My taxes should go up but not because wealth is immoral and not because most wealthy people are greedy grifters. I want taxes to go up because when I take a hard look at the deficits and debt of our federal government, I see great peril.
What would you propose going forward for taxing unearned income? And more importantly: capital gains?
And what about people like Musk, who sell no assets or take salaries--and thus pay very little in taxes--instead, borrowing against their assets?
And would any such taxes be Progressive? I.e., should someone making $100,000 on an asset sale be taxed the same as someone making $10,000,000? or $10 billion?
We can’t tax our way out of it. Feds are cruising at two trillion a year in deficits. Looking only at income tax, you’d have to push rates on the top quartile into the 60s to balance the budget. Dems want to spend even more and GOP hasn’t been fiscally hawkish at all.
Either we are bailed out by growth (hopefully!) or “mandatory” spending will get cut back (raising retirement age, lifting Medicaid thresholds) or flattened in real terms by extreme inflation. My guess is the latter but I hope it’s growth!
I agree - I think productivity (which is often short-term inflationary)and shifting to a new paradigm has to be a massive part of the solution. Plus it will increase 1% wealth, so even the same tax rate will yield more absolute income. Historically, technological progress that enables more efficient resource use/extraction is what has boosted the economy. Not to mention - it’s hard to imagine a bunch of CEOs today soberly agreeing to raise taxes for the good of the nation.
At a 3% deficit, we could keep the ratio pretty steady. But that would still call for increases in revenue that are significant. One thing I didn't;t mention is the demographic headwinds given the aging population. That's one reason the projections by the CBO are so grim.
Yeah, coercive at the behest of billionaires, aka the oligarchs running our society. I would much rather "coerce" them out of existence than punish working people who prop them up. Profit is theft after all. The wealthy only got there by stealing from me and my class. So redistribution is really just reappropriating what was already ours to begin with. There isn't much daylight between an oligarch and a slaver.
No, state coercion at the behest of elected politicians.
Developing an attitude of gratitude will result in long term wealth accumulation, maintaining an attitude of resentment and envy will result in continued poverty.
Gratitude doesn’t build wealth and resenting the system that’s oppressing you doesn’t keep you poor. Your philosophy does, however, keep people silent as they’re screwed over. No thank you.
Well, an attitude of gratitude and service does actually end up building wealth, but you aren’t doing that so you are aren’t building wealth and aren’t seeing it.
But we have to make choices. You have made your choice. Good luck.
Not necessarily, but it is important to realize that every state intervention that IS coercive reduces out freedoms. We should be trying to reduce the number, not increase it.
The United States was founded as a counterpoint to the authoritarianism of the UK. So US culture is one based around liberty and minimal state intervention. There are, of course, authoritarians in the USA who want to force other to do what they want. Most Americans are inclined to reject to much of this, and only agree to the minimal amount of state intervention and coercion that is practically possible. Forcing a minimum wage on employers is one of those things that is on the line, some states accept it others reject it.
So if the coercion is not the issue that having a state requires coercion and a state even a society requires coercion even a family does what is the point of mentioning it?
Good analysis, but it misses one essential ingredient: spending. Specifically, government spending. Faced with increased income, our Congress could find programs to spend it on, likely totaling more than what is realized by the increased taxes. I'll agree to increased taxes if you'll agree to frozen government spending. Otherwise, it's like a dog chasing its tail. As for a national sales tax, it is regressive.
I am not as well versed financially speaking and it's impacts on the government. So I am asking from a less than knowledgeable position. How do the DSA people think we could implement the concepts you are speaking of here? Is there a risk that enough DSA people come into office, make policy and we have even less collections and more spending as we move forward? If so, I imagine this would take many years to achieve. But you have Sanders and Warren and others advocating for DSA-like candidates to be elected. And I believe non some level this is a call for "anybody but Trump" more than it is the policy positions of the proposed candidates.
Extremes in either end are a concern. I didn't know MAGA was proposing such extreme policies as the DSA side seems to put out? I am sure they are! I don't see that as much maybe because they don't seem to be making traction like more DSA-like/aligned candidates?
I haven't bread an official policy briefing where "MAGA" has identified their policy positions. I did recently bread the policy positions of the DSA. Maybe MAGA is well put together like the DSA party? My sense is it is not as cohesive and coherent. I am not saying they aren't extreme.
I did a quick search. Now this could be leading the argument. I asked "
the DSA party has official policy statements. Does MAGA have similar stated policies that it espouses like the DSA party does?"
The response.
"No, MAGA does not have official policy statements comparable to those of the Democratic Socialists of America (DSA) because it is not a formal organization but rather a political movement and emotional instinct within the Republican Party. While the DSA operates as a structured entity with articulated goals such as universal healthcare and labor rights, MAGA functions as a "tribal" identity focused on issues like immigration, voting security, and crime without a unified, codified platform."
So that was my comparison to David's comment. And I Guess MAGA could be an ideology and the DSA is a "party" with an ideology. The MAGA extreme end seems less formally identified. So that was why my question was about how the DSA party could change and shape the future. And due to their more formal stance, I didn't include MAGA who seem loosely on the fringes.
Seeing several comments about the need to cut spending, as if there was really much there to cut. As Paul Krugman often says, the US government is an insurance company with an army. Raising the retirement age sounds simple, unless your job requires standing all day. The people who most need social security are often approaching disability as they approach retirement. Raise rates, starting with the current 24% bracket and top out at least 50% for the highest earners. Your suggestions on SS taxes and capital gains rates are needed too. Raise sufficient income, and interest rates will drop enough to produce additional saving. The economy was pretty damn good when Clinton balanced the budget. Then W decided to go back to trickle-down and fight two wars when one would have been enough.
Raising federal income tax rates for the top bracket and you will hit the Laffer curve. If you add in FICA, Medicare tax, net investment tax, and state and local income taxes the top rate will be over 60% in some locations, so why would any work if most of the money earned goes to the Donald Trump ( without Congress in action, the money goes to whatever his latest whims are)?
In my footnote I wrote, If we want to make a dent in the outlays, we would have to reform entitlements, perhaps even more of a political “third rail” than raising taxes.
Most billionaires are such because they own shares in companies that are highly valued. They don't typically have billions of cash sitting around.
Stop giving millons of dollars to Solar Energy companies that want to cover vast acres of land and thus poison it long term and build over nature and wildlife reserves. A young lady called Alexandra Fasulo (House of Green) of Saratoga New York state has uncovered sheer unimaginable levels of corruption in this issue and is fighting it in the courts. A lot of the wildlife area protection laws were covertly changed in covid time and this isn't really business at all as it loses money so all the "profit" comes from the government payouts. Which is people's taxpayer money that should fund their healthcare and such. Our British NHS needs some restructuring but not after the USA model which THEY favour,we should be going the European way.
Another good dose of fiscal reality and I appreciate seeing your homework. I was reminded of our exchange here about taxing the wealthy the other day when reading about the latest crisis in Social Security and the dems who propose lifting the earnings cap. I care about the national debt but I also care about getting my full SS payments one day, after paying into it since 1976 (as a freelancer I don't have a pension, only savings, so it will make all the difference) and it's so frustrating to see the congressional impasse.
I’ve also been paying in since 1977, but I wasn’t fooled by them pretending it was my money in a safe government lockbox. Current FICA tax collected now pays the increasing number of retirees and it has always been that way. I don’t have any pensions either, but I saw the coming collapse and put big savings in IRAs and 401ks for the last 40 years, thus taxing myself to fund my own retirement. Don’t depend on the government, you never know who might end up running it.
Agree that taxes s/b raised, but addressing the cause of the deficit is more important. And I'm not referring to social safety nets either. Undeclared wars are expensive,wasteful and invariably unjustified- which is why they're undeclared. Mind Krugman's remark on government being an insurance company with an army and apply that to the largest sector in today's economy- health care which is the world's most expensive and produces mediocre metrics. Add the venal nature of PACs- does anyone think all that money is being spent to influence goverment spending for the greater good??!!
Defense spending (excluding Veterans' benefits) is about a trillion. I have no clue how much could be cut. The best use of defense spending is to deter war not start wars like the current one we have.
What you propose is very solid planning well worked out. The fear everyone seems to have is that the leftists will quantum increase spending so high that the American economy will crash. Some wealthy progressive younger people might think that will never happen. But progressives feel if enough money is spent, income inequality will disappear and an economic utopia will ensue. There are probably progressives in Brooklyn who believe that the American government should be dismantled because their apartment rents are too high. We live in a time where many somewhat wealthy younger people are overwhelmed with angry envy of Trump and rich people and how ordinary people keep having survival issues as the rich get richer. This is always a prelude to Socialist dictators taking over, where everyone is miserable and except for a few, almost everyone is made almost unbearably miserable.
"There are probably progressives in Brooklyn who believe that the American government should be dismantled because their apartment rents are too high."
I don't think it's so much we don't understand what progressives want. It seems like mild European Socialism. Problem is the progressives in their time in Russia, China, Venezuela and Cuba actually wanted a mild sort of Socialism but it was not to be. Many of the Chinese progressives escaped to Taiwan. I think most progressives don't realize how similar they are to their similar counterparts in China, and Russia and even pre Holocaust Germany. Today's progressives don't want to notice any of the similarities because the progressives never got what they wished for. So if progressive New Yorkers feel it will be all right and nothing really bad will happen that's a good thing. Maybe they will be lucky. But if one looks at recent history, the odds are not very good. Just saying.
I am not sure you get it. Ever spent time in Europe? Know any Europeans?
You’re focusing on authoritarian regimes. We are adopting authoritarian FASCISM here, nothing remotely like Europe. Or democratic socialism … to say nothing of Trump’s crazy-ass rankings about Communism.
It's just the usual polarization. Most people caught inside authoritarian Socialist regimes all over the world don't believe anyone who says authoritarian fascism is going on in America now. Because that is not what they experienced. And they really shouldn’t be ignored because their experience is as valid as anybody elses. Doesn't seem a very warm and fuzzy kind of collectivism being advocated. Hope you're right. Hope nothing bad happens that some people felt they had to ignore. And if all the polarization gets continued that's where we are. Everyone is stuck on what they believe and no minds will change. That's just the way it is.
I’m curious about the “prelude to Socialist dictators taking over” part. I’m not sure the connection is quite so straightforward as inequality → socialism → dictatorship.
And I think the author’s argument is considerably more pragmatic. He’s essentially saying that wealthy people should be willing to pay more because the fiscal situation is ultimately a threat to all of us. He also makes the point that you’re unlikely to persuade people to embrace change by demonizing them. Sure that applies in both directions. Maybe we’d all get a little further if we stopped assuming the worst motives of people on the other side.
The prelude to Socialist dictators is what has happened when inequality was present in Russia, China, Venezuela and Cuba. Somehow most New Yorkers believe Mandami will not bring about the same results which seems like a huge suspension of disbelief. And if Mandami is discriminating against Jewish people in his actions and making rich people want to leave New York than it's his demonization of others not their demonization of him.
Yet another centrist Davidism. Or a primer on the righteous path to victory with taxes . The upper percents are never going to bend . There must be a viable alternative. Sanders? He bellows progressive ideology whilst his wallet is plentiful. I propose Kentucky Gov Andrew Bersher.
Yes...but is anyone on either side of the aisle really listening.
Not yet.
What would you propose going forward for taxing unearned income? And more importantly: capital gains?
And what about people like Musk, who sell no assets or take salaries--and thus pay very little in taxes--instead, borrowing against their assets?
And would any such taxes be Progressive? I.e., should someone making $100,000 on an asset sale be taxed the same as someone making $10,000,000? or $10 billion?
These are the kinds of questions our reps need to be asking...thanks!
Excellent piece !!!!
We can’t tax our way out of it. Feds are cruising at two trillion a year in deficits. Looking only at income tax, you’d have to push rates on the top quartile into the 60s to balance the budget. Dems want to spend even more and GOP hasn’t been fiscally hawkish at all.
Either we are bailed out by growth (hopefully!) or “mandatory” spending will get cut back (raising retirement age, lifting Medicaid thresholds) or flattened in real terms by extreme inflation. My guess is the latter but I hope it’s growth!
I agree - I think productivity (which is often short-term inflationary)and shifting to a new paradigm has to be a massive part of the solution. Plus it will increase 1% wealth, so even the same tax rate will yield more absolute income. Historically, technological progress that enables more efficient resource use/extraction is what has boosted the economy. Not to mention - it’s hard to imagine a bunch of CEOs today soberly agreeing to raise taxes for the good of the nation.
It is hard to imagine but it was also hard to imagine some of the people going all-in for Trump.
At a 3% deficit, we could keep the ratio pretty steady. But that would still call for increases in revenue that are significant. One thing I didn't;t mention is the demographic headwinds given the aging population. That's one reason the projections by the CBO are so grim.
Yes, and immigration restrictions aren’t helping either.
We really do need an influx of workers.
I know. And I agree with you that a higher tax rate is prudent. I hope better angels can prevail.
I agree with the sentiment, but taxation is inherently coercive.
Coercion always ends up a tool of the resentful, it's just in the nature of envy.
I’m a working class woman and I completely understand that my taxes pay for society.
Sure ok. Doesn’t mean they are not coercive, because they are.
Yeah, coercive at the behest of billionaires, aka the oligarchs running our society. I would much rather "coerce" them out of existence than punish working people who prop them up. Profit is theft after all. The wealthy only got there by stealing from me and my class. So redistribution is really just reappropriating what was already ours to begin with. There isn't much daylight between an oligarch and a slaver.
No, state coercion at the behest of elected politicians.
Developing an attitude of gratitude will result in long term wealth accumulation, maintaining an attitude of resentment and envy will result in continued poverty.
Choose wisely.
Gratitude doesn’t build wealth and resenting the system that’s oppressing you doesn’t keep you poor. Your philosophy does, however, keep people silent as they’re screwed over. No thank you.
Well, an attitude of gratitude and service does actually end up building wealth, but you aren’t doing that so you are aren’t building wealth and aren’t seeing it.
But we have to make choices. You have made your choice. Good luck.
So are you saying there should be no taxes because they are coercive requiring drivers have a license is coercive too.
Not necessarily, but it is important to realize that every state intervention that IS coercive reduces out freedoms. We should be trying to reduce the number, not increase it.
That’s a narrow vision. Coercing a business owner to provide a minimum wage is good for the worker, increasing his or her freedom.
The United States was founded as a counterpoint to the authoritarianism of the UK. So US culture is one based around liberty and minimal state intervention. There are, of course, authoritarians in the USA who want to force other to do what they want. Most Americans are inclined to reject to much of this, and only agree to the minimal amount of state intervention and coercion that is practically possible. Forcing a minimum wage on employers is one of those things that is on the line, some states accept it others reject it.
So if the coercion is not the issue that having a state requires coercion and a state even a society requires coercion even a family does what is the point of mentioning it?
Good analysis, but it misses one essential ingredient: spending. Specifically, government spending. Faced with increased income, our Congress could find programs to spend it on, likely totaling more than what is realized by the increased taxes. I'll agree to increased taxes if you'll agree to frozen government spending. Otherwise, it's like a dog chasing its tail. As for a national sales tax, it is regressive.
I agree any legislation has to include spending discipline.
I am not as well versed financially speaking and it's impacts on the government. So I am asking from a less than knowledgeable position. How do the DSA people think we could implement the concepts you are speaking of here? Is there a risk that enough DSA people come into office, make policy and we have even less collections and more spending as we move forward? If so, I imagine this would take many years to achieve. But you have Sanders and Warren and others advocating for DSA-like candidates to be elected. And I believe non some level this is a call for "anybody but Trump" more than it is the policy positions of the proposed candidates.
I always worry when ideologies meet budgets. That includes MAGA and the DSA.
Extremes in either end are a concern. I didn't know MAGA was proposing such extreme policies as the DSA side seems to put out? I am sure they are! I don't see that as much maybe because they don't seem to be making traction like more DSA-like/aligned candidates?
I would love to hear what you mean about not knowing MAGA was extreme. Have I misunderstood?
I haven't bread an official policy briefing where "MAGA" has identified their policy positions. I did recently bread the policy positions of the DSA. Maybe MAGA is well put together like the DSA party? My sense is it is not as cohesive and coherent. I am not saying they aren't extreme.
I did a quick search. Now this could be leading the argument. I asked "
the DSA party has official policy statements. Does MAGA have similar stated policies that it espouses like the DSA party does?"
The response.
"No, MAGA does not have official policy statements comparable to those of the Democratic Socialists of America (DSA) because it is not a formal organization but rather a political movement and emotional instinct within the Republican Party. While the DSA operates as a structured entity with articulated goals such as universal healthcare and labor rights, MAGA functions as a "tribal" identity focused on issues like immigration, voting security, and crime without a unified, codified platform."
So that was my comparison to David's comment. And I Guess MAGA could be an ideology and the DSA is a "party" with an ideology. The MAGA extreme end seems less formally identified. So that was why my question was about how the DSA party could change and shape the future. And due to their more formal stance, I didn't include MAGA who seem loosely on the fringes.
Seeing several comments about the need to cut spending, as if there was really much there to cut. As Paul Krugman often says, the US government is an insurance company with an army. Raising the retirement age sounds simple, unless your job requires standing all day. The people who most need social security are often approaching disability as they approach retirement. Raise rates, starting with the current 24% bracket and top out at least 50% for the highest earners. Your suggestions on SS taxes and capital gains rates are needed too. Raise sufficient income, and interest rates will drop enough to produce additional saving. The economy was pretty damn good when Clinton balanced the budget. Then W decided to go back to trickle-down and fight two wars when one would have been enough.
Clinton had other tailwinds that soften the drag of the tax increases. The Laffer Curve still applies.
Otherwise, I share the concern about raising retirement age on a guy climbing telephone poles.
Raising federal income tax rates for the top bracket and you will hit the Laffer curve. If you add in FICA, Medicare tax, net investment tax, and state and local income taxes the top rate will be over 60% in some locations, so why would any work if most of the money earned goes to the Donald Trump ( without Congress in action, the money goes to whatever his latest whims are)?
Remember that marginal rates are lower than effective rates. Anyway, we are not getting a tax increase under Trump!
You’re right!
Not a word on spending and market reforms of the biggest deficit drivers - Medicare and Social Security?
Where is the chart for the growth of government tax revenues by source?
What do you think the billionaires do with their billions?
There are charts at https://www.cbo.gov/publication/62105
In my footnote I wrote, If we want to make a dent in the outlays, we would have to reform entitlements, perhaps even more of a political “third rail” than raising taxes.
Most billionaires are such because they own shares in companies that are highly valued. They don't typically have billions of cash sitting around.
Stop giving millons of dollars to Solar Energy companies that want to cover vast acres of land and thus poison it long term and build over nature and wildlife reserves. A young lady called Alexandra Fasulo (House of Green) of Saratoga New York state has uncovered sheer unimaginable levels of corruption in this issue and is fighting it in the courts. A lot of the wildlife area protection laws were covertly changed in covid time and this isn't really business at all as it loses money so all the "profit" comes from the government payouts. Which is people's taxpayer money that should fund their healthcare and such. Our British NHS needs some restructuring but not after the USA model which THEY favour,we should be going the European way.
Well said, we need a new plan for sure. So far neither party has it.
Another good dose of fiscal reality and I appreciate seeing your homework. I was reminded of our exchange here about taxing the wealthy the other day when reading about the latest crisis in Social Security and the dems who propose lifting the earnings cap. I care about the national debt but I also care about getting my full SS payments one day, after paying into it since 1976 (as a freelancer I don't have a pension, only savings, so it will make all the difference) and it's so frustrating to see the congressional impasse.
I’ve also been paying in since 1977, but I wasn’t fooled by them pretending it was my money in a safe government lockbox. Current FICA tax collected now pays the increasing number of retirees and it has always been that way. I don’t have any pensions either, but I saw the coming collapse and put big savings in IRAs and 401ks for the last 40 years, thus taxing myself to fund my own retirement. Don’t depend on the government, you never know who might end up running it.
Good point. We have to remember that SS is really a pension plan that participants pay into.
Everybody read The Mandibles! Funny, albeit scary, look at what could happen when our debt finally catches up to us.
Johanna! My favorite and most terrifying dystopian novel ever. I still remember how someone died from a scratch on a rusty piece of metal.
This will be unpopular with the author, but the fact is more tax revenue resides in a broad mass market tax. For so many reasons.
And popularity is important for bloggers so I don't expect agreement.
I think the broader the tax the better. I think it may be less hard politically, however, to raise taxes on the people at the top.
Agreed
Agree that taxes s/b raised, but addressing the cause of the deficit is more important. And I'm not referring to social safety nets either. Undeclared wars are expensive,wasteful and invariably unjustified- which is why they're undeclared. Mind Krugman's remark on government being an insurance company with an army and apply that to the largest sector in today's economy- health care which is the world's most expensive and produces mediocre metrics. Add the venal nature of PACs- does anyone think all that money is being spent to influence goverment spending for the greater good??!!
Defense spending (excluding Veterans' benefits) is about a trillion. I have no clue how much could be cut. The best use of defense spending is to deter war not start wars like the current one we have.
What you propose is very solid planning well worked out. The fear everyone seems to have is that the leftists will quantum increase spending so high that the American economy will crash. Some wealthy progressive younger people might think that will never happen. But progressives feel if enough money is spent, income inequality will disappear and an economic utopia will ensue. There are probably progressives in Brooklyn who believe that the American government should be dismantled because their apartment rents are too high. We live in a time where many somewhat wealthy younger people are overwhelmed with angry envy of Trump and rich people and how ordinary people keep having survival issues as the rich get richer. This is always a prelude to Socialist dictators taking over, where everyone is miserable and except for a few, almost everyone is made almost unbearably miserable.
Your sentence made me chuckle.
"There are probably progressives in Brooklyn who believe that the American government should be dismantled because their apartment rents are too high."
I’m pretty far left and I don’t think you understand what we want. But it’s not what you describe.
How many progressive folks do you know?
I don't think it's so much we don't understand what progressives want. It seems like mild European Socialism. Problem is the progressives in their time in Russia, China, Venezuela and Cuba actually wanted a mild sort of Socialism but it was not to be. Many of the Chinese progressives escaped to Taiwan. I think most progressives don't realize how similar they are to their similar counterparts in China, and Russia and even pre Holocaust Germany. Today's progressives don't want to notice any of the similarities because the progressives never got what they wished for. So if progressive New Yorkers feel it will be all right and nothing really bad will happen that's a good thing. Maybe they will be lucky. But if one looks at recent history, the odds are not very good. Just saying.
I am not sure you get it. Ever spent time in Europe? Know any Europeans?
You’re focusing on authoritarian regimes. We are adopting authoritarian FASCISM here, nothing remotely like Europe. Or democratic socialism … to say nothing of Trump’s crazy-ass rankings about Communism.
It's just the usual polarization. Most people caught inside authoritarian Socialist regimes all over the world don't believe anyone who says authoritarian fascism is going on in America now. Because that is not what they experienced. And they really shouldn’t be ignored because their experience is as valid as anybody elses. Doesn't seem a very warm and fuzzy kind of collectivism being advocated. Hope you're right. Hope nothing bad happens that some people felt they had to ignore. And if all the polarization gets continued that's where we are. Everyone is stuck on what they believe and no minds will change. That's just the way it is.
I’m curious about the “prelude to Socialist dictators taking over” part. I’m not sure the connection is quite so straightforward as inequality → socialism → dictatorship.
And I think the author’s argument is considerably more pragmatic. He’s essentially saying that wealthy people should be willing to pay more because the fiscal situation is ultimately a threat to all of us. He also makes the point that you’re unlikely to persuade people to embrace change by demonizing them. Sure that applies in both directions. Maybe we’d all get a little further if we stopped assuming the worst motives of people on the other side.
The prelude to Socialist dictators is what has happened when inequality was present in Russia, China, Venezuela and Cuba. Somehow most New Yorkers believe Mandami will not bring about the same results which seems like a huge suspension of disbelief. And if Mandami is discriminating against Jewish people in his actions and making rich people want to leave New York than it's his demonization of others not their demonization of him.
Yet another centrist Davidism. Or a primer on the righteous path to victory with taxes . The upper percents are never going to bend . There must be a viable alternative. Sanders? He bellows progressive ideology whilst his wallet is plentiful. I propose Kentucky Gov Andrew Bersher.
Jennifer, I admit it, I'm an extreme Centrist!
As I. Waiting for equilibrium. Progressives in my opinion are going to make waste of the Democrats ability to gain power in 2028
A nice, fair take on the matter, David. Let's see what the internet does with it, lol.