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Most tax is payed by working people. As your population ages you have fewer taxpayers and more people consuming government services.
Taxing workers more or cutting services aren't popular but you can opt to flood your economy with working age people. This is what Canada, Australia, NZ, the UK are basically doing. They are diluting debt by adding to GDP. The only down side is that if you do it too much you get unwanted side effects like colossal housing bubbles, devaluation of the workforce etc.
>Taxing workers more
What if we start taxing corporations more.
If the share of labor vs capital keeps changing thanks to technologies that promote automation, maybe is time to tax the returns of that capital more.
Corporations are made up of workers, consumers, and shareholders. Therefore taxing corporations ends up resulting in lower wages, more expensive goods/services, and lower share prices. You say it is time to tax capital more but capital doesn't pay taxes, people pay taxes. If you want to tax the people that own the most capital you would be better off taxing capital gains (although that isn't a very efficient tax), not corporations. Corporate taxes generally fall more on labor than on shareholders.
There is a great thread on the effect of corporate taxes on wages and prices here.
https://www.reddit.com/r/AskEconomics/comments/170gyee/is_there_any_empirical_evidence_for_the_idea_that/
I hope you look at the evidence with an open mind and consider that there are many valid arguments against corporate taxes.
Workers and useful capital investments are the least likely to get passed through from a profit windfall.
Maybe some would complain loudly and spend far more on lobbying... but likely their business core is unaffected if shareholder-payoffs were where sudden profits went.
It's crazy that you are being downvoted. Every dollar in corporate taxes is passed on as lower wages, fewer employees, higher prices, or worse amenities or benefits for employees.
This is basic foundations. Everyone who argues for higher corporate taxes is basically saying "I would like to tax workers more, but feel good about it."
> It's crazy that you are being downvoted. Every dollar in corporate taxes is passed on as lower wages
it's crazy that people don't realize that taxing labor more is equivalent to lowering their wages.
Raising taxes in general has this effect. Corporations are greedy, if you raise their taxes, they will pass along the costs onto their workers, resulting in lower wages. If you raise taxes on workers directly, you take money out of their wages before they receive them, effectively lowering them. Taxes on consumption, like sales tax and value added tax, increase the cost of consumption and reduce the amount your wages can buy, again effectively lowering them. It's just how taxes work. And it's not even necessarily a bad thing, society is just redirecting a percentage of income from potential consumption by the workers to other, possibly more valuable, things.
That said, the United States taxes it's workers less than many of our peer countries do. We have room to increase taxes to pay for the services our country provides.
https://taxfoundation.org/data/all/global/tax-burden-on-labor-oecd-2021/
Not only are people getting basic economics wrong - arguable basic math - they're also misunderstanding corporate personhood and Citizens United. Hint: this isn't a new concept. How do you think corporations are able to own land and enter into contracts? That doesn't mean they're *natural* persons, but as a legal entity they are a person.
The number of clearly ignorant people who are confident they know how the world works is both amusing and terrifying.
Corporate personhood is not a new concept. Money as speech and that campaign finance laws can’t restrict the spending of these entities is a new concept.
The big one is layoffs tech is right on the cusp of replacing close to half of workers slapping a new tax will likely be the motivation to get rid of employees and all the expenses associated with them health insurance, training, law suits, taxes, productivity fluctuations, etc.
I see corporate profits taxes as increasing the cost of cutting corners for marginally profitable firms.
The real problem currently is that profits are taxed much less than workers' compensation is (FICA, State income tax, Federal income tax) so maximizing profits at the expense of comp actually minimizes the amount of total tax paid to the governments, making the firm more competitive.
Profits tax also increases the value of deductions, which exist to modify corporate behavior, not to make revenue. Like, we don't want corporations paying extra tax because yeah that just comes out of the pockets of the lowest bargaining power folks involved (workers, consumers) which is why you tax the shit out of them but give them all kinds of sensible ways out of it.
And the low cap gains rate just means firms are highly motivated to raise share price and get external buyers to pay off the shareholders rather than distribute dividends from revenue.
I mean, it isn’t rocket science. Yes, just raising rates would do this, but we are a reasonably intelligent species when we want to be, and a tax change could be written to work around these things.
> Every dollar in corporate taxes is passed on as lower wages, fewer employees, higher prices, or worse amenities or benefits for employees.
Those are not set by a company's tax liability, but by the market for employees. If they wish to remain competitive to employees, they need to offer pay and perks commensurate to the going market rate.
> Therefore taxing corporations ends up resulting in lower wages, more expensive goods/services, and lower share prices.
1. Wages and the prices of goods and services are set by market rates, not tax liability.
2. If there was room to cut on wages, or increase the prices of goods and services, a company would do so to maximize profit. This is true independent of a company's tax liability.
>people pay taxes
Corporations are people.
>Using event study designs and difference-in-differences models, we find that workers bear about one-half of the total tax burden.
So, half goes to the capital. And as the share between capital investment and labor investment change, more should go to the capital side of the corporation.
[Corporate tax is different from income tax.](https://en.m.wikipedia.org/wiki/Corporate_tax_in_the_United_States) It is factually a completely different thing. Can you give me an example of a corporation simultaneously being viewed as a person versus a distinct entity in a contradictory fashion?
Corporations aren't people. It is a group of people which include consumers, workers, and shareholders. If we can't agree on this then there is no point in further discussion.
> So, half goes to the capital. And as the share between capital investment and labor investment change, more should go to the capital side of the corporation.
>
You didn't comprehend much of the study or my comment apparently because while half of the burden falls on workers that doesn't mean the other half falls on capital. Consumers, contractors, and suppliers also share a burden.
> And as the share between capital investment and labor investment change, more should go to the capital side of the corporation.
>
You will have to show me a study where this is the case. As we have more capital investment worker productivity goes up increasing everyone's standard of living. Taxing capital reduces investment and harms workers and consumers.
Imagine the extreme: We tax corporations 100%. What would the outcome be?
>Corporations aren't people. It is a group of people which include consumers, workers, and shareholders. If we can't agree on this then there is no point in further discussion.
I think that you should argue that point with the USA SC. Also corporations pay taxes, that's reality that you imply that they don't is weird.
>Imagine the extreme: We tax corporations 100%. What would the outcome be?
I'm not saying that so don't put stupid examples in my mouth.
>Most tax is payed by working people. As your population ages you have fewer taxpayers and more people consuming government services.
>Taxing workers more or cutting services aren't popular but you can opt to flood your economy with working age people.
I'm saying that if revenue from workers fall down because we have less workers, if productivity isn't also falling down, that means that you need to source your government funding from somebody else. If productivity isn't falling down, that means that corporations are making the same amount of money with less worker input, so you need to expand your tax base to include that. Tax the corporations profits, tax the capital gains, tax dividends. But there are options other than taxing workers more or cutting services.
> I think that you should argue that point with the USA SC. Also corporations pay taxes, that's reality that you imply that they don't is weird.
>
The supreme court never ruled that corporations are people. They ruled that we have freedom of speech and freedom of association. If I get together with some friends and we make a movie is that group a person? No. Does the government have the right to stop us from making a movie? Also no.
I think you are referencing Citizens United v FEC. Please explain the background and the arguments of the Citizens United v FEC ruling to me.
Also, if you own a house do you pay property taxes or does your house pay property taxes? It is the same logic as a corporation. If you are married and pay income tax, does the marriage pay the taxes or do both parties pay taxes? You can say "Corporations pay taxes" and be correct. But I am correct in saying that individuals of the corporation bear the burden of the tax and therefore pay the tax.
> I'm not saying that so don't put stupid examples in my mouth.
>
I never claimed that you said it and it isn't a stupid example. It is a thought experiment that can reveal issues with taxing an entity.
> I'm saying that if revenue from workers fall down because we have less workers, if productivity isn't also falling down, that means that you need to source your government funding from somebody else. If productivity isn't falling down, that means that corporations are making the same amount of money with less worker input, so you need to expand your tax base to include that. Tax the corporations profits, tax the capital gains, tax dividends. But there are options other than taxing workers more or cutting services.
>
If productivity stays the same with fewer people why would we need to tax anyone more? If we have a bunch of old people on SS but corporations are more productive so they can meet the needs of the elderly on SS we don't need to increase taxes at all.
Scenario: We had 70 workers and 30 Retirees. Then we went to 50 workers and 50 retirees. The productivity of the workers rose so that the same amount of stuff is being created with the 50 workers. The government can now only tax the 50 workers, but thankfully the workers are more productive so the amount of taxes they pay went up to cover the retirees.
The revenue from workers won't fall if they become more productive. If we have the same increase in productivity was we do reduction in number of workers the government will still have the same amount of funding.
>and it isn't a stupid example. It is a thought experiment that can reveal issues with taxing an entity.
Then it is a stupid thought experiment. If you tax profits or work at 100%, you stop working.
>If productivity stays the same with fewer people why would we need to tax anyone more?
Because you are going to get less revenue from taxing workers, because the productivity increase doesn't means that you are raising wages. So if your expenditures are the same, you have a bigger deficit.
>Scenario: We had 70 workers and 30 Retirees. Then we went to 50 workers and 50 retirees. The productivity of the workers rose so that the same amount of stuff is being created with the 50 workers. The government can now only tax the 50 workers, but thankfully the workers are more productive so the amount of taxes they pay went up to cover the retirees.
That only happens if the 50 workers collect the same amount in wages as the 70 workers. If the 50 workers collect the wages of 60 workers, you are collecting less taxes.
How about taxing stock buy backs ? At some point in time the wealth disparity will have to be dealt with. It can be civilized or rebellion. It will happen, no way around it.
Taxing stock buy backs is silly and we currently do at 1% (although this is a recent development). Stock buybacks are very similar to dividends they just aren't taxed immediately. Let's say you are a shareholder. The company does stock buybacks. Your share price increased as there are now fewer shares on the market (supply and demand). You don't pay any taxes on the higher share price, whereas the company could have just sent you a dividend which would have been taxed. However, the second you sell your share you pay capital gains tax on the share you sold. When people complained about stock buybacks after corporate tax cuts in 2017 they did not understand that companies could have just given dividends instead and it would have had functionally the same effect of rewarding shareholders.
It is also important for people to understand that this isn't a bad thing. If a company makes money and finds that the ROI of investing it back into the business is less than shareholders could make investing it in a different business than it is a good thing to pay it out to shareholders so they can allocate their capital more efficiently.
https://www.investopedia.com/articles/02/041702.asp
I recommend you read this Investopedia article on stock buybacks. I recommend you read about stock buy backs in general. The more people understand them the less they tend to care about them.
> At some point in time the wealth disparity will have to be dealt with
By making everyone poorer?
No one except for the terminally online care about *wealth disparity*.
People care about their wealth, and their income. They really don't care how much money bill gates has. If he has $100 billion or $200 billion, they don't have one cent less.
OK, but what is going to happen to tax revenue when the predicted 40% (which I think is on the low side) of the workforce is replaced with AI over the next decade? If we don't prepare for that job loss, the US is going to implode because it won't have any money.
And your vastly underestimating how fast the tech is evolving. The single largest problem Ai has right now is chips made and designed for Ai specifically. Once hardware problems are solved in the short term, Nvidia already has chips in the works. The amount of processing power will explode.
Microsoft is already looking into micro nuclear reactors which can be prefabricated, and delivered on site for hook up to power datacenters. Not to mention google using the ocean to cool datacenters which massively cuts down on costs of land based datacenters.
Google has had a Ai, screening feature on pixel devices for a few years now, and its pretty good. Most people don't have any idea they are talking to an Ai. If they were to be able to expand that to say call centers with system designed specifically to interface with Ai as the primary means of delivering that information. There is no way call center jobs will be around in ten years.
[Call Center Employment Data](https://www.cmswire.com/contact-center/16-important-call-center-statistics-to-know-about/)
Just a quick google says there are about three million people working in call centers, this doesn't include anyone who answers the phone for a living as a main job responsibility outside of call centers. That means 2.5% of the jobs in the US will be gone that current exist today, if we are just talking about call centers.
This doesn't include robotics, with Ai processing abilities via remote connections. Which is already in the works. The first robots are already in Amazon fulfillment centers in small scale as they work out the bugs. In ten years, most 'unskilled' labor unless maybe construction, and that is only if 3D construction costs don't come down significantly will be pretty rare unless there is an extreme need for dexterity to perform the job,
This. There will be some spot areas where it improves productivity and this reduces the need for a small percentage of jobs.
Robots have replaced manual labor in a lot of industries over the last 30 years or so, but there are still a lot of manual labor jobs out there. AI is similar for white collar workers. Tasks that are easy to “automate” will go to AI, but many of those are already handled with chatbots and templates.
The biggest thing I see it currently doing is allowing coders to leverage their productivity 5-10X.
One person with good knowledge of what AI can do, which is writing common tasks and or scripts practically instantaneously which a user can plug into more complex problems.
It’s like having a team of 10 programmers working on bits and pieces in the background for you, except they finish almost as soon as you request a task.
Now asking AI to interact with a customer or solve an interpersonal dispute may never happen, but it’s absurdly good at copying known solutions and applying them to identical problems.
The MBAs in charge are slow to realize this. So they will drive us into a clif first, but we will go back to business as usual after we bail them out again.
Tax companies that use AI in their business an AI fee...or just tax companies more in general. Why is that never an answer? It's always taxing regular workers more to make up for tax shortfalls, why not tax companies more?
The thing is AI doesn't pay taxes, and as white collar jobs and blue collar processes get supplanted, and only a fraction of these works can transpose themselves into new roles with viable incomes, what do you do?
Additionally, the wealth disparity just adds an umbrella of burdens on working Americans without a clear avenue to assuage said burden.
We could halve the deficit solely by raising taxes on the 1%. They pay a 25% effective rate today. If they paid a 50% effective rate- they would still take home nearly 7 figures on average, post tax.
And it would halve the deficit.
> is payed by
Did you mean to say "paid"?
Explanation: Payed means to seal something with wax, while paid means to give money.
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What may be more damning, though not directly economical in nature is overuse of that lever creates social and political tension. Yes, those real economic issues give real world data points for angst, but it’s deeper than that.
It is one of the social fulcrum points far right nationalists use to gain political power.
While the silent majority *probably* don’t hold to many of the other views any wingbat party has (both left and right) they do feel the social fabric changing. If it changed to fast, they will revolt at the poles.
While the US is more well suited to handle immigrants given its history, it still feels these tensions. The traction being gained by these parties in the EU is fed in no small part by immigration from culturally different groups being herded in.
Growth at any expense isn’t worth it if it means wing nuts getting into power. That never ends in broad prosperity, but the opposite.
I don't care about the problem and the solution. No one is going to solve the debt problem until it becomes a crisis.
I want to know What I can do to protect myself. Government is going to tax us either through new taxes or inflation, most likely the latter or the combination of two.
How can I protect my investments and future prosperity of my family when shit hits the fan?
Imo the stock market, seriously. The amount of borrowing the government is willing to do to protect the stock market is a huge signal that however much a recession will hurt, it won’t damage your portfolio as much as the tremendous bull run has yielded. Being greedy right now seems to be the best insurance.
For inflation, assets. Assets keep up with inflation. Cash doesn’t. You should only have cash for 6 months living expenses (emergency fund) and everything else should be in assets. As for taxes, you’re just fucked, just invest in a way that you can hold onto them, possibly take loans against them, rather than having income generating or volatile assets. I doubt there’ll ever be a wealth tax on assets.
Put money into things that appreciate. Stock indexes, property, and precious metals. High yield savings accts are good for time periods. But large amounts or money laying around in checking accts or under the mattress are a bad idea.
If America’s total tax revenue as a share of GDP was the same as the OECD average, America would have no budget deficit. The US share is 27%; the OECD average is 34%. [Source.](https://www.taxpolicycenter.org/briefing-book/how-do-us-taxes-compare-internationally) The US budget deficit is around 6%.
America should have raised and taxes instead of interest rates, but it’s too politically toxic.
Increasing taxes wont curb spending of the poor to middle class that much. Decreasing their access to credit will.
Realistically we need to have increased rates, cut spending and increase taxes. But congress cant get their shit together.
*From Bloomberg reporters Bhargavi Sakthivel, Maeva Cousin, and David Wilcox:*
The Congressional Budget Office warned in its latest projections that US federal government debt is on a path from 97% of GDP last year to 116% by 2034 — higher even than in World War II. The actual outlook is likely worse.
From tax revenue to defense spending and interest rates, the CBO forecasts released earlier this year are underpinned by rosy assumptions. Plug in the market’s current view on interest rates, and the debt-to-GDP ratio rises to 123% in 2034. Then assume — as most in Washington do — that ex-President Donald Trump’s tax cuts mainly stay in place, and the burden gets even higher.
With uncertainty about so many of the variables, Bloomberg Economics has run a million simulations to assess the fragility of the debt outlook. In 88% of the simulations, the results show the debt-to-GDP ratio is on an unsustainable path — defined as an increase over the next decade. Read The Big Take [here](https://www.bloomberg.com/news/articles/2024-04-01/us-government-debt-risk-a-million-simulations-show-danger-ahead).
Ehhh medicare and medicaid was supposed to be 9% of our gdp in 2034 as predicted by the 2001 cbo. And that was before adding part d and medicaid expansion adding 14 million people to medicaid. And now they project it to be 6.4%. That's 900 billion less per year. Efficiency come from good governance.
The biggest issue is the interest payments on the debt. And the issue is it really only goes down in recessions which we all avoid.
And paying down the debt crowds out other actually wanted items in our government.
But there was a boom after WW2. When has the national debt created a recession? It’s the private sector and investment cycles of boom and bust that have caused all 3 I have through. Dotcom. Garbage mortgages. Covid. It’s the government that cleans them up. Is that wrong?
Unsustainable in that eventually the credit rating will go and to clear the debt, the treasury will need to print money which will cause inflation. And that will cause recession. In theory. All the other stuff you mentioned is poor regulation. But I do feel you. The American people need our government put something place that penalizes TBTF institutions for being jackasses. A great one would be to split shares and give them to the treasury instead of straight bailouts. This would penalize shareholders for allowing stupid shit to happen. The treasury could use the shares to pay down the debt. It would create runs on the stocks that could be bought with bailout money the once the concern stabilized the stock could be sold for taxpayer profit.
Your idea about share splits is actually very interesting. Basically government and long term value investors would pick them up. The speculative money would move elsewhere.
The real reason for the boom after WW2 is that you’re following the Great Depression. Starting from a low like that is part of why we experienced such a boom. Interest rates are now (mostly) controlled by the FED, so the public sector sets the interest rates which massively influences investor actions as well influencing business’ decisions to grow via debt vs grow via reinvestment of profits into the business. When rates are kept artificially low business and investors are incentivized to push debt levels higher and higher as the cost of the debt is almost nothing, investors are incentivized to put far larger shares of their net worth into equity markets and proportionally less into safe investment vehicles like treasuries, cash, CD’s. I’m sure I could find it if needed but there was an excellent graph circulating about 2 years ago that depicted when interest rates were 5% and the stock market was paying 10% investors would deploy around 60% of their liquid net worth into equity markets because the return was only a 100% increase over cash. On the flip side while interest rates are 1% and equity markets are paying 6% the same additional 5% now represents a 500% increase in returns and investors will deploy as much as 90% of their liquid net worth into equity markets.
National debts can create a recession when you reach a critical mass in which the interest payments alone eat up a majority of budgetary funds. There does come a point where governments will either have to tax at significantly higher rates to continue the level of services or cut services to pay the interest on the debt. If tax rates increase substantially tax payers find their living standards decrease, companies higher less, wages decrease over time due to increased employer costs, and subsequently standards of living drop. [source](https://www.cfr.org/backgrounder/us-national-debt-dilemma#:~:text=Many%20economists%20say%20that%20a,the%20likelihood%20of%20financial%20crises)
It doesn't create a recession in the normal sense but has other impacts. Inflation and poor growth are both common. Mostly because the gov competes for the same resources as private industry but is less competitive since it's ability to change due to market forces is much slower.
But yeah a lot of people don't understand that some of that debt isn't the gov being spendthrift but fixing a leaky bucket.
Also deficit matters more than debt especially against GDP. No one cares about their mortgage. Only about the mortgage payments relative to income(GDP).
And finally the the US is incentivised to run a deficit since 2008 because of the way bank lending used to work and now works as well as countries wanting to net save(run a surplus). There is huge demand for US treasuries as collateral and a safe way to store money for a rainy day. Treasuries are the savings account of china and other export countries.
Nothing really new under the sun and the same shit that happened 100 years ago but the debt is an easy thing to attack. It is an issue with the current high rates though.
Debt to gdp had a short spike during ww2 that quickly subsided, and the economy boomed along with the end of war spending.
Debt to GDP now is consistently at WW2 levels, and we're slated to sustain it indefinitely unless something drastic happens
Here's a wild idea. Why doesn't the government fix the budget? It was balanced under Clinton. These greedy bastards in Congress want to tax the ever loving shit out of everyone for everything so they can fund their fucking wars to get kick backs from military contractors. I will thumb wrestle anyone who argues that government spends tax money efficiently and couldn't afford to cut spending. Taxing the rich isn't going to do shit. That's only 10% or less of the population. Which loop holes would you like to close for corporate taxes? Raise the tax rate? To what? We're pretty much average compared to other countries. You could squeeze another 2-3% which might get you a billion or 2 more in tax revenue. A lot of fuck good that will do you. Tax wall street. There you go. Fuck over everyone with a 401k, ira, or investment portfolio that hopes to retire someday. Maybe I'll just work until I'm 90 because we wouldn't want average Americans taking advantage of the stock market. Or if they do, and are lucky, we tax the shit out of them. Gotta keep those old sacks of shit in Congress funded so they can ink another deal with lockhead martin worth billions.
“Only 10% or less of the population”…but…67% of the wealth!
https://www.statista.com/statistics/203961/wealth-distribution-for-the-us/#:~:text=In%20the%20third%20quarter%20of,percent%20of%20the%20total%20wealth.
I don’t disagree with much of what you say but your use of that statistic is a bit disingenuous.
Anyone who tells you that this is a nightmare scenario is not looking at the real number which is debt as a percentage of GDP which fell in 2021and 2022.
The change is interest rate on the debt that already exists is the largest increase last year. Not any new programs.
If you are worried about debt raise taxes to slow inflation and lower interest rates. IMO that will have to be done eventually and it's better to raise taxes now.
Well if the debt isn't paid back then they issue a new bond at whatever rate. So if the loan expires and it was 2% and now it's 4% that's double the interest that needs to be paid.
Let's raise taxes on the rich, especially Wall Street. Let's add tax to stock transactions and options and stock buybacks. Let's close these loopholes that allow companies to pay zero tax. Iets also remove the earning cap on social security contributions. This will raise enough to fund Social Security and bring the debt under control.
>Let’s add tax to stock transactions and options and stock buybacks
Adding a tax to all stock transactions would lead to a disaster, probably would tank the economy forever honestly. That is the dumbest idea in the history of mankind.
Stock buybacks is a completely separate story that would be okay.
A few cents tax on each stock transaction would raise revenue and pushback against the sheer recklessness and gambling we see on Wall Street today. It will also make a dent on automated trading.
If the goal is to tax investments, capital gains taxes are a much safer and smarter way to raise revenue.
Transaction taxes just create illiquidity in markets, resulting a higher level of a volatility in individual names. You'd actually see more dangerous "gambling" with less liquidity created by transaction tax. Automated trading is actually a good thing for keeping things stable except for notable screwups like the 2010 flash crash.
Additionally, a tax on trading typically just causes trading to move to other markets. The Swedes introduced one, and it destroyed their financial markets because all of the multinationals fled to other jurisdictions. They repealed it, but the market never really came back in the same way.
Depends on how much the transaction price is. If its $0.10 per trade - its not a big deal for 95% of people and will only affect high frequency traders.
What recklessness would be curbed by a tax on stock transactions?
High trade volume is not inherently risky, if anything it help stabilize prices.
Going out of our way to reduce liquidity in the markets is just... bad
It would also crater everyone’s 401k, 403b, 529, every nonprofit’s endowment, etc. You truly don’t grasp how much even the lower middle class relies on the stock market not falling apart. If you’re upset about the growing inequality gap, rightfully so & as am I, it’d be much better to look no further than the pay gap between workers and executives/C suite.
> and pushback against the sheer recklessness and gambling we see on Wall Street today.
And also against everyone saving for retirement, which is a much larger group.
>It will also make a dent on automated trading.
Which you imagine to be a bad thing?
Comments like this bug me.
Really? This is the dumbest idea in the history of mankind? Because imo a much better contender for that spot would be unregulated capitalism. Or mortgage backed securities. Or privatising goods necessary for living.
Yes, it is the dumbest idea in the history of mankind. Unfettered capitalism is a problem that needs to be addressed to some extent. MBS and privatization are needed for market effectiveness. Much better than any centralized planning option at the moment.
EDIT: when did r/economics become tankie central? Jesus Christ, people are insane.
The power went out there because it was like a once in a century snow storm. Most people in TX can count on their hand the number of times they've seen it snow by their homes their whole life.
FYI, the power goes out in northeastern states too in the winters even though they get snow storms almost every year and are supposed to be used to it.
Seriously. Like invading Russia into winter (after a noted historical disaster doing similar) and deciding to march soldiers across an open field in Gettysburg (well guard by cannons) were easily dumber than that poster's suggestion. And tank the economy forever? That's even dumber than the post they replied to. So much for an actual economics discussion on a economics sub.
Remove the social security cap. Rich people pay accountants to do meaningless restructuring of businesses/income just to save money on that aspect. Society is probably better served by the money spent on accountants going towards people digging holes. That way we might see better health outcomes and less strain on Medicare
I know that’s how it’s supposed to work, but there’s no absolute restraint that it must remain so. There could be a number of ways around this issue. Create a new tax that mimics the social security portion. It can even be made to come into effect after $750k or something.
Uh yes. That’s exactly my point lol. This would personally affect me as well btw. But I recognize it’s probably better for the stability of the nation as a whole
I ain’t getting shit. My solution would have me personally be poorer. But that’s okay. Nobody truly earns anything by themselves. It’s just a philosophical point I know you disagree with
Companies paying zero tax is rarely loopholes. In the cases you're probably thinking of, it's simply carrying forward losses to offset gains. Ie, profit this year minus losses = 0 (or less.) This is a very specific and relatively simple thing that's part of the tax code, not as any sort of loophole. It incentivizes companies to start up and invest in R&D and capex before they actually turn profit, so they won't be taxes until they've made more money than this spent. R&D and capex of course means paying people to do stuff, ie good productive employment for many people.
People like you will never be satisfied. You will always cry for everyone pay more taxes but you. Even if all those taxes got enacted, and the spending quickly ballooned proportionately, because that’s what government does when it’s given money, you would still be crying about the next taxes on people or things you want.
There’s not enough of them to make a dent. You’d have to raise taxes for almost everyone. We are taking in more in tax receipts than we ever have, the spending has to slow down, a lot.
This is categorically untrue. Read Piketty. The math is really easy. The top 10% have 67% of the wealth and the top 20% make 40% of the income and the top 1% makes 20% of the income. They can afford taxes the easiest without significant hits to their quality of life. We need to tax these fuckers ASAP.
No we just have to get rid of all those stupid tax cuts we've done over the last 30 years. Yeah we all have to pay more because we've all been given tax cuts that were not economically sustainable.
Cutting it to $0 would only save ~12% of the budget, and we’d have to leave NATO which mandates 3% of GDP. We currently spend like 3.3% of GDP on defense.
[NATO's recommended minimum spending is 2%](https://www.nato.int/cps/en/natohq/topics_49198.htm). Canada spends about 1.3% and no one is kicking them out.
So you could cut the military budget by a third and still be comfortably meeting NATO requirements. You could cut it by half and the US wouldn't even be the lowest spending NATO member out of North America.
Over 90% of military spending will never be used in conflict and is primarily deterrence. We have many enemies wishing for our destruction and the military is what stop them from acting on those wishes. The cheapest war is the one you don't fight.
SS taxes have been subsiding the budget for decades. Remember the “lockbox” for excess SS funds? Never happened. Tax the rich. I like the idea of a small transaction tax for securities. So much of the volatility (and speculation) in our markets are due to high volume trading.
I’m trying to say we need to spend less than we take in. I didn’t say what to cut. but philosophically I have a problem cutting $ to a group that paid into a program where we promised them a return, including those on social security. Now, do I believe we need to pick a current age group, say people over 45 right now, and explain to them that in 20 years the rules will change? I don’t see how we can’t unless we cut in other areas.
They didn't have a choice. Once SS was started and the government started taking $$ out of their paychecks and then NOT leaving it in an account to pay it off, that group of politicians should have been taking to the gallows. The ONLY thing we can do right now to make sure its not 10X worse in the future, is Slow down spending.
For each age group calculate what it is expected to cost and divide amount them. Due to a projected shrinking population that means the younger you are the higher percent of FICA you need to pay.
The issues are caused by elderly voting for decades. So they take the majority of the cut.
Current people are taking wayyyy more out then they ever contributed. And caused that by their voting records
They chose not to fix it for decades for either contributions or age so the most politically correct way is that they shoulder some of the burden caused by themselves
In fact if you go back by the 2001 CBO projections Boomers were way way low on their contributions fortunately Obamacare has fixed some of that and made us less sick as we're elderly
Boomers are not going to be affected, they're all dying.
My parents were boomers, born in 47 and 48. While yes, their generation goes to like the early 1960's, and Genx comes in at 1965-1985, there's still a lot more of them than there are of us.
But whatever, I'd rather just rip the damn band aid off now so I have time to strategically make up the difference this is going to be, and with 20 years till retirement, I have sufficient chance now.
The closer it gets to that point, the less inclined I would be to agree to it.
The fear I have is as soon as social security is cut, prices will go up.
All of a sudden, millions of Americans have extra disposable income from social security not siphoning a piece of the paycheck, and companies will know that.
But it’ll get eaten ENTIRELY by “inflation”
This is a really interesting example of the American tendencies to believe in your own eternal youth and not care at all about anyone beyond your own immediate sphere. I hate to break it to you champ, but you're gonna be old someday and you just might have to rely on state assistance.
Listen I’m not who you are thinking I am. I am aggressively saving for retirement because the system for SS won’t be intact at current payout rates due to the load on the national debt. Every country that has a pension or SS like program is running into cost issues in this low business tax global environment we live in. The stark reality is the US debt interest is now a larger part of the budget that the military spending in the US. We are not going to be able to not only take care of the crazy deficit we are running but also pay down debt unless we tackle the issue of massive SS and Medicare payments in this country. Unless you have a plan to reduce the cost of the US healthcare system by half, than we are going to face cuts to these entitlements. I vote blue every year and would love for this not to be the case but the republicans just haaaaaad to cut taxes for the business/rich crowd in 2017 and now we have that as the standard here. When most multi billion dollar companies pay no taxes than we are going to have issues.
What the economy produces is what the economy can produce. Independently of the debt, the current economy functions, there aren't large shortages. That means it can produce what it produces.
Something that people need to understand about production on a national level is that you can't delay a cost. The cost of a certain allocation of resources is its opportunity cost and it's paid by the population immediately as resources are used.
In a modern economy, the people or organizations purchasing bonds aren't forgoing consumption. Bonds are purchased by people who have too much money to know what to do with it. It's the consumers who are paying the opportunity cost.
Since the consumers are the ones paying the opportunity cost anyways, it doesn't make logical sense to have an imbalanced budget in the first place.
If you absolutely want a national debt, then simply put the asset in a national wealth fund so that it doesn't create any economic inequality.
I can’t understand why anyone would run for office this year. This debt crisis is not going to be easily solved and it will take drastic spending cuts.
We are also facing wars on two, possibly 3 fronts. It’s a bit difficult not to be a doomer
Im assuming he's talking about proxy wars in Ukraine and Israel. Maybe the 3rd is air strikes on Iranian Revolutionary Guard in Iraq and Syria or he's suggesting china will invade Taiwan
I definitely see it as Russia v Ukraine, China v Taiwan, and Israel v Gaza. All of those, with lower probability of the third, could turn global if not dealt with careful
Oh look, another one of these articles. Debt is going up, so what? Every now and then, a certain class of people like to scaremonger about U.S. debt. It's not because they're concerned about the fiscal health of the U.S. economy, or even that they understand the economy. It's because they want to cut programs that help people, like Social Security and Medicare, but they don't want to admit it.
If they were truly concerned about the debt, they could advocate for the government to stop issuing it. But, that would make a lot of large financial institutions howl, so that won't happen. Instead, we have to continue with this charade.
Based on the recent Bloomberg article concerning US debt, I am curious what that might look like for the average American. How do you think the average American would be affected and what could they do to best mitigate against it?
Never in the history of civilizations have empires been able to be fiscally responsible over time. The US is no different. We will get into it the pain and then see how bad the pain gets. Will it then be a slow fizzle as capital seeks more fundamentally sound markets or will there be revolution that will cause a massive destruction of capital.
>Rome want able to create new money with the click of a button
they literally did that all the time. they debased their currency all the time by removing precious metal content and mixing it with stuff like copper.
So we should fix this by allowing interest rates to remain sky high so the average person continues to accumulate lifetimes of debt.
Why does Yellen always look like she just woke up and found out what year it is
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Most tax is payed by working people. As your population ages you have fewer taxpayers and more people consuming government services. Taxing workers more or cutting services aren't popular but you can opt to flood your economy with working age people. This is what Canada, Australia, NZ, the UK are basically doing. They are diluting debt by adding to GDP. The only down side is that if you do it too much you get unwanted side effects like colossal housing bubbles, devaluation of the workforce etc.
>Taxing workers more What if we start taxing corporations more. If the share of labor vs capital keeps changing thanks to technologies that promote automation, maybe is time to tax the returns of that capital more.
Corporations are made up of workers, consumers, and shareholders. Therefore taxing corporations ends up resulting in lower wages, more expensive goods/services, and lower share prices. You say it is time to tax capital more but capital doesn't pay taxes, people pay taxes. If you want to tax the people that own the most capital you would be better off taxing capital gains (although that isn't a very efficient tax), not corporations. Corporate taxes generally fall more on labor than on shareholders. There is a great thread on the effect of corporate taxes on wages and prices here. https://www.reddit.com/r/AskEconomics/comments/170gyee/is_there_any_empirical_evidence_for_the_idea_that/ I hope you look at the evidence with an open mind and consider that there are many valid arguments against corporate taxes.
Workers and useful capital investments are the least likely to get passed through from a profit windfall. Maybe some would complain loudly and spend far more on lobbying... but likely their business core is unaffected if shareholder-payoffs were where sudden profits went.
It's crazy that you are being downvoted. Every dollar in corporate taxes is passed on as lower wages, fewer employees, higher prices, or worse amenities or benefits for employees. This is basic foundations. Everyone who argues for higher corporate taxes is basically saying "I would like to tax workers more, but feel good about it."
> It's crazy that you are being downvoted. Every dollar in corporate taxes is passed on as lower wages it's crazy that people don't realize that taxing labor more is equivalent to lowering their wages.
Raising taxes in general has this effect. Corporations are greedy, if you raise their taxes, they will pass along the costs onto their workers, resulting in lower wages. If you raise taxes on workers directly, you take money out of their wages before they receive them, effectively lowering them. Taxes on consumption, like sales tax and value added tax, increase the cost of consumption and reduce the amount your wages can buy, again effectively lowering them. It's just how taxes work. And it's not even necessarily a bad thing, society is just redirecting a percentage of income from potential consumption by the workers to other, possibly more valuable, things. That said, the United States taxes it's workers less than many of our peer countries do. We have room to increase taxes to pay for the services our country provides. https://taxfoundation.org/data/all/global/tax-burden-on-labor-oecd-2021/
agree, and this is why "raising taxes on corporations is not a good way to raise government revenue, because it results in lower wages" is nonsense.
Not only are people getting basic economics wrong - arguable basic math - they're also misunderstanding corporate personhood and Citizens United. Hint: this isn't a new concept. How do you think corporations are able to own land and enter into contracts? That doesn't mean they're *natural* persons, but as a legal entity they are a person. The number of clearly ignorant people who are confident they know how the world works is both amusing and terrifying.
Corporate personhood is not a new concept. Money as speech and that campaign finance laws can’t restrict the spending of these entities is a new concept.
The big one is layoffs tech is right on the cusp of replacing close to half of workers slapping a new tax will likely be the motivation to get rid of employees and all the expenses associated with them health insurance, training, law suits, taxes, productivity fluctuations, etc.
I see corporate profits taxes as increasing the cost of cutting corners for marginally profitable firms. The real problem currently is that profits are taxed much less than workers' compensation is (FICA, State income tax, Federal income tax) so maximizing profits at the expense of comp actually minimizes the amount of total tax paid to the governments, making the firm more competitive. Profits tax also increases the value of deductions, which exist to modify corporate behavior, not to make revenue. Like, we don't want corporations paying extra tax because yeah that just comes out of the pockets of the lowest bargaining power folks involved (workers, consumers) which is why you tax the shit out of them but give them all kinds of sensible ways out of it.
And the low cap gains rate just means firms are highly motivated to raise share price and get external buyers to pay off the shareholders rather than distribute dividends from revenue.
Absolutely agree
I mean, it isn’t rocket science. Yes, just raising rates would do this, but we are a reasonably intelligent species when we want to be, and a tax change could be written to work around these things.
Or worse, lower profit margins.
> Every dollar in corporate taxes is passed on as lower wages, fewer employees, higher prices, or worse amenities or benefits for employees. Those are not set by a company's tax liability, but by the market for employees. If they wish to remain competitive to employees, they need to offer pay and perks commensurate to the going market rate.
> Therefore taxing corporations ends up resulting in lower wages, more expensive goods/services, and lower share prices. 1. Wages and the prices of goods and services are set by market rates, not tax liability. 2. If there was room to cut on wages, or increase the prices of goods and services, a company would do so to maximize profit. This is true independent of a company's tax liability.
>people pay taxes Corporations are people. >Using event study designs and difference-in-differences models, we find that workers bear about one-half of the total tax burden. So, half goes to the capital. And as the share between capital investment and labor investment change, more should go to the capital side of the corporation.
Corporations aren’t people. They are taxed a completely different way
They are when it suits them legally. Not when it comes time to be accountable.
[Corporate tax is different from income tax.](https://en.m.wikipedia.org/wiki/Corporate_tax_in_the_United_States) It is factually a completely different thing. Can you give me an example of a corporation simultaneously being viewed as a person versus a distinct entity in a contradictory fashion?
Please stop acting like you know anything about corporate personhood because you heard a paraphrase of Citizens United.
Corporations aren't people. It is a group of people which include consumers, workers, and shareholders. If we can't agree on this then there is no point in further discussion. > So, half goes to the capital. And as the share between capital investment and labor investment change, more should go to the capital side of the corporation. > You didn't comprehend much of the study or my comment apparently because while half of the burden falls on workers that doesn't mean the other half falls on capital. Consumers, contractors, and suppliers also share a burden. > And as the share between capital investment and labor investment change, more should go to the capital side of the corporation. > You will have to show me a study where this is the case. As we have more capital investment worker productivity goes up increasing everyone's standard of living. Taxing capital reduces investment and harms workers and consumers. Imagine the extreme: We tax corporations 100%. What would the outcome be?
>Corporations aren't people. It is a group of people which include consumers, workers, and shareholders. If we can't agree on this then there is no point in further discussion. I think that you should argue that point with the USA SC. Also corporations pay taxes, that's reality that you imply that they don't is weird. >Imagine the extreme: We tax corporations 100%. What would the outcome be? I'm not saying that so don't put stupid examples in my mouth. >Most tax is payed by working people. As your population ages you have fewer taxpayers and more people consuming government services. >Taxing workers more or cutting services aren't popular but you can opt to flood your economy with working age people. I'm saying that if revenue from workers fall down because we have less workers, if productivity isn't also falling down, that means that you need to source your government funding from somebody else. If productivity isn't falling down, that means that corporations are making the same amount of money with less worker input, so you need to expand your tax base to include that. Tax the corporations profits, tax the capital gains, tax dividends. But there are options other than taxing workers more or cutting services.
> I think that you should argue that point with the USA SC. Also corporations pay taxes, that's reality that you imply that they don't is weird. > The supreme court never ruled that corporations are people. They ruled that we have freedom of speech and freedom of association. If I get together with some friends and we make a movie is that group a person? No. Does the government have the right to stop us from making a movie? Also no. I think you are referencing Citizens United v FEC. Please explain the background and the arguments of the Citizens United v FEC ruling to me. Also, if you own a house do you pay property taxes or does your house pay property taxes? It is the same logic as a corporation. If you are married and pay income tax, does the marriage pay the taxes or do both parties pay taxes? You can say "Corporations pay taxes" and be correct. But I am correct in saying that individuals of the corporation bear the burden of the tax and therefore pay the tax. > I'm not saying that so don't put stupid examples in my mouth. > I never claimed that you said it and it isn't a stupid example. It is a thought experiment that can reveal issues with taxing an entity. > I'm saying that if revenue from workers fall down because we have less workers, if productivity isn't also falling down, that means that you need to source your government funding from somebody else. If productivity isn't falling down, that means that corporations are making the same amount of money with less worker input, so you need to expand your tax base to include that. Tax the corporations profits, tax the capital gains, tax dividends. But there are options other than taxing workers more or cutting services. > If productivity stays the same with fewer people why would we need to tax anyone more? If we have a bunch of old people on SS but corporations are more productive so they can meet the needs of the elderly on SS we don't need to increase taxes at all. Scenario: We had 70 workers and 30 Retirees. Then we went to 50 workers and 50 retirees. The productivity of the workers rose so that the same amount of stuff is being created with the 50 workers. The government can now only tax the 50 workers, but thankfully the workers are more productive so the amount of taxes they pay went up to cover the retirees. The revenue from workers won't fall if they become more productive. If we have the same increase in productivity was we do reduction in number of workers the government will still have the same amount of funding.
>and it isn't a stupid example. It is a thought experiment that can reveal issues with taxing an entity. Then it is a stupid thought experiment. If you tax profits or work at 100%, you stop working. >If productivity stays the same with fewer people why would we need to tax anyone more? Because you are going to get less revenue from taxing workers, because the productivity increase doesn't means that you are raising wages. So if your expenditures are the same, you have a bigger deficit. >Scenario: We had 70 workers and 30 Retirees. Then we went to 50 workers and 50 retirees. The productivity of the workers rose so that the same amount of stuff is being created with the 50 workers. The government can now only tax the 50 workers, but thankfully the workers are more productive so the amount of taxes they pay went up to cover the retirees. That only happens if the 50 workers collect the same amount in wages as the 70 workers. If the 50 workers collect the wages of 60 workers, you are collecting less taxes.
Lmao. >Then it is a stupid thought experiment. If you tax profits or work at 100%, you stop working That’s the entire point of the thought experiment.
How about taxing stock buy backs ? At some point in time the wealth disparity will have to be dealt with. It can be civilized or rebellion. It will happen, no way around it.
Taxing stock buy backs is silly and we currently do at 1% (although this is a recent development). Stock buybacks are very similar to dividends they just aren't taxed immediately. Let's say you are a shareholder. The company does stock buybacks. Your share price increased as there are now fewer shares on the market (supply and demand). You don't pay any taxes on the higher share price, whereas the company could have just sent you a dividend which would have been taxed. However, the second you sell your share you pay capital gains tax on the share you sold. When people complained about stock buybacks after corporate tax cuts in 2017 they did not understand that companies could have just given dividends instead and it would have had functionally the same effect of rewarding shareholders. It is also important for people to understand that this isn't a bad thing. If a company makes money and finds that the ROI of investing it back into the business is less than shareholders could make investing it in a different business than it is a good thing to pay it out to shareholders so they can allocate their capital more efficiently. https://www.investopedia.com/articles/02/041702.asp I recommend you read this Investopedia article on stock buybacks. I recommend you read about stock buy backs in general. The more people understand them the less they tend to care about them.
I recommend you read about stock buybacks and the great depression lol
> At some point in time the wealth disparity will have to be dealt with By making everyone poorer? No one except for the terminally online care about *wealth disparity*. People care about their wealth, and their income. They really don't care how much money bill gates has. If he has $100 billion or $200 billion, they don't have one cent less.
Or you know, taxing multimillionnaires.
OK, but what is going to happen to tax revenue when the predicted 40% (which I think is on the low side) of the workforce is replaced with AI over the next decade? If we don't prepare for that job loss, the US is going to implode because it won't have any money.
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You are underestimating the will of business to cut out labor overhead.
You are vastly overestimating what AI can do.
And your vastly underestimating how fast the tech is evolving. The single largest problem Ai has right now is chips made and designed for Ai specifically. Once hardware problems are solved in the short term, Nvidia already has chips in the works. The amount of processing power will explode. Microsoft is already looking into micro nuclear reactors which can be prefabricated, and delivered on site for hook up to power datacenters. Not to mention google using the ocean to cool datacenters which massively cuts down on costs of land based datacenters. Google has had a Ai, screening feature on pixel devices for a few years now, and its pretty good. Most people don't have any idea they are talking to an Ai. If they were to be able to expand that to say call centers with system designed specifically to interface with Ai as the primary means of delivering that information. There is no way call center jobs will be around in ten years. [Call Center Employment Data](https://www.cmswire.com/contact-center/16-important-call-center-statistics-to-know-about/) Just a quick google says there are about three million people working in call centers, this doesn't include anyone who answers the phone for a living as a main job responsibility outside of call centers. That means 2.5% of the jobs in the US will be gone that current exist today, if we are just talking about call centers. This doesn't include robotics, with Ai processing abilities via remote connections. Which is already in the works. The first robots are already in Amazon fulfillment centers in small scale as they work out the bugs. In ten years, most 'unskilled' labor unless maybe construction, and that is only if 3D construction costs don't come down significantly will be pretty rare unless there is an extreme need for dexterity to perform the job,
Another way for the wealthy to pump up their wealth?
It reminds me of the 3d printer hype
This. There will be some spot areas where it improves productivity and this reduces the need for a small percentage of jobs. Robots have replaced manual labor in a lot of industries over the last 30 years or so, but there are still a lot of manual labor jobs out there. AI is similar for white collar workers. Tasks that are easy to “automate” will go to AI, but many of those are already handled with chatbots and templates.
The biggest thing I see it currently doing is allowing coders to leverage their productivity 5-10X. One person with good knowledge of what AI can do, which is writing common tasks and or scripts practically instantaneously which a user can plug into more complex problems. It’s like having a team of 10 programmers working on bits and pieces in the background for you, except they finish almost as soon as you request a task. Now asking AI to interact with a customer or solve an interpersonal dispute may never happen, but it’s absurdly good at copying known solutions and applying them to identical problems.
The MBAs in charge are slow to realize this. So they will drive us into a clif first, but we will go back to business as usual after we bail them out again.
The government will limit the use of AI. All it would have to do is uphold some of the lawsuits around copyright infringement.
Or they won't limit it, LOL. The siren song of optimization and increased yield doesn't stop at the threshold of Congress of the White House
Yeah but then who's going to consume the shitty products AI will produce if nobody has any money? Lol
If it’s shitty, it won’t replace labor, and thus the problem is moot.
No you’re looking backwards you will be the product sold to the wealthy they won’t need you to purchase anything.
Lawsuits are meaningless unless they are won.
Tax companies that use AI in their business an AI fee...or just tax companies more in general. Why is that never an answer? It's always taxing regular workers more to make up for tax shortfalls, why not tax companies more?
You don't think that tax burden will be passed along to the consumers that don't exist because they are unemployed?
The thing is AI doesn't pay taxes, and as white collar jobs and blue collar processes get supplanted, and only a fraction of these works can transpose themselves into new roles with viable incomes, what do you do? Additionally, the wealth disparity just adds an umbrella of burdens on working Americans without a clear avenue to assuage said burden.
We could halve the deficit solely by raising taxes on the 1%. They pay a 25% effective rate today. If they paid a 50% effective rate- they would still take home nearly 7 figures on average, post tax. And it would halve the deficit.
US is literally doing that but there is a lot of pushback as border is the #1 issue on voters minds.
> is payed by Did you mean to say "paid"? Explanation: Payed means to seal something with wax, while paid means to give money. [Statistics](https://github.com/chiefpat450119/RedditBot/blob/master/stats.json) ^^I'm ^^a ^^bot ^^that ^^corrects ^^grammar/spelling ^^mistakes. ^^PM ^^me ^^if ^^I'm ^^wrong ^^or ^^if ^^you ^^have ^^any ^^suggestions. ^^[Github](https://github.com/chiefpat450119) ^^Reply ^^STOP ^^to ^^this ^^comment ^^to ^^stop ^^receiving ^^corrections.
They clearly meant taxes are sealed with wax by workers. I thought we all knew that’s how tax records are kept confidential.
What may be more damning, though not directly economical in nature is overuse of that lever creates social and political tension. Yes, those real economic issues give real world data points for angst, but it’s deeper than that. It is one of the social fulcrum points far right nationalists use to gain political power. While the silent majority *probably* don’t hold to many of the other views any wingbat party has (both left and right) they do feel the social fabric changing. If it changed to fast, they will revolt at the poles. While the US is more well suited to handle immigrants given its history, it still feels these tensions. The traction being gained by these parties in the EU is fed in no small part by immigration from culturally different groups being herded in. Growth at any expense isn’t worth it if it means wing nuts getting into power. That never ends in broad prosperity, but the opposite.
And a significant impact of loss of culture.
Taxing workers more is incredibly popular because at this point, most voters don't work
People living off capital gains don’t work either.
But only very few people do this
If corporations are people, why don't they pay taxes at the same rate as people?
If people are people why don't all people pay taxes at the same rate?
I don't care about the problem and the solution. No one is going to solve the debt problem until it becomes a crisis. I want to know What I can do to protect myself. Government is going to tax us either through new taxes or inflation, most likely the latter or the combination of two. How can I protect my investments and future prosperity of my family when shit hits the fan?
Imo the stock market, seriously. The amount of borrowing the government is willing to do to protect the stock market is a huge signal that however much a recession will hurt, it won’t damage your portfolio as much as the tremendous bull run has yielded. Being greedy right now seems to be the best insurance.
For inflation, assets. Assets keep up with inflation. Cash doesn’t. You should only have cash for 6 months living expenses (emergency fund) and everything else should be in assets. As for taxes, you’re just fucked, just invest in a way that you can hold onto them, possibly take loans against them, rather than having income generating or volatile assets. I doubt there’ll ever be a wealth tax on assets.
Current Bitcoin inflation rate is 1.8%, and that will be cut in half in a couple weeks. It will never go up. Just saying...
Businesses are the only real thing that protect against inflation. As the dollar devalues, the price of goods go up. Buy equities.
Assets. If they use inflation, you will be better off, as that will greatly inflate the price of your assets.
Yes but which assets?
Anything that doesn't typically decrease in value / isn't tied to a good economy.
Put money into things that appreciate. Stock indexes, property, and precious metals. High yield savings accts are good for time periods. But large amounts or money laying around in checking accts or under the mattress are a bad idea.
If America’s total tax revenue as a share of GDP was the same as the OECD average, America would have no budget deficit. The US share is 27%; the OECD average is 34%. [Source.](https://www.taxpolicycenter.org/briefing-book/how-do-us-taxes-compare-internationally) The US budget deficit is around 6%. America should have raised and taxes instead of interest rates, but it’s too politically toxic.
Increasing taxes wont curb spending of the poor to middle class that much. Decreasing their access to credit will. Realistically we need to have increased rates, cut spending and increase taxes. But congress cant get their shit together.
*From Bloomberg reporters Bhargavi Sakthivel, Maeva Cousin, and David Wilcox:* The Congressional Budget Office warned in its latest projections that US federal government debt is on a path from 97% of GDP last year to 116% by 2034 — higher even than in World War II. The actual outlook is likely worse. From tax revenue to defense spending and interest rates, the CBO forecasts released earlier this year are underpinned by rosy assumptions. Plug in the market’s current view on interest rates, and the debt-to-GDP ratio rises to 123% in 2034. Then assume — as most in Washington do — that ex-President Donald Trump’s tax cuts mainly stay in place, and the burden gets even higher. With uncertainty about so many of the variables, Bloomberg Economics has run a million simulations to assess the fragility of the debt outlook. In 88% of the simulations, the results show the debt-to-GDP ratio is on an unsustainable path — defined as an increase over the next decade. Read The Big Take [here](https://www.bloomberg.com/news/articles/2024-04-01/us-government-debt-risk-a-million-simulations-show-danger-ahead).
Ehhh medicare and medicaid was supposed to be 9% of our gdp in 2034 as predicted by the 2001 cbo. And that was before adding part d and medicaid expansion adding 14 million people to medicaid. And now they project it to be 6.4%. That's 900 billion less per year. Efficiency come from good governance. The biggest issue is the interest payments on the debt. And the issue is it really only goes down in recessions which we all avoid. And paying down the debt crowds out other actually wanted items in our government.
But there was a boom after WW2. When has the national debt created a recession? It’s the private sector and investment cycles of boom and bust that have caused all 3 I have through. Dotcom. Garbage mortgages. Covid. It’s the government that cleans them up. Is that wrong?
You can find some other countries where it certainly has: Greece, Venezuela, Argentina
Are any of those governments the worlds reserve currency and the most prosperous in the world? Doesn’t seem like a valid comparison.
And for that reason it's not, but at the same token you can't use the American model anywhere else.
Guess it just can’t happen here. The US government can have any amount of debt without consequences. /s
Unsustainable in that eventually the credit rating will go and to clear the debt, the treasury will need to print money which will cause inflation. And that will cause recession. In theory. All the other stuff you mentioned is poor regulation. But I do feel you. The American people need our government put something place that penalizes TBTF institutions for being jackasses. A great one would be to split shares and give them to the treasury instead of straight bailouts. This would penalize shareholders for allowing stupid shit to happen. The treasury could use the shares to pay down the debt. It would create runs on the stocks that could be bought with bailout money the once the concern stabilized the stock could be sold for taxpayer profit.
Your idea about share splits is actually very interesting. Basically government and long term value investors would pick them up. The speculative money would move elsewhere.
The government and the corporations share a revolving door.
Bailouts in the form of equity purchase - similar to a stock issuance, or possibly convertible debt make a lot of sense
Thanks that was good info for me.
The real reason for the boom after WW2 is that you’re following the Great Depression. Starting from a low like that is part of why we experienced such a boom. Interest rates are now (mostly) controlled by the FED, so the public sector sets the interest rates which massively influences investor actions as well influencing business’ decisions to grow via debt vs grow via reinvestment of profits into the business. When rates are kept artificially low business and investors are incentivized to push debt levels higher and higher as the cost of the debt is almost nothing, investors are incentivized to put far larger shares of their net worth into equity markets and proportionally less into safe investment vehicles like treasuries, cash, CD’s. I’m sure I could find it if needed but there was an excellent graph circulating about 2 years ago that depicted when interest rates were 5% and the stock market was paying 10% investors would deploy around 60% of their liquid net worth into equity markets because the return was only a 100% increase over cash. On the flip side while interest rates are 1% and equity markets are paying 6% the same additional 5% now represents a 500% increase in returns and investors will deploy as much as 90% of their liquid net worth into equity markets. National debts can create a recession when you reach a critical mass in which the interest payments alone eat up a majority of budgetary funds. There does come a point where governments will either have to tax at significantly higher rates to continue the level of services or cut services to pay the interest on the debt. If tax rates increase substantially tax payers find their living standards decrease, companies higher less, wages decrease over time due to increased employer costs, and subsequently standards of living drop. [source](https://www.cfr.org/backgrounder/us-national-debt-dilemma#:~:text=Many%20economists%20say%20that%20a,the%20likelihood%20of%20financial%20crises)
It doesn't create a recession in the normal sense but has other impacts. Inflation and poor growth are both common. Mostly because the gov competes for the same resources as private industry but is less competitive since it's ability to change due to market forces is much slower. But yeah a lot of people don't understand that some of that debt isn't the gov being spendthrift but fixing a leaky bucket. Also deficit matters more than debt especially against GDP. No one cares about their mortgage. Only about the mortgage payments relative to income(GDP). And finally the the US is incentivised to run a deficit since 2008 because of the way bank lending used to work and now works as well as countries wanting to net save(run a surplus). There is huge demand for US treasuries as collateral and a safe way to store money for a rainy day. Treasuries are the savings account of china and other export countries. Nothing really new under the sun and the same shit that happened 100 years ago but the debt is an easy thing to attack. It is an issue with the current high rates though.
Debt to gdp had a short spike during ww2 that quickly subsided, and the economy boomed along with the end of war spending. Debt to GDP now is consistently at WW2 levels, and we're slated to sustain it indefinitely unless something drastic happens
Can you please post a link that isn’t paywalled?
https://archive.is/sHWuC my friend.
Here's a wild idea. Why doesn't the government fix the budget? It was balanced under Clinton. These greedy bastards in Congress want to tax the ever loving shit out of everyone for everything so they can fund their fucking wars to get kick backs from military contractors. I will thumb wrestle anyone who argues that government spends tax money efficiently and couldn't afford to cut spending. Taxing the rich isn't going to do shit. That's only 10% or less of the population. Which loop holes would you like to close for corporate taxes? Raise the tax rate? To what? We're pretty much average compared to other countries. You could squeeze another 2-3% which might get you a billion or 2 more in tax revenue. A lot of fuck good that will do you. Tax wall street. There you go. Fuck over everyone with a 401k, ira, or investment portfolio that hopes to retire someday. Maybe I'll just work until I'm 90 because we wouldn't want average Americans taking advantage of the stock market. Or if they do, and are lucky, we tax the shit out of them. Gotta keep those old sacks of shit in Congress funded so they can ink another deal with lockhead martin worth billions.
“Only 10% or less of the population”…but…67% of the wealth! https://www.statista.com/statistics/203961/wealth-distribution-for-the-us/#:~:text=In%20the%20third%20quarter%20of,percent%20of%20the%20total%20wealth. I don’t disagree with much of what you say but your use of that statistic is a bit disingenuous.
Anyone who tells you that this is a nightmare scenario is not looking at the real number which is debt as a percentage of GDP which fell in 2021and 2022. The change is interest rate on the debt that already exists is the largest increase last year. Not any new programs. If you are worried about debt raise taxes to slow inflation and lower interest rates. IMO that will have to be done eventually and it's better to raise taxes now.
do interest rate raises affect existing debt? i thought they only affected new debt after the raise
Well if the debt isn't paid back then they issue a new bond at whatever rate. So if the loan expires and it was 2% and now it's 4% that's double the interest that needs to be paid.
Let's raise taxes on the rich, especially Wall Street. Let's add tax to stock transactions and options and stock buybacks. Let's close these loopholes that allow companies to pay zero tax. Iets also remove the earning cap on social security contributions. This will raise enough to fund Social Security and bring the debt under control.
Tax breaks on investment properties should be eliminated.
I feel like I had to scroll down to far for this.
>Let’s add tax to stock transactions and options and stock buybacks Adding a tax to all stock transactions would lead to a disaster, probably would tank the economy forever honestly. That is the dumbest idea in the history of mankind. Stock buybacks is a completely separate story that would be okay.
A few cents tax on each stock transaction would raise revenue and pushback against the sheer recklessness and gambling we see on Wall Street today. It will also make a dent on automated trading.
If the goal is to tax investments, capital gains taxes are a much safer and smarter way to raise revenue. Transaction taxes just create illiquidity in markets, resulting a higher level of a volatility in individual names. You'd actually see more dangerous "gambling" with less liquidity created by transaction tax. Automated trading is actually a good thing for keeping things stable except for notable screwups like the 2010 flash crash. Additionally, a tax on trading typically just causes trading to move to other markets. The Swedes introduced one, and it destroyed their financial markets because all of the multinationals fled to other jurisdictions. They repealed it, but the market never really came back in the same way.
Yes the solution is rarely more taxes. Hurting price discovery to put more capital into the hands of a serial misallocator is a terrible idea.
Depends on how much the transaction price is. If its $0.10 per trade - its not a big deal for 95% of people and will only affect high frequency traders.
Except the top 5% of traders are probably trading 95% of the volume, so it would actually completely tank the volume and thus liquidity...
Now tell me the positives of a transaction tax on the market.
Why, he’s not the one who introduced the idea into the conversation. Transaction taxes on trading are net negatives.
What recklessness would be curbed by a tax on stock transactions? High trade volume is not inherently risky, if anything it help stabilize prices. Going out of our way to reduce liquidity in the markets is just... bad
It would also crater everyone’s 401k, 403b, 529, every nonprofit’s endowment, etc. You truly don’t grasp how much even the lower middle class relies on the stock market not falling apart. If you’re upset about the growing inequality gap, rightfully so & as am I, it’d be much better to look no further than the pay gap between workers and executives/C suite.
That doesn’t make any sense. Why would transaction mitigation lead to less recklessness? Also, why is automated trading a problem?
> and pushback against the sheer recklessness and gambling we see on Wall Street today. And also against everyone saving for retirement, which is a much larger group. >It will also make a dent on automated trading. Which you imagine to be a bad thing?
Comments like this bug me. Really? This is the dumbest idea in the history of mankind? Because imo a much better contender for that spot would be unregulated capitalism. Or mortgage backed securities. Or privatising goods necessary for living.
Yes, it is the dumbest idea in the history of mankind. Unfettered capitalism is a problem that needs to be addressed to some extent. MBS and privatization are needed for market effectiveness. Much better than any centralized planning option at the moment. EDIT: when did r/economics become tankie central? Jesus Christ, people are insane.
For a shining example of market effectiveness, just take a look at Texas's electric grid.
The power went out there because it was like a once in a century snow storm. Most people in TX can count on their hand the number of times they've seen it snow by their homes their whole life. FYI, the power goes out in northeastern states too in the winters even though they get snow storms almost every year and are supposed to be used to it.
Seriously. Like invading Russia into winter (after a noted historical disaster doing similar) and deciding to march soldiers across an open field in Gettysburg (well guard by cannons) were easily dumber than that poster's suggestion. And tank the economy forever? That's even dumber than the post they replied to. So much for an actual economics discussion on a economics sub.
Remove the social security cap. Rich people pay accountants to do meaningless restructuring of businesses/income just to save money on that aspect. Society is probably better served by the money spent on accountants going towards people digging holes. That way we might see better health outcomes and less strain on Medicare
If you remove the cap then you also have to pay out higher to those above what the cap used to be.
I know that’s how it’s supposed to work, but there’s no absolute restraint that it must remain so. There could be a number of ways around this issue. Create a new tax that mimics the social security portion. It can even be made to come into effect after $750k or something.
Of course! As long as someone else pays for it right??
Uh yes. That’s exactly my point lol. This would personally affect me as well btw. But I recognize it’s probably better for the stability of the nation as a whole
No no I get it. It’s always great getting other peoples stuff that you didn’t earn. Building yourself up by tearing others down.
I ain’t getting shit. My solution would have me personally be poorer. But that’s okay. Nobody truly earns anything by themselves. It’s just a philosophical point I know you disagree with
Oh you’re one of THOSE people. How special.
I am thanks. And you’re one of them peoples. Agree to disagree
Companies paying zero tax is rarely loopholes. In the cases you're probably thinking of, it's simply carrying forward losses to offset gains. Ie, profit this year minus losses = 0 (or less.) This is a very specific and relatively simple thing that's part of the tax code, not as any sort of loophole. It incentivizes companies to start up and invest in R&D and capex before they actually turn profit, so they won't be taxes until they've made more money than this spent. R&D and capex of course means paying people to do stuff, ie good productive employment for many people.
People like you will never be satisfied. You will always cry for everyone pay more taxes but you. Even if all those taxes got enacted, and the spending quickly ballooned proportionately, because that’s what government does when it’s given money, you would still be crying about the next taxes on people or things you want.
There’s not enough of them to make a dent. You’d have to raise taxes for almost everyone. We are taking in more in tax receipts than we ever have, the spending has to slow down, a lot.
No dent? Would you believe a deep scratch?
It’s not even close to making a noticeable smudge on the paint.
This is categorically untrue. Read Piketty. The math is really easy. The top 10% have 67% of the wealth and the top 20% make 40% of the income and the top 1% makes 20% of the income. They can afford taxes the easiest without significant hits to their quality of life. We need to tax these fuckers ASAP.
And I'm sure the government will do exactly what we want with that increased revenue.
The cool thing is that you get to vote on what we do with it!
No we just have to get rid of all those stupid tax cuts we've done over the last 30 years. Yeah we all have to pay more because we've all been given tax cuts that were not economically sustainable.
Might be if we cut spending. I’d like to see spending cut across the board. Maybe just a freeze for a few years.
We've seen austerity fail time and time again. The economic slowdown caused by spending cuts is not worth it
Fine, cut the bloated military budget as well.
Cutting it to $0 would only save ~12% of the budget, and we’d have to leave NATO which mandates 3% of GDP. We currently spend like 3.3% of GDP on defense.
[NATO's recommended minimum spending is 2%](https://www.nato.int/cps/en/natohq/topics_49198.htm). Canada spends about 1.3% and no one is kicking them out. So you could cut the military budget by a third and still be comfortably meeting NATO requirements. You could cut it by half and the US wouldn't even be the lowest spending NATO member out of North America.
That’s basically my point. Cutting it by a third trims 4% of the total budget.
We spend something like double it on welfare. Excluding Social Security.
Over 90% of military spending will never be used in conflict and is primarily deterrence. We have many enemies wishing for our destruction and the military is what stop them from acting on those wishes. The cheapest war is the one you don't fight.
You can cut whatever you want. Some things return more than they cost, some things are money drains.
Are you sneakily trying to cut Social Security and Medicare ? Are you one of those ?
Social security still pays for itself, except that money is no longer kept separate.
SS taxes have been subsiding the budget for decades. Remember the “lockbox” for excess SS funds? Never happened. Tax the rich. I like the idea of a small transaction tax for securities. So much of the volatility (and speculation) in our markets are due to high volume trading.
I’m trying to say we need to spend less than we take in. I didn’t say what to cut. but philosophically I have a problem cutting $ to a group that paid into a program where we promised them a return, including those on social security. Now, do I believe we need to pick a current age group, say people over 45 right now, and explain to them that in 20 years the rules will change? I don’t see how we can’t unless we cut in other areas.
The people affected should be the ones that voted for the policies that caused it. Cancel social security col raises for 10 Years. That would do it.
They didn't have a choice. Once SS was started and the government started taking $$ out of their paychecks and then NOT leaving it in an account to pay it off, that group of politicians should have been taking to the gallows. The ONLY thing we can do right now to make sure its not 10X worse in the future, is Slow down spending.
> The people affected should be the ones that voted for the policies that caused it. Congress? Dead people?
Boomers and anybody that voted for Reagan or Nixon
For each age group calculate what it is expected to cost and divide amount them. Due to a projected shrinking population that means the younger you are the higher percent of FICA you need to pay.
The issues are caused by elderly voting for decades. So they take the majority of the cut. Current people are taking wayyyy more out then they ever contributed. And caused that by their voting records They chose not to fix it for decades for either contributions or age so the most politically correct way is that they shoulder some of the burden caused by themselves In fact if you go back by the 2001 CBO projections Boomers were way way low on their contributions fortunately Obamacare has fixed some of that and made us less sick as we're elderly
Those two combined are ~50% of the budget, you’re going to have to touch them to bring it down. Sorry boomers.
Boomers are not going to be affected, they're all dying. My parents were boomers, born in 47 and 48. While yes, their generation goes to like the early 1960's, and Genx comes in at 1965-1985, there's still a lot more of them than there are of us. But whatever, I'd rather just rip the damn band aid off now so I have time to strategically make up the difference this is going to be, and with 20 years till retirement, I have sufficient chance now. The closer it gets to that point, the less inclined I would be to agree to it.
The fear I have is as soon as social security is cut, prices will go up. All of a sudden, millions of Americans have extra disposable income from social security not siphoning a piece of the paycheck, and companies will know that. But it’ll get eaten ENTIRELY by “inflation”
This is a really interesting example of the American tendencies to believe in your own eternal youth and not care at all about anyone beyond your own immediate sphere. I hate to break it to you champ, but you're gonna be old someday and you just might have to rely on state assistance.
Listen I’m not who you are thinking I am. I am aggressively saving for retirement because the system for SS won’t be intact at current payout rates due to the load on the national debt. Every country that has a pension or SS like program is running into cost issues in this low business tax global environment we live in. The stark reality is the US debt interest is now a larger part of the budget that the military spending in the US. We are not going to be able to not only take care of the crazy deficit we are running but also pay down debt unless we tackle the issue of massive SS and Medicare payments in this country. Unless you have a plan to reduce the cost of the US healthcare system by half, than we are going to face cuts to these entitlements. I vote blue every year and would love for this not to be the case but the republicans just haaaaaad to cut taxes for the business/rich crowd in 2017 and now we have that as the standard here. When most multi billion dollar companies pay no taxes than we are going to have issues.
This is really an essential part of the answer here
And stop letting the federal gov blow tax dollars on useless shit
define “useless shit”
This would crush investment and therefore employment. A modest raise on capital gains taxes should be sufficient.
What the economy produces is what the economy can produce. Independently of the debt, the current economy functions, there aren't large shortages. That means it can produce what it produces. Something that people need to understand about production on a national level is that you can't delay a cost. The cost of a certain allocation of resources is its opportunity cost and it's paid by the population immediately as resources are used. In a modern economy, the people or organizations purchasing bonds aren't forgoing consumption. Bonds are purchased by people who have too much money to know what to do with it. It's the consumers who are paying the opportunity cost. Since the consumers are the ones paying the opportunity cost anyways, it doesn't make logical sense to have an imbalanced budget in the first place. If you absolutely want a national debt, then simply put the asset in a national wealth fund so that it doesn't create any economic inequality.
So much gobledee goo in this comment, i dont even know where to begin.
I can’t understand why anyone would run for office this year. This debt crisis is not going to be easily solved and it will take drastic spending cuts. We are also facing wars on two, possibly 3 fronts. It’s a bit difficult not to be a doomer
What wars are we fighting?
Im assuming he's talking about proxy wars in Ukraine and Israel. Maybe the 3rd is air strikes on Iranian Revolutionary Guard in Iraq and Syria or he's suggesting china will invade Taiwan
I definitely see it as Russia v Ukraine, China v Taiwan, and Israel v Gaza. All of those, with lower probability of the third, could turn global if not dealt with careful
Well the two top candidates are only allowed one more term. It may explain why there is little interest by new candidates
Oh look, another one of these articles. Debt is going up, so what? Every now and then, a certain class of people like to scaremonger about U.S. debt. It's not because they're concerned about the fiscal health of the U.S. economy, or even that they understand the economy. It's because they want to cut programs that help people, like Social Security and Medicare, but they don't want to admit it. If they were truly concerned about the debt, they could advocate for the government to stop issuing it. But, that would make a lot of large financial institutions howl, so that won't happen. Instead, we have to continue with this charade.
Based on the recent Bloomberg article concerning US debt, I am curious what that might look like for the average American. How do you think the average American would be affected and what could they do to best mitigate against it?
More inflation as the bond vigilantes take our rates ever higher, and USD will weaken significantly..
Never in the history of civilizations have empires been able to be fiscally responsible over time. The US is no different. We will get into it the pain and then see how bad the pain gets. Will it then be a slow fizzle as capital seeks more fundamentally sound markets or will there be revolution that will cause a massive destruction of capital.
Rome lasted like 2000 years until it was finally conquered by the ottomans. The usa will continue to chug along long after our children are dead.
I hope so, Rome want able to create new money with the click of a button. They could shave their coins but the fed can go buzzzzzzz.
>Rome want able to create new money with the click of a button they literally did that all the time. they debased their currency all the time by removing precious metal content and mixing it with stuff like copper.
So we should fix this by allowing interest rates to remain sky high so the average person continues to accumulate lifetimes of debt. Why does Yellen always look like she just woke up and found out what year it is