From an economic standpoint, it makes sense not to tax income because income is production, and taxing production reduces the incentive to produce, which is the last thing we need. If we have to tax something, it makes more economic sense to tax consumption, for example with a national sales tax.
> The general ailments and downtrends in American society started right around the time when taxation (especially the corporate kind) started getting cut and we moved away from the gold standard for our money.
I don't think this historical narrative is correct. First, the two things you mention did not happen at the same time; tax cuts, at least if we are talking about income taxes, more or less started with Reagan in the 1980s, but the US went off the gold standard in 1933 under FDR. (Technically the US still claimed to support converting dollars to gold internationally until 1971, but that's a relatively minor change compared to what happened in 1933.)
Second, "general ailments and downtrends" is very broad and I don't think one can pin down a particular time when they started.
Third, as I believe pg pointed out in one of his essays, US government tax revenue as a percentage of GDP has varied very little over decades even while tax rates have varied a lot.
> Perverse financial incentives are ruining everything
I don't disagree with this as a general statement, but I think the tax code is a fairly minor contributor to the perverse financial incentives as compared with the government (via the Fed) printing money. Historically, monetary debasement has always led to civilizational decline.
But unearned income enjoys a dramatically lower tax rate (the capital gains rate is lower than income rate, and capital gains are not subject to FICA/self-employment taxes)
That said, if no income were taxed at all, any disparity between how the various kinds of income were taxed would go away.
My proposal (in the GP of the post you responded to) was to tax consumption, i.e., a national sales tax or something like it.
> Capital seems to me a viable choice.
What would count as "capital"?
Whatever the answer is, this would seem to me to have the same issue as income taxes have: you would be taxing production instead of consumption, hence lowering the incentive to produce.
It's not an ideological framing. The IRS calls it that.
The 2000 election was a debate over whether to use the budget surplus to reduce taxes or increased government spending. The "reduce taxes" side narrowly won, and then a year later the death of 3000 people provoked us into increasing spending by several hundred billion doallars per year. That doesn't completely explain the current unsustainable deficit ($1.5T or about 5% of GDP !!), but it's a good chunk of it.
Of course the Bush tax cuts were largely retained under Obama with a bipartisan bill that made them permanent with no corresponding cut to spending.
Debt should be reduced by reducing government spending, not by higher taxes.
I don‘t know where you get the idea that paying taxes somehow makes you more invested in politics. Switzerland has very low taxes and yet the whole political system is based on civic involvement with all but the top political offices being done by people as a sidegig rather than a career. Meanwhile Germany is a high tax country where most people are just fed up with politics and government because politicians are so far removed from civic society.
A simple example, we have periodic checks for bicycle lights. If yours doesn't work you get a fine. If you have plastic or cash it would be a good idea if the government employee would fix your light and/or sell you a new one. You are supposed to walk while holding your bike. Everyone does that until they are around the corner. They can fix car lights too, deliver food and drive for uber. etc
It should come with a corresponding reduction in government waste. The existing government budget contains a level of inefficiency which is difficult to comprehend. The scale of it is so large it's hard to wrap your head around it.
> I would even say the more taxes you pay, the more invested in politics and civic responsibilities you would become.
This doesn't seem to be the case. In fact, it tends to go the other way. The people who have lives and just want to go about their business (i.e. the middle class) are taxed heavily specifically because they don't have time to get involved in politics and then are poorly represented when politicians are slicing up the pie. The super-rich, meanwhile, are highly involved and then avoid paying.
> The general ailments and downtrends in American society started right around the time when taxation (especially the corporate kind) started getting cut and we moved away from the gold standard for our money.
US government revenue has been stable as a percent of GDP since the end of WWII and growing over time in real dollars per capita. Taxation per capita, even adjusted for inflation, is now higher than it was during WWII. That level of taxation is... high.
As to your point, multinational corporations avoid paying those taxes: Since real government revenue has been going up rather than down, guess who pays?
> For once I'd like to see a politician promise to raise taxes and use that revenue to fix things and actually win.
Doing this is not really possible. Between state and federal income, payroll, sales, property and other taxes, the average person in many states is already paying more than 50% of their compensation in tax.
Even if all you care about is tax revenue, there comes a point at which increasing taxes lowers government revenue. If you raise total taxes from 5% to 10% and that causes the economy to contract by 10%, that's maybe not great for wage earners, but government revenue has increased by 80%. If you raise total taxes from 55% to 60% and it causes the economy to contract by 10%, even government revenue goes down because 55% of 100 is more than 60% of 90.
The problem isn't that the government doesn't have enough revenue, it's that most of that money might as well be set on fire because it spends it so inefficiently. And whether you think it should instead be returned to the taxpayer or spent in some other way, the status quo is absurd and unsustainable.
1. San Jose Failed To Adequately Track $300 Million In Homelessness Spending
https://sd15.senate.ca.gov/news/mercury-news-audit-san-jose-....
2. U.N. Has Flown More Than $2.9 Billion in Cash to Afghanistan Since the Taliban Seized Power, Diverting U.S. Funds https://www.propublica.org/article/united-nations-cash-afgha...
3. California put hundreds of millions of homelessness dollars at risk because of its “disorganized” and “chaotic” anti-fraud policies, according to a critical federal audit released today. https://calmatters.org/housing/homelessness/2024/08/hud-hcd-...
> For once I'd like to see a politician promise to raise taxes and use that revenue to fix things and actually win. Perverse financial incentives are ruining everything.
No. We should vote for no more new taxes (not a single cent more) till we audit at all levels of government and find out how much fraud and waste is there and have a plan to fix it.
Anything else would be illogical.
You don't think that is possible? Why?
https://www.gao.gov/products/gao-24-105833#:~:text=What%20GA....
> GAO estimated total direct annual financial losses to the government from fraud to be between $233 billion and $521 billion, based on data from fiscal years 2018 through 2022. The range reflects the different risk environments during this period
That is just fraud. Wastage will be probably be higher lol.
It is morally wrong to pour more water into a container with holes in the middle of water shortage.
The first is purposeful waste. That is, a corrupt program that diverts tax dollars into the coffers of some corporation with lobbyists. This is extremely common in the DoD, for example, and identifying these has extremely high gains because the program can be deleted wholesale.
Then there is simple inefficiency. The government's website is incapable of doing something it should be capable of doing and then the government has to employ an army of clerks to do it by hand. These can be pretty big gains too. If you can reduce the number of clerks by 80%, that's a lot of money.
Then there is unnecessary complexity. Most of this comes directly from Congress. Somebody needs to go through all the existing laws and do a cost/benefit analysis to see which ones are still relevant and have a net positive effect, and get rid of the ones that don't. More than that, look at the laws as a whole and see if they make sense. We have a slew of programs that all have the same ostensible purpose, e.g. to provide assistance to the poor, but then they all have different applications and qualification conditions and phase outs and benefits. Combine them all into a single system that provides a cash benefit and you can eliminate a lot of bureaucracy. And for both of these, the savings isn't just to the government -- it's also to the citizens who have to interact with the government. So even though the savings in terms of tax dollars might be smaller than the other categories, the value here gets doubled because it's also a savings to the public in time and paperwork.
We have to start doing these things.
While I think the system is in a major need of a cleanup I don't expect it to free up money.
I also agree our legal system needs a rewrite. Unfortunately, it's an impossible task because things change. To *some* extent it could be handled by having judges actually change the law (provisional while appeals are pending) but sometimes one judicial ruling will invalidate many laws. (The one that I think probably changed the most laws was the 10th Circuit Court's ruling on top equality. Six states became topfree with the stroke of a pen and there's an awful lot of local laws involved. Roe affected more people but since those were generally state laws there probably were fewer jurisdictions involved.)
I would like to see a system in which unclear law is automatically unconstitutional. The defendant should get to choose the most favorable interpretation of what the law says. And if it's not clear to the average person to whom it applies (thus, for example, a law regulating doctors needs to be clear to doctors, but need not be clear to the average person) it's also unconstitutional.
And, in addition to the purposeful waste you refer to there is purposeful exploitation. A nice chunk of change could be freed up from the Medicaid system this way. The problem is the federal government pays a *percentage* of the Medicaid costs. Thus you see drug companies colluding with states. Cover our expensive drug X but don't cover the generic, we will rebate you more than the state share of the price difference.
The scenario you're laying out is one in which, for example, a program is currently dispensing $100B in benefits but if everyone who qualified for it actually received the benefits it would be dispensing $200B. A platonic ideal would then have the program costing $200B (i.e. more), but we don't have to beat the platonic ideal, we only have to beat the status quo.
And that program dispensing $100B is spending another e.g. $10B just doing the eligibility determinations. Moreover, the program is then dispensing vouchers that can only be used for specific things, which are less valuable than money.
So if we take the $100B and distribute it as unconditional cash (i.e. a tax credit) instead, the intended recipients get the same $100B as they get now. But the government saves $10B in administrative costs, the recipients save all the time and effort of applying for the program, and $100B in cash is worth more than $100B in vouchers because it e.g. gives you the option to live with your parents while using the money to eventually save up a down payment on your own home rather than being required to use the subsidy to pay rent to a landlord forever.
> I also agree our legal system needs a rewrite. Unfortunately, it's an impossible task because things change.
That doesn't make it an impossible task, it makes it a continuous task. The problem is we haven't been doing it at all, so laws keep accumulating rather than anyone going through and removing the bad ones after things change or we learn that the law was ill-conceived to begin with.
It would probably help quite a bit to make laws expire and have to be renewed every e.g. 10 years. Not only would it invite reconsideration of dusty rules, it would get Congress to spend some time arguing over whether those rules should stay instead of spending all of their time accumulating new ones.
> I would like to see a system in which unclear law is automatically unconstitutional. The defendant should get to choose the most favorable interpretation of what the law says.
This is nominally already the case. There is a rule of interpretation that ambiguous laws are to be construed in favor of a criminal defendant. The problem is judges are human and prosecutors are not, so the prosecutor will purposely bring the precedent-setting case against the most vile scum in the dungeon and force the judge to choose between resolving the ambiguity in favor of the prosecution or letting the child-murderering cartel hitman go free. Then the same precedent gets used against everybody whenever the prosecution couldn't otherwise prove a case against them.
> And, in addition to the purposeful waste you refer to there is purposeful exploitation.
The best solution to this would be to stop forcing the states to fund half of federal programs and let each program be funded entirely by one or the other. The existing system is the federal government screwing the states out of billions of dollars because the states either have to fund a federal program they may not even like or they don't get the federal program but their citizens still have to pay the taxes that fund it. A ruling that the existing arrangement is unconstitutional wouldn't do a lick of harm.
The deficit is so absurdly high at this point that we need to both cut spending (and yes, any obviously wasteful spending is a good place to start) and increase revenue.
> It is morally wrong to pour more water into a container with holes in the middle of water shortage.
I have no clue what you are trying to say with this analogy, so I'll just take it at face value and point out that a human being is a container with holes.
1: https://www.bitsaboutmoney.com/archive/optimal-amount-of-fra...
Did I say anywhere no other fraud or wastage is there? Did I say no new taxes at all?
I said no new taxes without addressing waste.
You can do two things in sequence.
and why this is inefficient?
Zero US tax payer money should go to the Taliban.
Excessive taxation is bad but I have never seen anywhere near excessive taxation in the US. The general ailments and downtrends in American society started right around the time when taxation (especially the corporate kind) started getting cut and we moved away from the gold standard for our money.
For once I'd like to see a politician promise to raise taxes and use that revenue to fix things and actually win. Perverse financial incentives are ruining everything.