7 ms·

There is no "overspending." There is only undertaxing. The debt is literally just the accumulated difference between spending and taxation. If extreme wealth w

There is no "overspending." There is only undertaxing. The debt is literally just the accumulated difference between spending and taxation. If extreme wealth was taxed, the debt would be zero. The point isn't even to "pay for spending" but to enforce a functional social contract, and to limit the political and democratic distortions created by extreme inequality. "Markets" should not have a veto on policy in a democracy. Making it non-zero is a policy choice. Inflating away this debt is also a policy choice. There is nothing accidental about this. What will not be inflated away is personal debt. That will remain linked to inflation even after the currency is revalued, and will be captured from personal assets wherever possible.

tobias3 1y ago
Yeah, but for taxation you need state capacity to enforce it which was chainsawed/DOGED away.
- nostromo 1y ago
  This isn't true. US tax revenue in 2025 is on track to be the highest ever.
  - const_cast 1y ago
    Perfect, just in time to put a teeny tiny dent in our new 2 Trillion dollar raised deficit! Thanks "party of fiscal responsibility"!
  - dcherman 1y ago
    Adjusted for inflation?
hilsdev 1y ago
Why is the default to tax more and not spend less? Is there really no limit to the amount of spending the government should do? You see no possible use of resources that would be wasteful?
- dehrmann 1y ago
  The default depends on your party and which party is in power.
- cosmic_cheese 1y ago
  Problem is, there’s a lot of needs that private industry will not fill (or cannot be trusted to fill well). We’ve seen this play out repeatedly. If you want a functioning society, a certain degree of government spending is unavoidable. Now there is something to be said for making sure that spending is effective, but this must be engaged with in good faith; that is, changes should be made with a scalpel after gathering plenty of data supporting the change in question. Proclaiming ineffectiveness without data to ground the claim and then using that as an excuse to make broad cuts is a great way to make any dysfunction even worse.
  - nullc 1y ago
    FY2024 federal spend 6.75 trillion. FY2019 was 4.4 trillion. FY2009 was 3.1 trillion. Twice the growth in half the time. Was there so much more that private industry "will not fill" in 2024 vs 2009? How about vs 1999? (1.7 trillion budget). We can't attribute the difference to inflation: the US government's inflation calculator says 1.7 trillion in 1999 is 3.3 trillion today. No one is arguing that the federal government doesn't need to spend some money. But this truth has no relevance to the absurd out of control spending we're witnessing today.
    - bigbadfeline 1y ago
      > FY2024 federal spend 6.75 trillion. That's selective apples to oranges Deficit as % of GDP: 2009 - 10%, 2011 - 8.6%, 2012 - 6.7%, 2013 - 4% ... 2019 - 4.6%, 2020 - 15%, 2021 - 12%, 2022 - 5.4%, 2023 - 6%.
      - nullc 1y ago
        I don't think _deficit_ is at all a useful metric about the appropriate level of spending by the federal government-- Outside of emergencies deficit is merely a measure of gross financial incompetence in our elected officials.
nostromo 1y ago
Europe has repeatedly tried to soak the rich, and the results are always the same: the rich move their wealth somewhere else and you end up breaking even or even reducing your tax revenue. France: https://www.theguardian.com/world/2014/dec/31/france-drops-75percent-supertax https://www.theguardian.com/world/2014/dec/31/france-drops-7... UK: https://obr.uk/box/effect-of-the-additional-rate-of-income-tax-on-receipts/ https://obr.uk/box/effect-of-the-additional-rate-of-income-t... Sweden: https://eml.berkeley.edu/~saez/course/seimAEJ17wealth.pdf https://eml.berkeley.edu/~saez/course/seimAEJ17wealth.pdf It's interesting to note that even when these tax schemes were repealed, the damage had already been done and the wealth did not return. Here's a real plan for America: Step 1: have a tax rate that's a little less than our peers Step 2: return spending to pre-Covid rates circa 2019
- crooked-v 1y ago
  The US is a long way away from trying to "soak" anyone. We have a top rate on long-term capital gains of 20%.
  - nostromo 1y ago
    That's pretty average (which is a good thing). Japan: 20% China: 20% India: 13% UK: 24% Italy: 26% Germany: 26% France: 30% Then there's Canada of course... 50% with a proposal to make it 66% in 2026. Let's see how that works out!
    - pseudo0 1y ago
      Isn't it a 50% inclusion rate for capital gains in Canada? That works out to a maximum tax rate of 27% in the top tax bracket. And they canceled the proposed increase to a 66% inclusion rate, which is probably smart considering how a ton of rich Canadians already move to Florida.
      - cperciva 1y ago
        Yes that's correct.
alphazard 1y ago
I'm not even sure if this is a serious post, but it indicates a significant misunderstanding. There is an asymmetry between a government's revenue and its expenses. Revenue can increase arbitrarily if the government is allowed to take out unlimited debt. The amount a government can tax is limited first by the size of its country's economy. There is a maximum amount of revenue you can collect via taxation, and after a certain point increasing taxation decreases revenue. Countries also exist in the context of the rest of the world and there is a market for business. If the tax rate is not competitive businesses and people will leave, although this is over a longer time horizon. In terms of the possibilities overspending is far more likely than undertaxing because you can spend an infinite amount, but you can only undershoot your optimal tax rate by a finite amount. Both are probably happening right now. The amount that the US government is undertaxing compared to its theoretical optimum might not even balance the current budget.
- deleted 1y ago
  [deleted]
wtcactus 1y ago
Well, I argue with your point with mine then: there’s no under taxing, only over spending. If extreme spending was cut, the debt would be zero.
AnthonyMouse 1y ago
Federal receipts as a percent of GDP: https://fred.stlouisfed.org/series/FYFRGDA188S https://fred.stlouisfed.org/series/FYFRGDA188S Basically unchanged for 70+ years, and far lower historically. Meanwhile significant growth in real GDP per capita and therefore real government receipts per capita. The change isn't that the government is collecting less money. They get more than ever. But growth in government spending has outstripped it, and it has been getting worse rather than better.
- ethbr1 1y ago
  > But growth in government spending has outstripped it, and it has been getting worse rather than better. cough Universal single-payer healthcare with aggressive, adversarial price negotiation.
  - AnthonyMouse 1y ago
    That can't be the explanation because it wasn't present in the US before the government was running huge deficits either.
    - ethbr1 1y ago
      As in, the US still doesn’t have it. Hence the propensity to sink growing amounts of GDP into paying an ever-heightening stack of middlemen to provide medical care at market prices... instead of simplifying the stack and saving money. The US government created a mandate, then allowed it to metastasize as health care became more technical and expensive, and is now in the business of sticking its fingers in its ears and pretending there’s not a financial problem. https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data/nhe-fact-sheet https://www.cms.gov/data-research/statistics-trends-and-repo...
      - mananaysiempre 1y ago
        Everyone in that spending pipeline is doing it[1], not just the US government. [1] https://siderea.dreamwidth.org/1179450.html https://siderea.dreamwidth.org/1179450.html (very long; you’ll need to get to at least part 2 to see the relevance)
NotGMan 1y ago
You think that Bezos and Musk have billions in their own personal bank account? So what do you mean be "extreme wealth"? Companies? Dividend payouts? House? Yachts? I agree that luxury items that are out of reach of the middle class (eg sport cars etc...) should be taxed highly, but a toy that a rich person can buy vs a rich person investing money into his own or other companies is a problem if you want to tax that since no-one will then create new companies and invest in R&D.
- jrs235 1y ago
  Paper wealth used as collateral for loans should be taxed as income (or capital gains).
  - chasing0entropy 1y ago
    Whoa - dude I hope you live in a bunker. Great ideas like this will make uncle Sam disappear you.
  - Workaccount2 1y ago
    While I'm all for it, the real impact of this would likely be on the order of a few billion dollars, if that. Most regular people could sit down and cut a billion dollars of dumb shit out of the budget in a few hours (every Congress person has their little pet projects they slide in to omni bills). The fixes needed for this are massive, and the pain will be felt by everyone. Even taking the harshed path against the 1% will still leave plenty of pain for average folks.
    - Nevermark 1y ago
      > While I'm all for it, the real impact of this would likely be on the order of a few billion dollars, if that. The collateral loan -> invested -> growth, collateral loan -> invested -> growth cycle doesn't just result in tax avoidance on a one-time basis. It's a way to indefinitely grow capital at a higher rate, by pushing taxes further and further into the future. And when any wealth gains are finally accounted for as taxable income, it's a one time tax that doesn't reflect all the compounding. So a huge time-value of money break. So there is a compounding of the tax that is avoided over time, despite actual liquidity accessed and deployed all along. This is one of the primary loopholes that lets wealth gains made from capital get taxed far below wealth created by labor (which gets very reliably taxed, and at higher rates). The percentage of wealth growth that actually gets taxed as a running number keeps growing, despite the ability to make those gains liquid via loans. Imagine if you could do labor, then instead of taking your income and getting taxed, accept loan proceeds against your "delayed" salary, and invest the net gain from not being taxed. Indefinitely. (With interest on your loan, cancelled out by the "interest" on your delayed salary.) That would be like being able to choose to pay your own IRA instead of paying taxes. That's how the unrealized (but real) wealth gains -> leverage (the practical and very real realization) cycle works.
ponector 1y ago
>> If extreme wealth was taxed, the debt would be zero With current level of debt it does not matter. Taxes should be rised for everyone if huge cuts in expenses are not done.
amy_petrik 1y ago
>"Markets" should not have a veto on policy in a democracy. capitalism is meant to be organic thing like a bacteria. a self-organizing network. one cannot legislate nature, one cannot legislate human nature. Imagine making crimes illegal and then nobody committing crimes. Imagine making it illegal to change lanes without using your turn signal. a democracy can give an antibiotic by dr. democracy to clear the infection, that is the nature of control here .. but if it's a nasty bug.. the bug will veto the doctor
- kelseyfrog 1y ago
  Capitalism isn't meant to do anything. We have a system of laws that undergird the economic system - the legal protection of private property being the main one. Private property requires a monopoly of violence to enforce. When capitalism colonizes a legal system, it necessarily creates the incentives for the legal system to adopt laws to maintain itself. If for some reason private property was not legally enforceable, capitalism wouldn't get off the ground.
  - berdario 1y ago
    > Capitalism isn't meant to do anything. It was probably meant in the manner of: "the purpose of a system, is what it does"... I.e. regardless of how it evolved (system of laws written with good intent, or system of laws organically grown out of corruption and lobbying...) what capitalism does now is its purpose, and we shouldn't expect it to be meant to do anything different. > capitalism [...] necessarily creates the incentives for the legal system to adopt laws to maintain itself Agree > If for some reason private property was not legally enforceable, capitalism wouldn't get off the ground I think this makes as much sense as saying: "if money wasn't a thing, capitalism wouldn't get off the ground". Technically true, neither capitalism nor feudalism would be able to get off the ground, but "private property not enforceable" evokes images of thugs stealing your property... The truth is that the first few people (or group thereof) who accumulate a commodity (grain, livestock, widgets, etc.) would also be the first who would be able to bribe/pay thugs with a small share of their commodities, to help protect from (deny access to) others in the community. The monopoly of violence (and legal authority) would grow out of the initial group. In the same way, even if money was going to be abolished, any other commodity would just take its place, and rebuild capitalism with it. It is tricky to wrestle democratic control back, and move on from capitalism.
deleted 1y ago
[deleted]
DrScientist 1y ago
> There is no "overspending." There is only undertaxing. The debt is literally just the accumulated difference between spending and taxation. There is obviously both - as you say it's the difference between two numbers - and sure how you portray that differences is often politicised - just as you are doing now. Also remember there is borrowing in the equation - it's not just money in the system, but the ability to spend made up money today based on future promises, the with the rich benefitting from the interest on that debt. ie those with assets benefit twice from a gap between spending and taxation - they get to not pay their way, and also get a nice return on lending the money then didn't pay in tax to pay for the necessary spending!
tnel77 1y ago
>>There is no "overspending." There is only undertaxing. This is quite the take. Do you run your household as “there is no ‘overspending.’ There is only under-earning.”
- deleted 1y ago
  [deleted]
sershe 1y ago
"If extreme wealth was taxed, the debt would be zero" Do you have numbers for that? Even ignoring the issues with lots of wealth being paper wealth that cannot be translated into any kind of realized gains, and any 2nd order effects, the wealth (stock, can be depleted once) is not even in the same ballpark esp. given the deficit (flow, keeps happening).
aglavine 1y ago
Math doesn't support your claim.

tobias3 1y ago

Yeah, but for taxation you need state capacity to enforce it which was chainsawed/DOGED away.

nostromo 1y ago
This isn't true. US tax revenue in 2025 is on track to be the highest ever.
- const_cast 1y ago
  Perfect, just in time to put a teeny tiny dent in our new 2 Trillion dollar raised deficit! Thanks "party of fiscal responsibility"!
- dcherman 1y ago
  Adjusted for inflation?

hilsdev 1y ago

Why is the default to tax more and not spend less? Is there really no limit to the amount of spending the government should do? You see no possible use of resources that would be wasteful?

dehrmann 1y ago
The default depends on your party and which party is in power.
cosmic_cheese 1y ago
Problem is, there’s a lot of needs that private industry will not fill (or cannot be trusted to fill well). We’ve seen this play out repeatedly. If you want a functioning society, a certain degree of government spending is unavoidable. Now there is something to be said for making sure that spending is effective, but this must be engaged with in good faith; that is, changes should be made with a scalpel after gathering plenty of data supporting the change in question. Proclaiming ineffectiveness without data to ground the claim and then using that as an excuse to make broad cuts is a great way to make any dysfunction even worse.
- nullc 1y ago
  FY2024 federal spend 6.75 trillion. FY2019 was 4.4 trillion. FY2009 was 3.1 trillion. Twice the growth in half the time. Was there so much more that private industry "will not fill" in 2024 vs 2009? How about vs 1999? (1.7 trillion budget). We can't attribute the difference to inflation: the US government's inflation calculator says 1.7 trillion in 1999 is 3.3 trillion today. No one is arguing that the federal government doesn't need to spend some money. But this truth has no relevance to the absurd out of control spending we're witnessing today.
  - bigbadfeline 1y ago
    > FY2024 federal spend 6.75 trillion. That's selective apples to oranges Deficit as % of GDP: 2009 - 10%, 2011 - 8.6%, 2012 - 6.7%, 2013 - 4% ... 2019 - 4.6%, 2020 - 15%, 2021 - 12%, 2022 - 5.4%, 2023 - 6%.
    - nullc 1y ago
      I don't think _deficit_ is at all a useful metric about the appropriate level of spending by the federal government-- Outside of emergencies deficit is merely a measure of gross financial incompetence in our elected officials.

nostromo 1y ago

Europe has repeatedly tried to soak the rich, and the results are always the same: the rich move their wealth somewhere else and you end up breaking even or even reducing your tax revenue. France: https://www.theguardian.com/world/2014/dec/31/france-drops-75percent-supertax https://www.theguardian.com/world/2014/dec/31/france-drops-7... UK: https://obr.uk/box/effect-of-the-additional-rate-of-income-tax-on-receipts/ https://obr.uk/box/effect-of-the-additional-rate-of-income-t... Sweden: https://eml.berkeley.edu/~saez/course/seimAEJ17wealth.pdf https://eml.berkeley.edu/~saez/course/seimAEJ17wealth.pdf It's interesting to note that even when these tax schemes were repealed, the damage had already been done and the wealth did not return. Here's a real plan for America: Step 1: have a tax rate that's a little less than our peers Step 2: return spending to pre-Covid rates circa 2019

crooked-v 1y ago
The US is a long way away from trying to "soak" anyone. We have a top rate on long-term capital gains of 20%.
- nostromo 1y ago
  That's pretty average (which is a good thing). Japan: 20% China: 20% India: 13% UK: 24% Italy: 26% Germany: 26% France: 30% Then there's Canada of course... 50% with a proposal to make it 66% in 2026. Let's see how that works out!
  - pseudo0 1y ago
    Isn't it a 50% inclusion rate for capital gains in Canada? That works out to a maximum tax rate of 27% in the top tax bracket. And they canceled the proposed increase to a 66% inclusion rate, which is probably smart considering how a ton of rich Canadians already move to Florida.
    - cperciva 1y ago
      Yes that's correct.

alphazard 1y ago

I'm not even sure if this is a serious post, but it indicates a significant misunderstanding. There is an asymmetry between a government's revenue and its expenses. Revenue can increase arbitrarily if the government is allowed to take out unlimited debt. The amount a government can tax is limited first by the size of its country's economy. There is a maximum amount of revenue you can collect via taxation, and after a certain point increasing taxation decreases revenue. Countries also exist in the context of the rest of the world and there is a market for business. If the tax rate is not competitive businesses and people will leave, although this is over a longer time horizon. In terms of the possibilities overspending is far more likely than undertaxing because you can spend an infinite amount, but you can only undershoot your optimal tax rate by a finite amount. Both are probably happening right now. The amount that the US government is undertaxing compared to its theoretical optimum might not even balance the current budget.

deleted 1y ago
[deleted]

wtcactus 1y ago

Well, I argue with your point with mine then: there’s no under taxing, only over spending. If extreme spending was cut, the debt would be zero.

AnthonyMouse 1y ago

Federal receipts as a percent of GDP: https://fred.stlouisfed.org/series/FYFRGDA188S https://fred.stlouisfed.org/series/FYFRGDA188S Basically unchanged for 70+ years, and far lower historically. Meanwhile significant growth in real GDP per capita and therefore real government receipts per capita. The change isn't that the government is collecting less money. They get more than ever. But growth in government spending has outstripped it, and it has been getting worse rather than better.

ethbr1 1y ago
> But growth in government spending has outstripped it, and it has been getting worse rather than better. cough Universal single-payer healthcare with aggressive, adversarial price negotiation.
- AnthonyMouse 1y ago
  That can't be the explanation because it wasn't present in the US before the government was running huge deficits either.
  - ethbr1 1y ago
    As in, the US still doesn’t have it. Hence the propensity to sink growing amounts of GDP into paying an ever-heightening stack of middlemen to provide medical care at market prices... instead of simplifying the stack and saving money. The US government created a mandate, then allowed it to metastasize as health care became more technical and expensive, and is now in the business of sticking its fingers in its ears and pretending there’s not a financial problem. https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data/nhe-fact-sheet https://www.cms.gov/data-research/statistics-trends-and-repo...
    - mananaysiempre 1y ago
      Everyone in that spending pipeline is doing it[1], not just the US government. [1] https://siderea.dreamwidth.org/1179450.html https://siderea.dreamwidth.org/1179450.html (very long; you’ll need to get to at least part 2 to see the relevance)

NotGMan 1y ago

You think that Bezos and Musk have billions in their own personal bank account? So what do you mean be "extreme wealth"? Companies? Dividend payouts? House? Yachts? I agree that luxury items that are out of reach of the middle class (eg sport cars etc...) should be taxed highly, but a toy that a rich person can buy vs a rich person investing money into his own or other companies is a problem if you want to tax that since no-one will then create new companies and invest in R&D.

jrs235 1y ago
Paper wealth used as collateral for loans should be taxed as income (or capital gains).
- chasing0entropy 1y ago
  Whoa - dude I hope you live in a bunker. Great ideas like this will make uncle Sam disappear you.
- Workaccount2 1y ago
  While I'm all for it, the real impact of this would likely be on the order of a few billion dollars, if that. Most regular people could sit down and cut a billion dollars of dumb shit out of the budget in a few hours (every Congress person has their little pet projects they slide in to omni bills). The fixes needed for this are massive, and the pain will be felt by everyone. Even taking the harshed path against the 1% will still leave plenty of pain for average folks.
  - Nevermark 1y ago
    > While I'm all for it, the real impact of this would likely be on the order of a few billion dollars, if that. The collateral loan -> invested -> growth, collateral loan -> invested -> growth cycle doesn't just result in tax avoidance on a one-time basis. It's a way to indefinitely grow capital at a higher rate, by pushing taxes further and further into the future. And when any wealth gains are finally accounted for as taxable income, it's a one time tax that doesn't reflect all the compounding. So a huge time-value of money break. So there is a compounding of the tax that is avoided over time, despite actual liquidity accessed and deployed all along. This is one of the primary loopholes that lets wealth gains made from capital get taxed far below wealth created by labor (which gets very reliably taxed, and at higher rates). The percentage of wealth growth that actually gets taxed as a running number keeps growing, despite the ability to make those gains liquid via loans. Imagine if you could do labor, then instead of taking your income and getting taxed, accept loan proceeds against your "delayed" salary, and invest the net gain from not being taxed. Indefinitely. (With interest on your loan, cancelled out by the "interest" on your delayed salary.) That would be like being able to choose to pay your own IRA instead of paying taxes. That's how the unrealized (but real) wealth gains -> leverage (the practical and very real realization) cycle works.

ponector 1y ago

>> If extreme wealth was taxed, the debt would be zero With current level of debt it does not matter. Taxes should be rised for everyone if huge cuts in expenses are not done.

amy_petrik 1y ago

>"Markets" should not have a veto on policy in a democracy. capitalism is meant to be organic thing like a bacteria. a self-organizing network. one cannot legislate nature, one cannot legislate human nature. Imagine making crimes illegal and then nobody committing crimes. Imagine making it illegal to change lanes without using your turn signal. a democracy can give an antibiotic by dr. democracy to clear the infection, that is the nature of control here .. but if it's a nasty bug.. the bug will veto the doctor

kelseyfrog 1y ago
Capitalism isn't meant to do anything. We have a system of laws that undergird the economic system - the legal protection of private property being the main one. Private property requires a monopoly of violence to enforce. When capitalism colonizes a legal system, it necessarily creates the incentives for the legal system to adopt laws to maintain itself. If for some reason private property was not legally enforceable, capitalism wouldn't get off the ground.
- berdario 1y ago
  > Capitalism isn't meant to do anything. It was probably meant in the manner of: "the purpose of a system, is what it does"... I.e. regardless of how it evolved (system of laws written with good intent, or system of laws organically grown out of corruption and lobbying...) what capitalism does now is its purpose, and we shouldn't expect it to be meant to do anything different. > capitalism [...] necessarily creates the incentives for the legal system to adopt laws to maintain itself Agree > If for some reason private property was not legally enforceable, capitalism wouldn't get off the ground I think this makes as much sense as saying: "if money wasn't a thing, capitalism wouldn't get off the ground". Technically true, neither capitalism nor feudalism would be able to get off the ground, but "private property not enforceable" evokes images of thugs stealing your property... The truth is that the first few people (or group thereof) who accumulate a commodity (grain, livestock, widgets, etc.) would also be the first who would be able to bribe/pay thugs with a small share of their commodities, to help protect from (deny access to) others in the community. The monopoly of violence (and legal authority) would grow out of the initial group. In the same way, even if money was going to be abolished, any other commodity would just take its place, and rebuild capitalism with it. It is tricky to wrestle democratic control back, and move on from capitalism.

deleted 1y ago

[deleted]

DrScientist 1y ago

> There is no "overspending." There is only undertaxing. The debt is literally just the accumulated difference between spending and taxation. There is obviously both - as you say it's the difference between two numbers - and sure how you portray that differences is often politicised - just as you are doing now. Also remember there is borrowing in the equation - it's not just money in the system, but the ability to spend made up money today based on future promises, the with the rich benefitting from the interest on that debt. ie those with assets benefit twice from a gap between spending and taxation - they get to not pay their way, and also get a nice return on lending the money then didn't pay in tax to pay for the necessary spending!

tnel77 1y ago

>>There is no "overspending." There is only undertaxing. This is quite the take. Do you run your household as “there is no ‘overspending.’ There is only under-earning.”

deleted 1y ago
[deleted]

sershe 1y ago

"If extreme wealth was taxed, the debt would be zero" Do you have numbers for that? Even ignoring the issues with lots of wealth being paper wealth that cannot be translated into any kind of realized gains, and any 2nd order effects, the wealth (stock, can be depleted once) is not even in the same ballpark esp. given the deficit (flow, keeps happening).

aglavine 1y ago

Math doesn't support your claim.