America will come to regret its war on taxes

https://economist.com/leaders/2026/04/16/america-will-come-to-regret-its-war-on-taxes

by andsoitis • 3 months ago

77 131 3 months ago

roamerz• 3 months ago

I couldn't read the article but at least agree with the title. Taxes should be 1:1 linked with spending. The xx trillion dollar deficit is IMHO unfixable without substantial, painful changes.

umvi2• 3 months ago

It's not fixable with taxes alone though; the government also has to spend less than it brings in by cutting programs and budgets

ChicagoDave5• 3 months ago

This is the lie. Our economy generates 27 trillion gdp.

We can afford everything. We choose not to.

hn_throwaway_99• 3 months ago

This isn't correct when you look at the numbers. You can try it yourself at https://us.abalancingact.com/federal-budget-simulator.

The thing is, in isolation, balancing the budget looks pretty easy. It's only because you have to deal with particular interest groups and a populace who has come to believe that any tax increase means they're getting shafted. I was able to balance that budget with the following changes:

1. Top one percent effective tax rate goes from 24 to 30 percent.

2. Higher income goes from 12.26 to 14.26.

3. Upper middle income goes from 7.7 to 8.7.

4. Middle income goes from 4.8 to 5.8.

5. Lower middle income goes from .1 to 1.1

6. Lower income goes from -4.1 to -3.1

7. Social payroll taxable maximum goes to 90% of taxable income.

Those changes alone, with absolutely no spending changes, balance the budget. Now, I'm not proposing that those changes are politically viable, and you can certainly fiddle with my distribution if you think something else would be fairer (I think it's fair because the rich have done much better than everyone else over the past 40 years so I think they can afford to pay more, but I also think that everyone should have to contribute something more or else you get the current problematic belief that the issue can be solved just by taxing somebody else), but I would strongly disagree if you wanted to argue that those changes would result in any substantial change in standard of living for anyone.

I think, numerically, the problem can pretty easily be solved just by taxation alone (though I think it would make sense to add some spending cuts), just not politically.

lokar15• 3 months ago

There are really 4 possible positions on deficit spending:

- it does not matter at all, as long as inflation is under control (MMT)

- it's fine, as long as the long run average is ~zero (a cyclic argument)

- it's fine, as long as the long run average is a small stable % of GDP

- we have to balance the budget every year, no matter what

I don't think any serious person holds the last position.

MattGaiser3• 3 months ago

A lot of US states and municipalities work that way. Can argue whether it is wise, but it is certainly common.

oa335• 3 months ago

it's fine, as long as the long run average is a small stable % of GDP

I think this is theoretically viable only if debt % is lower than growth rate. Recently US debt % of GDP has been higher than growth rate.

NoMoreNicksLeft4• 3 months ago

I don't think any serious person holds the last position.

And yet, that's the only position that (were it followed) would see us free from ruinous debt. What are we paying in interest every year again?

Aboutplants• 3 months ago

I still think the American people want the government to pay their bills. If a candidate ran on an actual “Balanced Budget” and campaigned on it, boomers would eat it up!

lokar15• 3 months ago

I don't think that would stay true as soon as voters were faced with a detailed explanation of what a balanced budget (achieved by tax cuts alone) would look like. People say they don't like government. They say most of the spending is wasted. But when you point out specific spending programs (and what they actually do), they like them.

bandofthehawk• 3 months ago

Ross Perot comes to mind, but I think he wanted to balance the budget mostly be cutting spending.

georgemcbay2• 3 months ago

I still think the American people want the government to pay their bills.

Not a comment on you, as I don't know you, but in my life experience all of the conservative-minded people I've known who bought into and parroted variations of the "welfare queen" myth were always the first in line for corporate welfare like subsidies, PPP/EIDL loans, and ZIRP benefits.

And actual American people I know who are not part of the top 10% work extremely hard and just want essential safety nets (of the type that nearly all other first-world countries manage to offer) so they don't have to worry about being homeless if they get an unexpected medical bill.

So I've always seen the idea that the non-well-off are just looking for handouts to do nothing as pure projection of the well-off as to what their mindset would be if they were less fortunate in their life circumstances.

Is there some small set of people who abuse the system (any system)? Yes, but I'm absolutely convinced a lot more people abuse the system at the high-end (for far greater overall cost) than at the low-end. And only people on one side of the scale are likely to ever face legal consequences for systemic abuse.

lokar15• 3 months ago

What is the primary role of the police? To protect life and property, right?

Who owns most of the property they are protecting? The police are a welfare program for the wealthy.

tim333• 3 months ago

https://archive.ph/j5FI7

davideg4• 3 months ago

Gift link: https://www.economist.com/leaders/2026/04/16/america-will-co...

davideg4• 3 months ago

Ah sorry looks like they limit the number of accesses per gift link

dang• 3 months ago

Thanks for trying :)

erkanerol• 3 months ago

ohh interesting. can wars be a topic on HN? wow. didn’t know.

jeffbee4• 3 months ago

With Democrats like these...

lokar15• 3 months ago

I really want to see (good, competitive) candidates making the case for government, and taxes to support it. Most of what people value in public life is supported by taxes (in the sense it would be impossible without them).

But the other side has been allowed to criticize taxes and government unfairly with little to no effective opposition. IMO, there is a strong case to be made that waste and corruption is quite low (as a %), and that almost all non-defense spending is spent well and has a positive impact on society, benefiting everyone.

I see a growing narrative that successful people "earned" everything they have on their own. People think "I paid my way through university, no one gave me anything", obviously complete nonsense. "I built my business from nothing, with no help from the government", and so on.

jeffbee4• 3 months ago

Unfortunately the slopulist wing of the Democratic party now mostly favors magical tax-cut-and-programs electoral platforms. For example, all but two of the candidates for governor of California from the Democratic party have tax platforms similar or identical to those of the two Republicans in the race.

lokar15• 3 months ago

Yeah, getting flashbacks to Clinton era Democratic politics. Adopt the core of the Republican position so you can get into power and then do some stuff around the edges.

Forgeties792• 3 months ago

“If we just do a slightly lighter version of exactly what our opponent does everyone will vote for us. Sure, it didn’t work in the past. Sure, most people don’t realize that the ACA was basically Republican policy. Sure, we will never get any credit if we are tough on the border. But this time it will definitely work.”

therealdrag0• 3 months ago

At one point there was an article or podcast (freakanomics?) that said most Americans are proud of paying taxes, and have a higher pay rate than most countries. I thought that was interesting. Curious where that’s trending.

admissionsguy• 3 months ago

Most of what people value in public life is supported by taxes

Citation needed. If you value something paid for by taxes you should pay for yourself. Feel free to pool your money with all the other people of value the same thing - should be easy if it's most people.

The tax cuts are fine, the only issue is funding them by deficit spending. The government services/entitlement should be cut instead.

lokar15• 3 months ago

Where have you seen that be effective at a large scale?

NoMoreNicksLeft4• 3 months ago

there is a strong case to be made that waste and corruption is quite low (as a %),

This is even worse, not better. If what we see around us were due to corruption and waste, then the corruption might be rooted out and the waste might be curtailed. But if instead what we see is unavoidable as some intrinsic characteristic of bureaucracy and overhead, then your opponents won't be satisfied until they burn it all down and dance naked in the ashes. And I'd be inclined to celebrate with them.

lokar15• 3 months ago

IME, what we see (when we see things we don't like), are things we don't understand. When you take the time to actually dig in and see what's going on, it makes more sense and is neither wasteful or ineffective.

The government is about as effective and efficient as the median large corporation, IMO.

nothinkjustai4• 3 months ago

The issue is that it’s actually very difficult to make that pro-taxation argument, because that position doesn’t have much merit. Pretty much everyone’s experience with things ran by the government is purely negative. They waste billions (trillions?) and then print even more money and inflate the currency. And then you end up with completely subpar services at best.

Fun fact, Americans pay more in healthcare taxes than most Canadians. Our healthcare is free. Well, kinda, about ~75% is free, for Americans it’s more like %40.

But there is absolutely no argument that can be made that if we just raise taxes a little bit we can solve all our problems. The math just doesn’t work out.

Personally I favour the thinking of Adam Smith, John Locke, Rothbard and Friedman, the classical liberal tradition, and as governments balloon across the west, more and more people are coming to that same conclusion. Give us a small efficient government, stay out of the market as much as possible with little to no interference, stop printing money and trying to control the economy it from the top down, stop being technocrats, let people live their lives the way they wish.

lokar15• 3 months ago

Can you outline how you would apply that to healthcare?

KetoManx644• 3 months ago

You naively assume that there would be nothing else to fill the gap that would be created if the federal/state government just stopped existing tomorrow.

It's same argument as "who would build the roads if the government didn't exist??". Which is also quite naive, because the government doesn't actually build the roads. It forcefully takes tax payer money and then hires a contractor like any other business would to build the roads. If the government stopped existing businesses and individuals would still need a way to transport their goods, so they would just get together and hire contractors to pave roads so they can deliver goods to customers.

Same goes for just about every government program in existence. Before government welfare people would go to their local church or their community for assistance.

Government run schools have had dropping reading scores for decades even though they have more money being shoveled into them then ever before.

College Tuition costs are through the roof because the government got involved with giving out student loans.

Etc. Etc. Etc.

sloroo• 3 months ago

Tax the rich!

ChicagoDave5• 3 months ago

The New Deal effective tax rates on individuals and corporations plus subsidies for public college created the greatest middle class in history. It also barred banks from loaning Wall Street money for speculative and risky adventures.

In 1980 Reagan began unraveling all of the pillars of that middle class success.

46 years later you can see the damage. Housing is unaffordable even for professional couples. Public colleges are gated to the upper classes.

There is no middle class anymore.

lokar15• 3 months ago

The non-college educated working class was greatly reduced (in size and wealth), but mostly by trade and automation. In its place we have a smaller white-collar (college educated) middle class.

Noaidi3• 3 months ago

There is no middle class anymore.

There is a middle class, but it is the worst place to be. The best two places to be are rich or poor. The middle class are all suckers, they are making the rich richer and are supporting the poor.

(I am poor.)

zeroonetwothree3• 3 months ago

The traditional economist/polisci view is that laws favor the middle class (the largest voting group) at the expense of the poor (who don’t benefit from most services) and rich (who pay most taxes).

See “Director’s Law”

zeroonetwothree3• 3 months ago

This is very silly. College attendance is at record highs, far above 1980.

ChicagoDave5• 3 months ago

At what expense to college loan sufferers?

fzeroracer• 3 months ago

As much as I agree with the benefits of taxes, the Trump admin is showing one of the severe flaws with the American tax system. If the president can just freely choose how and where funds are allocated, then we don't have any actual representation for our taxes. Half the country can vote for a president whose policy is to illegally deny funding to states they don't like.

I think the only solution realistically is going to be continued balkanization of the states as they take up more of the tax burden. Which is not going to lead to the outcomes said voters want. It's a shame since I think we really need a proper national healthcare program but if the president can just shut it down on a whim then there's no point.

Galanwe• 3 months ago

What the US needs is constitution amendments and safeguards, so that what is happening does not happen again.

atmavatar2• 3 months ago

A big problem is that most of the checks and balances were designed around the assumption that each branch would be independent and adversarial with one another. Unfortunately, the existence of political parties cross-cutting the branches breaks this assumption, and they were created by the very founders who designed our government in the first place.

We've been limping around entirely based on the honor system, and after significant capture of the media by a few wealthy individuals, the parties have dropped any pretense of acting for the benefit of the country.

jaybrendansmith• 3 months ago

Paying taxes this year was more painful than it's ever been, because I am certain some of my money went to the billionaire grifters. If you think paying for good government is bad, try paying for horrible, corrupt government.

jandrewrogers2• 3 months ago

There isn't much juice to squeeze when you make one of the most progressive tax systems in the world even more progressive. Normalizing the idea that the middle class should pay very little tax makes it impossible to raise the necessary revenue as a matter of math.

jeffbee4• 3 months ago

Exactly. The tax platform that we need the most is that dentists are not paying their share. Penny-ante local landlords are not paying their fair share. There is too much focus on the ultra rich, you can and should take all their stuff but it doesn't amount to a whole lot.

lokar15• 3 months ago

AIUI, most EU nations (the ones with the great social benefits the left says it wants for America), have a flatter tax burden, where the middle class pays a higher percentage of the total.

etskinner• 3 months ago

Most people suggesting taxing the rich more aren't saying that the middle class should pay very little tax

dionian• 3 months ago

how much of the revenue is necessary?

jandrewrogers2• 3 months ago

No idea, my point was more that the math doesn't math regardless of if they are spending it well or poorly.

rossjudson• 3 months ago

Everything you need to know about the US tax system in one convenient, incredibly disconcerting package:

Ezra Klein https://music.youtube.com/watch?v=mX5U5DNUfBc&si=4XEYfEl6lbW...

lokar15• 3 months ago

Check out:

https://freakonomics.com/podcast-tag/jessica-riedl/

and other work / appearances by Riedl

KetoManx644• 3 months ago

Fantastic share. I've heard this explained in pieces from people a few times now but this just finally made it click for me. Thank you!

nostrademons4• 3 months ago

I think a lot of the reason for the war on taxes is the exorbitant privilege [1] of owning the world reserve currency. It lets America print as many dollars as it wants, and borrow in a currency it controls entirely. In a normal country this would result in severe inflation, but because America borrows and prints a currency that is necessary abroad to conduct international trade, it is able to "export" a large part of its inflation.

In such a system, it is rational to cut taxes as much as possible and instead rely on borrowing and monetization of debt. It allows America to limit the load on its own citizens, who in turn enjoy "exorbitant privilege" in the colloquial rather than economic sense, and then have the costs spread amongst the billions of people who don't live here. Privatize the gains, socialize the losses.

The flip side is that if the U.S. dollar ever loses its reserve currency status, that is literally the end of the United States. It will no longer have the ability to fund the government, which is fed by debt that is largely snapped up by foreigners who need a place to park the dollars that move abroad from the persistent trade deficits needed to sustain reserve currency status. It will also no longer have a citizenry or economy capable of doing anything other than moving capital (finance) and jobs (tech) around in the global economy, since in the current reserve currency economy, those are the only sectors that are profitable to go into. If it happens, expect basically a collapse of society and multi-sided civil war.

[1] https://en.wikipedia.org/wiki/Exorbitant_privilege

davideg4• 3 months ago

Ah your comment finally makes me understand the premise of MMT[1], which seems to presuppose that the US will always have this special status. Makes the current administration's geopolitical recklessness even more terrifying.

[1]https://en.wikipedia.org/wiki/Modern_Monetary_Theory

bigbadfeline• 3 months ago

It lets America print as many dollars as it wants... its own citizens enjoy "exorbitant privilege" and have the costs spread amongst the billions of people who don't live here.

This is a popular and tearful story of privilege but it's untrue today. In order for the "privilege" to exist, the foreign holdings of US debt must increase every year by amounts equal to the yearly US shortfalls... however, since around 2015, foreign holdings of US debt have been falling to flat. Nowadays, not only there isn't any "exorbitant" privilege, there isn't any privilege at all.

The shortfalls are funded by the US population at large via internal debt and inflation.

There's a slight uptick of foreign holdings this year due to instability but any public benefit from that is dwarfed by the losses caused by inflation and tariffs.

The yearly data for foreign holdings of US debt are easily found online.

nostrademons4• 3 months ago

Foreign debt doesn't have to increase by the U.S. deficit if US currency used in foreign trade makes up the difference. The U.S. approach since 2009 has generally been to monetize the debt [1], having the Federal Reserve buy it and issue new money in its place. Normally this would result in inflation per the money equation PQ = MV; if you hold velocity V roughly constant, an increase in the money supply M either needs to be backed by an increase in real goods transacted Q, or it results in a higher price level P. Per the FRED graph, M2 money supply has been growing significantly faster than real GDP, and so we should've been seeing significant inflation over this time period.

But the dollar is used for 60-80% of international trade [2]. Many dollars don't stay in the U.S. to be transacted among the locals; they go abroad, and are held as foreign currency reserves or transacted between other nations for international trade. Under these conditions, the relevant Q in the money supply equation is the value of international trade denominated in dollars, which has been growing close to the increase in money supply. The dollars are getting soaked up for international transactions, preventing severe inflation at home.

I'm trying to model out what happens if the volume of dollar-denominated international trade declines, which seems to be the situation we're entering now and is the stated policy of the Trump administration. Certainly one consequence is that the stock market would crash by ~70-80%, which is the component of major S&P 500 companies earnings that are earned abroad. I suspect that this would trigger major chaotic effects (like WW3 or a revolution in the U.S.), that make future economic predictions irrelevant.

[1] https://fred.stlouisfed.org/graph/fredgraph.png?g=1UTPn&heig...

[2] https://www.brookings.edu/articles/the-changing-role-of-the-...

senordevnyc2• 3 months ago

What’s the basis is for claiming that only finance and tech are profitable sectors in the US economy. Energy? Healthcare? Manufacturing?

nostrademons4• 3 months ago

Here's the list of S&P 500 companies by market cap & weighting:

https://www.slickcharts.com/sp500

Going down that list, the first 9 are all tech (the "Mag 7" plus Broadcom). The first non-tech is Berkshire Hathaway at #10, but that is financial services. The top 10 together are 38.63% of the index. Then you have Walmart at #11 and 1.57% of the index, then 2 financials (JP Morgan Chase and Visa) and a pharmaceutical (Eli Lilly). The rest of the top 30 includes 6 more tech companies (Micron, Oracle, AMD, Netflix, Palantir, and Intel) and 2 more financials (Mastercard and Bank of America).

Noaidi3• 3 months ago

we need to tax (update: sorry, not wealth) income.

90% tax on all income over $100 million. That would mean anyone making $500 million would still be bringing in $40 million a year. If you need more than $40 million a year you are just greedy and want to be some kind of king.

This would also mean the power of wealth would be neutralized.

bryanlarsen5• 3 months ago

90% tax on all income over $100 million.

That's an income tax, not a wealth tax?

Noaidi3• 3 months ago

Yes, sorry.

zeroonetwothree3• 3 months ago

This would have barely any actual effect since the number of people with such high income is nearly zero.

All it means is they would spend more on tax avoidance schemes which is wasteful.

Epa095• 3 months ago

I guess you think this high marginal tax rate would hold for unrealized capital gains? Otherwise your conclusion don't really hold.

Personally I prefer a wealth tax.

sackfield• 3 months ago

Something I have noticed about tax and spend advocates is they have shifted their messaging from "these taxes will pay for great services" to "these taxes will hurt the rich". It's telling that even they have lost faith in the ability for tax increases to provide meaningfully better services as an advertisement. I suppose no one, including myself, would seriously believe it.

I am referencing only the American zeitgeist, I assume other countries might have better systems.

ryandrake2• 3 months ago

"The government shouldn't help people" is such a bizarrely popular American attitude, that so many people take as gospel. Therefore "The government can't help people" emerges as reality. It doesn't have to be this way, but we make it this way due to the majority's stubborn choices.

MattGaiser3• 3 months ago

You look at a lot of places and between unions, procurement rules, or an obsession with certain classes of contractors, government capacity is badly hobbled from the start.

davideg4• 3 months ago

Taxes, if not quite the price of civilisation, do give citizens a reason to care about efficient and effective government. Severing that connection, and leaving large chunks of the electorate as mere recipients of state largesse, risks deepening America’s political dysfunction.

We can't have nice things without paying for them. People who believe they are self-sufficient seem to ignore all the public infrastructure that keeps society and the economy moving (e.g. roads, emergency response/firefighters, schools, parks, libraries, etc).

Imagine how much more entrepreneurial people could be if taking big big financial risks didn't have dire consequences like not having access to health care.

No one loves paying taxes, especially when you don't agree with ways it's spent, but that means we need to fix politics and spend money better rather than denying that society needs financial contributions from almost everybody to function.

casey2• 3 months ago

Roads and schools have been a net negative for American society. Massive amounts of public money are spent on making problems worse for no gain while simultaneously bloating spending further. (e.g. Smokey Bear, road build-out, bailouts).

Citizens shouldn't have to care about the efficiency of the Government, it should be allowed to fail like any other company. The economy wants off Uncle Sam's lap.

bryanlarsen5• 3 months ago

(e.g. roads, emergency response/firefighters, schools, parks, libraries, etc).

The very rich don't use a lot of that.

But what they do use a lot of is a reliance on educated employees, a wealthy customer base, a peaceful business environment, courts that enforce contracts, a stable currency, regulated and policed financial system, et cetera.

All of the above is highly under-rated and acknowledged IMO.

pclowes11• 3 months ago

We developed chronic overspending habits when interest rates were historically low. This made servicing the debt cheap and deficit spending reasonable. Why wouldn’t the government borrow at 0.14% (!!!) with GDP growth at say 3-4%.

Now the math doesn’t work with a federal fund rate of 4-5%. And now as our debt rolls over it gets refinanced at the higher rates. Debt servicing is roughly 20% of the government budget and will soon be 25-35% in ~10 years assuming we don’t further accelerate deficit spending (which seems unlikely).

US govt needs to cut dramatically to avoid this and the otherwise likely “solution” otherwise is inflation to make the debt effectively less expensive which also raises interest rates.

We can’t tax our way out of this. Only 60% of US households earn enough to pay federal income tax. The top 1% of earners already pay roughly half of all tax revenue, top 10% is roughly 75%. Furthermore, there is profligate waste in government, inefficiency, no matter where the taxes came from even if we could materialize them.

The government needs to shrink dramatically. This type of change is best done gradually but immediately to avoid later shocks (eg: Medicare suddenly disappears)

cyanydeez• 3 months ago

We developed chronic overspending habits when interest rates were historically low

Weird, they were historically low because the money printers went brr. So the "We" you're talking about is both Republicans and Democrats, and not much else.

So basically, the interest rate is meaningless, so everything that follows is probably just as meanginless.

The government needs to shrink

Just because the government makes bad choices doesnt mean whatever fills the vacuum with make good choices.

pclowes11• 3 months ago

Yes, both parties have objectively failed their mandate to look after the long-term interest of the American people and instead focused on short-term wasteful policies focused on their own party goals.

Governments that consistently make bad choices eventually die one way or the other.

bryanlarsen5• 3 months ago

The government needs to shrink dramatically

Most (but not all) other developed countries have both a larger government and a smaller deficit per capita. A smaller government is not the only solution.

pclowes11• 3 months ago

They are almost all also going bankrupt. Also, those governments may be efficient but the US is not. You do not get a more efficient government by making it larger.

pclowes11• 3 months ago

Put another way if your tax rate is 33% and you had to pay the government first.

Then every dollar you earn goes to the government until May 1.

In this scenario if you have to pay govt interest expense first then almost every dollar earned in January would go to paying the debt.

We are spending almost an entire month of everyone’s salary, not on providing anything of value but merely on paying for previous overspending.

jeffbee4• 3 months ago

This is such a Boomer way of looking at this. First of all, hardly anyone pays that much. Secondly, the more correct way of viewing such a situation is that you make a shitload of money.

UncleMeat• 3 months ago

In order to pay an effective federal tax rate of 33% you'd need to be making like seven figures and do nothing to reduce your taxable income.

illiac786• 3 months ago

The top 1% of earners already pay roughly half of all tax revenue, top 10% is roughly 75%.

Do you have sources for this? I was looking for reliable sources on this.

pclowes11• 3 months ago

Yes, IRS SOI tables. https://www.irs.gov/statistics/soi-tax-stats-individual-stat...

You can find high-level summaries from various websites, but they might have a bias eg: taxfoundation

nobody9999• 3 months ago

Only 60% of US households earn enough to pay federal income tax.

That's the problem. It's not a spending problem per se, but the market's misallocation of resources. Too many resources are concentrated in too few hands.

That's not to say we should abandon capitalism, but rather we should change the incentives to support higher incomes more broadly, as we did in the 1950s and 1960s. It's not a coincidence that deficit spending/public debt skyrocketed when we cut the top tax brackets. That changed the incentives from encouraging paying good wages and investing in business growth to hoarding capital and the financialization of everything.

Feel free to disagree, but the historical numbers support that.

tl;dr: change the incentives to broaden the distribution of resources across the economy, strengthening the economy (70% of which is consumer spending) and increasing, in a broad-based way, tax revenues.

pclowes11• 3 months ago

I am doubtful here (but eager to see data that says otherwise)

- The US median per capita income is quite high (top 2 or 3 globally IIRC). In light of that and the stat that the bottom 40% don’t pay federal income tax makes me think the tax brackets are already fairly progressive vs thinking the lower 40% is especially low earning.

- Additionally income inequality has been decreasing in recent years with lower percentile income earners increases outpacing even the relatively high inflation.

- I agree we should revert back to some policies.

- I don’t think there is much hoarding of capital, most high earners invest heavily.

pclowes11• 3 months ago

Just stumbled across this: https://www.latimes.com/opinion/story/2026-04-16/debunking-a...

foltik2• 3 months ago

Myth No. 1: The rich don’t pay their fair share
The top 1% of earners take in 22% of total income and pay 40% of all federal income taxes.

How misleading. Income here means AGI, i.e. taxable income as defined by the IRS. That excludes unrealized capital gains, loans against said unrealized capital gains, etc. For example, Elon Musk’s AGI was $0 in 2018 despite a massive increase in net worth. Wouldn’t call that his fair share.

Myth No. 2: We’ll fix the budget deficit by taxing the rich
We simply cannot. The collective net worth of every American billionaire is estimated at somewhere around $8 trillion. The projected federal deficit over the next decade alone approaches $25 trillion. Even a one-time total confiscation of every billionaire’s wealth wouldn’t come close, and you only get to do it once.

Hilarious argument. Suddenly it’s billionaires instead of the previously mentioned top 1%. Their estimated net worth is more like 40 to 50 trillion. Not to mention how much that wealth is expected grow in the next 10 years.

The entire article is similarly underhanded and clearly meant to mislead. Or perhaps to reinforce the views of readers who already agreed and weren’t going to think critically anyways. Doesn’t take a genius to guess who paid for it.

haberman2• 3 months ago

I would be open to paying higher taxes if I believed it would help address the deficit and debt (instead of just enabling more spending) and if I believed that the money was being well spent.

Earlier in my adulthood, I would happily vote for almost any tax or levy, because I had faith that that money was turning directly into societal good.

I have lost that faith. In the worst case, money seems to be grossly mismanaged (here is a local example from just last month: https://www.seattletimes.com/seattle-news/politics/fallout-f...).

In other cases, it is going to real nonprofits that are tasked with solving problems that never seem to get better, no matter how much money is spent.

In yet other cases, the money goes to building transit (something else I was previously very bullish on), but that, once built, seems to be governed by principles of limitless permissiveness (an example from a few days ago: https://komonews.com/news/local/only-8-metro-fare-enforcemen...)

It's hard to feel invested in the programs that my taxes pay for when it doesn't feel like they reflect my values.

silexia2• 3 months ago

I am also from Seattle, and the fraud and waste in the Washington state government is horrifying. The Attorney General and governor are threatening independent journalists with prosecution if they investigate it.

And California, where I lived ten years, is even worse now.

xnx• 3 months ago

We might be unintentionally moving to a system where paying for government is done mostly through inflation.

KetoManx644• 3 months ago

This has already been the case since the creation of the Federal Reserve and moving away from the golf standard. The federal reserve gets to print money and the US government gets the first dibs on that, and the middle and lower class then get screwed shortly later by the inflation of the printing.

jfengel2• 3 months ago

That's not the plan, but it's actually something economists have considered. They call it Modern Monetary Theory.

https://en.wikipedia.org/wiki/Modern_Monetary_Theory

Basically, printing money is just an IOU, so you might as well not bother with a separate "borrowing" step. If the government wants something, they issue an IOU, in the form of its own currency.

On the flip side, the government still taxes, but it's just getting back its own IOUs. Instead of pretending it's depositing those IOUs back into a bank, they just tear them up and forget them.

If your taxes match your spending, there's no inflation. The money supply remains constant. If you do spend more than you take in, you get inflation -- which is OK, if managed carefully. It encourages people to go spend their money, rather than just sitting on it.

It's counterintuitive, but it's a lot more flexible than the way we handle it now. It lets the government spend its way past crises, especially during crashes when people hold on to their money.

burnt-resistor• 3 months ago

It started with Regan tax cuts and trickle down voodoo economics.

High corporate taxes incentivized business investment that built the middle class.

Another stupid move was legalizing stock buybacks that was previously considered stock manipulation.

Doesn't even touch that the tax code is purposefully complicated to have zillions of loopholes so the very rich pay little to no taxes while everyone else funds an out-of-control military-industrial complex and socialism for the rich.

xracy2• 3 months ago

The wildest thing to me about the 2010s, was that the war on taxes got framed as a "class war". And everyone didn't understand that to mean "a war on anyone who is not the top 1%" Even reading through this comment section, people mistrust that Taxes are useful to prevent undue power gathering in the hands of a small number of people. They also then help fund programs which can help the underclass.

But the fear and dislike of taxes has clearly been weaponized by the ruling class to wage war on minimum wage workers and immigrants, in order to funnel as much wealth and power to the elites as possible.

The war on taxes was never "America vs Taxes" it was "The Wealthy vs. The Poor" and the wealthy were able to leverage the media to trick the poor people into reacting in fear that "The gov't is coming for your money." By just parroting their own fears about the gov't coming for their money and saying "it could happen to you too."

TBF, the Media really let/fueled this happening, likely because they were captured by corporate interests.

silexia2• 3 months ago

America will regret social security, medicare, and welfare far more in the long run.

vaadu• 3 months ago

The income tax needs to be replaced with a consumption tax. The income tax is a terrible system for an internet based economy.

To ensure that the consumption tax doesn't hit the poor too hard the govt can determine how much someone at the poverty line would pay, on average, in monthly taxes ie$200. The govt then deposits $200 monthly in to every US citizen's USG debit card.

carefree-bob• 3 months ago

Is purchasing a house consumption?

America will come to regret its war on taxes

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