to check up on.
  - harimau777 3y ago
    It looks like effective tax rate may have stayed mostly the same overall but fallen for the rich: https://www.taxpolicycenter.org/taxvox/effective-income-tax-rates-have-fallen-top-one-percent-world-war-ii-0 https://www.taxpolicycenter.org/taxvox/effective-income-tax-...
    - VirusNewbie 3y ago
the_third_wave 3y ago
A flat tax on... what? Income? What is income? Capital gains? Realised or unrealised capital gains? Also, what are "rich people"? Is it the "millionaires and billionaires" Bernie Sanders used to talk about before he became a millionaire himself or only the "billionaires" he now speaks about? Not to single out Sanders the question is an important one since one man's "rich man" is another man's servant. To the homeless bum on the street you will be "rich", to you Sanders is "rich", to Sanders Musk is ¨rich". Who gets to pay? Flat taxes sound great in theory but they end up having a far larger impact on those for whom the tax directly cuts into their ability to pay for basic necessities. Will there be an minimum guaranteed spendable income limit below which the tax will not be taken?
- harimau777 3y ago
  I think that a good definition of "the rich" might be: People who make money based on what they own rather than on the labor that they perform.
  - secondcoming 3y ago
    The problem with that is not all labour is the same. Should a weathly farmer be taxed less than a hairdresser? It’s a more physically demanding and dangerous job.
    - harimau777 3y ago
      Neither of them would meet that definition of "the rich" since they are both income gained through labor. Therefore, neither of them would have their taxes raised by a policy of "taxing the rich".
      - secondcoming 3y ago
        Right, but why do they both incur the same tax rate even though the labour required to do each job is vastly different?
- Dylan16807 3y ago

jeffbee 3y ago

It is a point of view (a bias) to say that the deficit was largely caused by large spending bills such as ARPA, but not mention the equal or large contribution to the deficit of tax cuts, such as the 2017 Tax Cuts and Jobs Act. https://www.americanprogress.org/article/tax-cuts-are-primarily-responsible-for-the-increasing-debt-ratio https://www.americanprogress.org/article/tax-cuts-are-primar...

bradleyjg 3y ago
President Donald Trump’s signature tax bill,26 enacted when Republicans gained control of the White House and both houses of Congress in 2017, will have cost roughly $1.7 trillion by the end of fiscal year 2023. It seems pretty reasonable on magnitude grounds to mention something that cost $1.9 trillion in a single year while and omitting something that cost $1.7 trillion over five.
- cmdli 3y ago
  > Taken together, the Bush tax cuts, their bipartisan extensions, and the Trump tax cuts, have cost $10 trillion since their creation and are responsible for 57 percent of the increase in the debt ratio since then. They are responsible for more than 90 percent of the increase in the debt ratio if you exclude the one-time costs for responding to COVID-19 and the Great Recession. I don't 100% agree with this article, but I think you are somewhat misrepresenting it. If taxes were at the level they used to be then we would be in a better position debt-wise than we are now. Whether you disagree with raising taxes or not, it does seem reasonable to examine cost-increasing measures like tax cuts.
  - bradleyjg 3y ago
    If you are going to aggregate all the tax cuts going back to 2000, you could also aggregate all the spending increases. I don’t think either is a reasonable thing to do. The OP article includes this paragraph: “Getting the debt under control will require taking a serious look at health care, Social Security and the tax code,” CRFB president Maya MacGuineas said in a news release. which mentions taxes. I don’t see what the big problem is with specifically mentioning the ARPA given how absolutely enormous it was. My objection wouldn’t have been not mentioning specific tax cuts, but instead not mentioning CARES which was even larger at $2.2 trillion.

sandworm101 3y ago

There are ways around this. But things have gotten so bad that i think the US debt is now more of a government welfare program than actual debt. It is a way to shovel taxpayer dollars towards large note holders. It is just moving money around, a sort of reverse welfare. It is an american institution no more killable than medicare or charitable tax deductions. https://en.wikipedia.org/wiki/Trillion-dollar_coin https://en.wikipedia.org/wiki/Trillion-dollar_coin

lumost 3y ago
The US effectively uses government debt to avoid large asset holders from eating up the entire money supply. Using deficit spending to redistribute funds works when the money hits the right places, and is horrendously inefficient otherwise.
- JumpCrisscross 3y ago
  > US effectively uses government debt to avoid large asset holders from eating up the entire money supply What does this mean?
  - bratwurst3000 3y ago
    If money isn’t debt it would be for example gold. So a person could hold all the gold in the world and in this sense also the power over money. Now money is there for the transfer between values so it represents the economics
    - JumpCrisscross 3y ago
      > a person could hold all the gold in the world and in this sense also the power over money Then something else becomes money. This has happened, in the past, when metal money was scarce. More realistically, if one person hoards a money, i.e. accumulates and doesn't meaningfully spend it, it gets taken.
  - lumost 3y ago

fuoqi 3y ago

And a huge amount of public debt matures in the next 1-2 years, e.g. it's $7.6T (31%) just in the next year [1]. Imagine how the interest will balloon after this debt will be re-borrowed with the current interest rate. The recent spike in long-term rates does not help to say the least. I expect the Fed will drop the interest rate and/or will re-start QE somewhere in the next year, so expect new waves of inflation similar to 70s. [1]: https://markets.businessinsider.com/news/bonds/us-debt-maturing-bond-yields-treasury-bills-federal-reserve-qt-2023-9 https://markets.businessinsider.com/news/bonds/us-debt-matur...

JumpCrisscross 3y ago
> I expect the Fed will drop the interest rate and/or will re-start QE somewhere in the next year, so expect new waves of inflation similar to 70s Side note, this has been Silicon Valley's take for a decade. It's wrong. It results from a series of fundamental misunderstanding that caught start-ups, VCs and even Silicon Valley Bank flat footed by the Fed's rate rises occurring and persisting.
- fuoqi 3y ago
  Yes, many analysts have expected this to happen this year, but they underestimated stimulating effect of the COVID stimulus checks and the huge deficit spending by the government (e.g. Inflation Reduction Act, lol). To be fair, the banking system has started breaking, but, instead of lowering the rate, the Fed has temporarily masked it by the BTFP. When the program will end, banks will end up with huge holes in their balance sheets (discounted paper + accumulated interest on BTFP funds). So we either end up with a huge banking crisis, or the Fed will prolong the program, thus effectively making it a form of QE.
  - JumpCrisscross 3y ago
    > many analysts have expected this to happen this year They expected the economy to cool thereby causing rates to fall. Because what we're going through--rising rates, falling inflation and persistent growth--is literally the first time an economy of note has managed the opposite of stagflation. The Fed being constrained by the federal deficit (or even interest expenditure) is a different beast. Nobody serious thinks the Fed would lower rates to finance the government thereby causing inflation. If the Fed is lowering rates, the economy is cooling. That's deflationary. If the economy is doing well enough that lowering rates would cause inflation, there is no need to lower rates. Stagflation is real. But it's never happened in the way this theory describes (deficits --> lower rates --> inflation amidst recession). And there are simple, well-tested reasons to find that causation ridiculous. > banks will end up with huge holes in their balance sheets It's a trivial hole to fill: let banks borrow at the discount window against the face instead of market value of their Treasuries. (At a penalty rate, I would add.) The persistent problems in banking come from credit risk. That's happening in commercial real estate. But not rates.

delehal 3y ago

I do have concerns about debt, but this is essentially clickbait. The headline also seems to be factually incorrect. If you check out the Treasury report that they linked, the outlay category "net interest" is actually lower than "national defense".

roenxi 3y ago
> The headline also seems to be factually incorrect. 69 v 70? If anyone wants to try and seriously use that as a debate point I wish them the best but don't like their chances of landing a good rhetorical hit. And signs suggest it'll sound a hollow in 6 months at the rate the spending is chugging along. Also the headline is presumably correct. Gross interest would be higher than net.

roenxi 3y ago

Usually I'm pretty happy to go in to any debate and argue for strong property rights and the importance of honouring debt agreements. However, at this point if the US government arranges some sort of default and anyone objects the responsibility really sits more with the creditors. The US government has been signalling that this headline was coming for ... Decade? Decades? Even if this isn't the most well telegraphed debt crisis in the history of the States it will be near the top of the list.

wudangmonk 3y ago

Deficit aside, how does a nation "borrow" money and must therefore pay interest on it, which rich trillionaires are financing the U.S?. Paying interest on money that only exists because others trust you seems too stupid to actually be true, right?.

unboxingelf 3y ago
the fed literally prints it out of thin air. fiat currency is a game of trust.
nemothekid 3y ago
>Paying interest on money that only exists because others trust you seems too stupid to actually be true, right?. This is essentially how a bank works, so I'm not sure how stupid it actually is.
crooked-v 3y ago
> money that only exists because others trust you This is literally the fundamental basis of all modern monetary systems.
verteu 3y ago
> Deficit aside, how does a nation "borrow" money and must therefore pay interest on it They sell treasury bonds, mainly to other nations and corporations.
phkahler 3y ago
>> Deficit aside, how does a nation "borrow" money and must therefore pay interest on it, which rich trillionaires are financing the U.S?. One large creditor is the Social Security Administration. They have invested trillions in treasury bonds. Sometimes when you hear SS is hav8ng a crisis its really just them needing to pull money out of that investment and people in congress being unhappy they have to pay back money borrowed by previous congress people. Fortunately even some high level folks from the federal reserve have educated them that it is in fact real debt and not some type of funny money they can just ignore.

JaceLightning 3y ago

Defense is a relatively small part of our total tax dollars.

thrill 3y ago
It's twelve percent of the total budget but still remains "discretionary" and yet is the only thing in the budget that the Constitution explicitly calls for with everything else made up as supposed "general welfare"

ec109685 3y ago

A better measure of debt is to compare it with GDP (intuitively makes sense given GDP normalizes for size of economy). By that measure, Japan is in way worse shape at 294%: https://tradingeconomics.com/country-list/government-debt-to-gdp https://tradingeconomics.com/country-list/government-debt-to... Someone like Peterson, as quoted in the article, has been saying the same thing since the 80’s, warning people of impending doom. In 2004: https://www.thriftbooks.com/w/running-on-empty-how-the-democratic-and-republican-parties-are-bankrupting-our-future-and-what-americans-can-do-about-it_peter-g-peterson/430724/ https://www.thriftbooks.com/w/running-on-empty-how-the-democ... And before that in 1993: https://www.thriftbooks.com/w/facing-up_peter-g-peterson/1260558/ https://www.thriftbooks.com/w/facing-up_peter-g-peterson/126... From the article: “As we have seen with recent growth in inflation and interest rates, the cost of debt can mount suddenly and rapidly,” Michael A. Peterson, CEO of the Peter G. Peterson Foundation, said in a statement. “With more than $10 trillion of interest costs over the next decade, this compounding fiscal cycle will only continue to do damage to our kids and grandkids.” While now might be different, the economy has been in good shape in aggregate over the last 30 years, with debt scolds sounding the alarm all throughout.

throw0101c 3y ago
Some historical context as well (#5, towards bottom): > Debt service as a share of federal outlays peaked at more than 15% in the mid-1990s, but generally falling interest rates have helped hold down payments even as the dollar amount continues to grow. * https://www.pewresearch.org/short-reads/2023/02/14/facts-about-the-us-national-debt/ https://www.pewresearch.org/short-reads/2023/02/14/facts-abo... Also, out of the ~$6T of spending in 2022, about $4T was mandatory (Social Security, Medicare, etc): * https://en.wikipedia.org/wiki/United_States_federal_budget https://en.wikipedia.org/wiki/United_States_federal_budget With $1.7T being discretionary, and $0.5T being interest.
anm89 3y ago
Absolutely f**ing rubbish. No. This is dead wrong. You are speaking authoratively but you don't know what you are talking about. There is nothing inherently superior about debt/gdp. It is one good metric for tracking debt but is in no way the one true metric or intrinsically superior to other debt metrics and importantly it cannot give you a reasonably complete picture of the fiscal situation of a country because it is lacking the key component of incorporating rates and flows. Japan has more than double our debt to GDP but this is able to not catastrophically blow up in the short term because their interest rates and therefore interest expense is low. Again, really sad , but not rrally surprising to see low quality drivel stated authoratively as the top answer

phkahler 3y ago

>> ...signed into law this summer to prevent a national default could result in a $1.5 trillion decrease to the deficit over the next decade. I find this infuriating. Why over 10 years? Why not now? Because the deficit is on the order of $1T per year and saying it'll be reduced by 150 billion dollars a year sounds pathetic. The economy is booming, stop spending money you don't have!

MuffinFlavored 3y ago
this is probably a dumb take, but I’m going to guess if you look at the budget of the federal government, you’re going to run into two problems that conflict with each other other. The first one being, there’s lots of spending that you really can’t lower easily. The second being that you really cannot increase revenues/income without some serious negative effects.
JumpCrisscross 3y ago
> Why over 10 years? Why not now? Tell me what you'd cut. Every politician railing for deficit reduction is also curious silent on what they'd axe.