The only way to balance the budget (Congress, economy, federal government)
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Higher taxes lead to greater deficits. Yes you heard me correctly. The higher taxes are, the greater the deficit will be. All tax increases will inevitably lead to higher deficits for two reasons:
1) Tax increases always result in decreased tax revenue because people change their behavior meaning less taxable economic activity takes place.
2) When the government perceives more tax revenue, they respond by increasing spending exponentially. I.e. if the government perceives they'll take in twice as much tax revenue from tax increases (even though in reality they'll take in less revenue), they'll quadruple their spending so the result will be an increase in the deficit and the debt.
The only way to stop Congress from spending is to tie their hands behind their backs. We need to limit the amount of tax revenue the federal government takes in. Additionally we need to limit the amount they can borrow, or else we'll just be deferring payment and accruing interest for their reckless spending.
IMHO at least 50% of the revenue taken in by the government is wasted, so 50% would be a good starting point. Whatever the federal government takes in, cut it in half and make it law that they can only take in that amount, and not a penny more (e.g. any excess revenue must be refunded to taxpayers). Allow that amount, whatever it may be, to be automatically increased annually by just enough to match the CPI, but by no more except under extenuating circumstances. The only way to force Congress to balance the budget is to disallow taxing and borrowing so that they can't compensate for spending by raising taxes or borrowing more.
I think there is a line between which you have too little and too much. The trick is to find that line. At this point I think it's too much...the problem is not an income issue. You're right in that no matter how high we raise them now, it won't be enough. At some point congress needs to cut spending in a big way.
Higher taxes lead to greater deficits. Yes you heard me correctly. The higher taxes are, the greater the deficit will be. All tax increases will inevitably lead to higher deficits for two reasons:
1) Tax increases always result in decreased tax revenue because people change their behavior meaning less taxable economic activity takes place.
2) When the government perceives more tax revenue, they respond by increasing spending exponentially. I.e. if the government perceives they'll take in twice as much tax revenue from tax increases (even though in reality they'll take in less revenue), they'll quadruple their spending so the result will be an increase in the deficit and the debt.
The only way to stop Congress from spending is to tie their hands behind their backs. We need to limit the amount of tax revenue the federal government takes in. Additionally we need to limit the amount they can borrow, or else we'll just be deferring payment and accruing interest for their reckless spending.
IMHO at least 50% of the revenue taken in by the government is wasted, so 50% would be a good starting point. Whatever the federal government takes in, cut it in half and make it law that they can only take in that amount, and not a penny more (e.g. any excess revenue must be refunded to taxpayers). Allow that amount, whatever it may be, to be automatically increased annually by just enough to match the CPI, but by no more except under extenuating circumstances. The only way to force Congress to balance the budget is to disallow taxing and borrowing so that they can't compensate for spending by raising taxes or borrowing more.
I think there is a line between which you have too little and too much. The trick is to find that line. At this point I think it's too much...the problem is not an income issue. You're right in that no matter how high we raise them now, it won't be enough. At some point congress needs to cut spending in a big way.
The governmental internal reports going way back to I believe the 1970's, show the best level of governmental tax revenue is somewhere around 17.5% of GDP. Anything below this percentage, then government is giving up what they could be getting without hampering the economy. Anything above this point, and they start to reduce the growth of the economy.
When I get time I'll have to search for the report because I posted it here once before.
Last edited by pghquest; 05-12-2011 at 04:04 PM..
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