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By the way, there once was a time when there weren't any gas taxes at all. But people recognized the need to invest in roads, and so they instituted these entirely new taxes. What a strange world that must have been.
My point is that increasing tax as a percentage income has been accepted as standard practice. Government growth continues to outpace economic and population growth. There is a ceiling to this (communism).
What has been growing a bit faster than the economy are what are called "transfer" payments, which in turn is mostly Medicare and Social Security. Actual government spending on government projects (aka government consumption) has overall been trending down, not up. That's why we have overall been able to cut the total tax burden minus payroll taxes in the U.S. in recent decades (although we cut it a bit too far on the federal level). The existing payroll taxes, of course, are going to prove inadequate to pay for Medicare in the future (and to a much lesser extent Social Security), unless we do something about how much our society spends on health care in the future. But again, when it comes to actual government spending, that is in an overall pattern of decrease, not increase.
Of course this sort of general discussion is rather unhelpful. We are neglecting basic maintenance on our existing infrastructure, both in Pennsylvania and nationally, let alone actually investing in the infrastructure we will need in the future to preserve a competitive economy. Meanwhile, people can't even propose indexing the current revenue measures devoted to infrastructure spending to inflation without being accused of "communism". If that dynamic continues, our state and national economy will simply crumble around us--although of course a lot of the people driving this dynamic will be dead by then, so maybe they don't care.
But, as you said earlier, the budget is constantly get redrawn. What is passed today as a tax increase for infrastructure development is turned into throw-away cash ("social programs", paid thumb twiddlers, etc) tomorrow. After I see this happen a few times, I am going to be a little less interested in seeing it happen a few more, no?
So, I don't believe that saying people don't want to pay for infrastructure is correct. In fact, I think you'd be hard pressed to find many people who believe that infrastructure development isn't a key responsibility of the government...
I am not making some political statement about the intentions of our current administration, I am saying that there is a real ceiling to tax percentage increases.. 100%. Once this is reached, and 100% the product of labor is returned to public ownership, this is communism.. This is a real fear, for those who believe in a "free" market, and see this treadmill of percentage increases continuing.
But, as you said earlier, the budget is constantly get redrawn. What is passed today as a tax increase for infrastructure development is turned into throw-away cash ("social programs", paid thumb twiddlers, etc) tomorrow. After I see this happen a few times, I am going to be a little less interested in seeing it happen a few more, no?
Except you are seeing things that are not there. In recent decades, total government consumption has been trending down, not up. Similarly, non-payroll taxes have been trending down, not up. If you "increased" the gas tax (or just indexed it to inflation), or levied brand new dedicated infrastructure taxes, based on recent experience the most likely result is that the reduced burden on the general budget would translate mostly into a reduction in other taxes.
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So, I don't believe that saying people don't want to pay for infrastructure is correct. In fact, I think you'd be hard pressed to find many people who believe that infrastructure development isn't a key responsibility of the government...
As it turns out, in practice people actually rank infrastructure well below both education and health care as a spending priority. Combine this with an opposition to "increasing" (or just inflation-indexing) dedicated infrastructure taxes, and a general insistence on lowering taxes, and you get the current state of crisis in infrastructure spending.
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I am not making some political statement about the intentions of our current administration, I am saying that there is a real ceiling to tax percentage increases.. 100%. Once this is reached, and 100% the product of labor is returned to public ownership, this is communism.. This is a real fear, for those who believe in a "free" market, and see this treadmill of percentage increases continuing.
Again, this isn't a "real" fear, because it is based on false perceptions about the actual trend.
The total amount of taxes we pay to governments in the U.S. has remained remarkably steady over the last few decades--around 30% of total national income, give or take a small amount. In fact thanks to the tax cuts in the various stimulus measures, we are back down to under 27%, around the early-1960s level. Meanwhile, since then payroll taxes have doubled, from about 3% of GDP to over 6% of GDP, so to find a comparable non-payroll tax burden you'd have to go back even farther into the 1950s.
So that in a nutshell is the problem: holding aside Social Security and Medicare, both the relative size of government in the U.S. and the related size of the tax burden has been going down, not up. But you have all these people claiming the opposite is true, and opposing every possible revenue measure to pay for infrastructure on the grounds that communism is now just around the corner.
And I'm honestly not sure what to say to people who believe black is white, up is down, and are willing to vote on the basis of those false beliefs.
One caveat: we do have to do something about runaway health care spending in the United States. Not just government spending, but ALL health care spending--the current trend is unsustainable, unless you think an economy can be 100% health care.
Nope, not joking--I think my phrase appropriately captures the mental habits of people who insist on believing certain things despite evidence demonstrating the contrary, particularly when they take those false beliefs to extremes. So, for example, a person insisting we are on the verge of "communism" via government expansion, and then dismissing the actual facts about declining government consumption and related tax burdens as a "couple graphs" because they contradict that extreme claim, might as well be a person insisting black is white.
But to bring this back on topic: regardless of what you want to call it, when you take that kind of fact-resistant, extremist opposition to any sort of measure that would increase revenues for any purpose, and combine that with the fact that infrastructure spending actually is a relatively low public priority and has relatively few strong defenders, you end up with the current infrastructure spending crisis. And I am not sure how to solve that problem, other than hoping and waiting for saner political conditions.
the mental habits of people who insist on believing certain things despite evidence demonstrating the contrary, particularly when they take those false beliefs to extremes. So, for example, a person insisting we are on the verge of "communism" via government expansion, and then dismissing the actual facts about declining government consumption and related tax burdens as a "couple graphs" because they contradict that extreme claim, might as well be a person insisting black is white.
the sad fact is, Brian, that your own assumptions are as debatable as anyone else's...you're just a bit better at debating than most of us. most of all, you are using a false measure of wealth, leading you to false conculsions...it's maddeining that you use your own false assumptions and glibly dismiss everyone else's. oftentimes people don't believe things despite evidence to the contrary, because it goes against their personal experience...sometimes personal experience is wrong, sometimes it indicates the establishment (you, in this case) is wrong. what you paint as black and white, is anything but. If I have a map of the world where it's flat, I'm going to make plans on false premises. since you dismissed my opinion out of hand the last time, I will let someone else do the talking
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As evidence of this, government “experts” discuss statistics such as GDP growth, employment, wealth, income and wage growth, and other economic data without defining exactly what they are referring to or explaining all the assumptions used. In Part 1 of this series, we saw how hedonics can alter GDP and inflation data. Here we look at some additional problems with GDP. After you read this piece, I hope you will agree that the misuse of GDP data as an indicator of economic strength has been one of the biggest errors made in the field of U.S. economics. ..I can make a strong case that over the past three years there has been virtually no GDP growth other than maybe three quarters. After adjusting for hedonics, the use of debt and the other gimmicks, it's clear the U.S. economy has grown little since 2005...Since the stock market fallout in early 2000, Washington has been desperate to keep consumers spending at any cost. They like the fact that consumers are spending, even if it has been for imported goods and even though these purchases have been made using credit. As far as they're concerned, strong consumer activity keeps GDP numbers high, pointing to the illusion of economic growth...many of our elected officials highlight GDP as a direct measure of economic growth and thus living standards. These misguided souls believe debt (and therefore deficits) is good for the economy because it helps add to GDP growth. ..The gross domestic product is a measure of the value of all goods and services produced in the national economy available for consumption. But GDP numbers say nothing about the source of consumption, whether it's from cash on hand or mounting debt...numbers include government spending, such as that for Katrina and the wars in Iraq and Afghanistan . It doesn't take a genius to realize that these expenditures haven't led to better living standards for most..
Meanwhile, America 's own infrastructure continues to be neglected – bridges and highways have collapsed, underground water pipes have broken, drinking water is toxic and contains, among other things, numerous pharmaceutical drugs, from sex hormones to anti-depressants. Even Washington 's U.S. Army Corp of Engineers has estimated it will take at least $2 trillion to restore America 's infrastructure to “good condition.” Other groups have stated these estimates to be much higher. Of course, if America does receive these needed funds, they will count toward the GDP data, although living conditions will only be restored, not improved. ..For instance, the nominal GDP is deflated using a chain-type inflation metric which significantly understates the real inflation rate. This leads to inflated GDP data..As an example, consider that a nation which exports 100 percent of its production ( Iraq for instance, due to oil exports) might have a high GDP but not necessarily a high standard of living. As it turns out, many other factors are involved in determination of living standards, such as employment and wage data, inflation, interest rates, currency exchange rates, debt levels, fiscal and monetary policy, and government benefits. ..In the case of America , decades of declining savings and increased debt burdens are not factored into GDP data. But borrowed money falsely inflates this data. Likewise, economies experiencing asset bubbles (eg. real estate, credit, and the stock market) tend to show higher GDP figures than in reality since consumption is higher than can be maintained over an extended period. And during these asset bubbles the total credit bubble grows along with the GDP. This is the current state of America ...Growth sustainability cannot be predicted by looking at GDP.
it goes on and on and makes for an interesting read. I would encourage trancefusion to read the linked article, it may help explain some things you think that supposedly are proven incorrect by brian's graphs. I hope the moderators will allow that lengthy quote as there is much in that article.
You didn't link or cite anything as of my writing this--I just see the excerpt.
I'm also not sure what point you are trying to make. Use whatever rational measure of economic activity you want (and I'd happily agree that GDP is not an ideal measure for many purposes)--government consumption and related government taxation as a percentage of economic activity have been in an overall declining trend for the last few decades, and we certainly aren't approaching "communism" in terms of those levels. Note that to the extent you are going to declare a lot of apparent economic activity in the private sector a nullity or at least heavily discount it, you will have to do the same with any similar government activity--in other words, one way or another, you have to do an apples to apples comparison.
That whole issue is entirely distinct, of course, from one of the issues raised in that excerpt, which is what value we are getting out of various government projects. I would entirely agree, for example, that we are expending way too many resources on military adventures, and not nearly enough resources on infrastructure. THAT is the discussion we should be having.
Instead, we can't seem to get past the "If the gas tax keeps pace with inflation, we will become COMMUNISTS!" level of discourse. So nothing changes.
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