When investors are no longer willing to buy US treasury bonds as they doubt the value of the dollar to pay interest or refund them at maturity, it will get difficult. I think that is called hyperinflation.
The US does have many assets that could be used to secure loans. Land values were used to end hyperinflation in 1920s Germany.
Lenders can make demands that must be met. It will make big changes in the US.
Best to be avoided.
Candidates who want my vote should be saying what they will do about the deficit spending. I like the Newt Gingrich Contract with America requiring that any new spending be funded with tax increases or cuts to obsolete programs.
Borrow and spend politicians must be purged from Congress.
Doesn’t work. They just ignore it. There is a law on the books that was supposed to have balanced the budget a couple of decades ago. Congress passed, and then ignored it.
I do agree with your general idea. The budget should list a program, how much it costs, and where they will get the money. If it doesn’t say how much, and how funded, it shouldn’t be in the budget.
It’s not at all inevitable. Interest on the national debt is about 18% of tax receipts, which means that the national debt would have to rise massively compared to already massive levels for this to happen. You’d almost certainly have some combination of tax increases and spending cuts long before that happened. It would be painful and unpleasant, and might tip the country into recession - but it would happen. Combine that with some moderately high inflation and you can get the debt down to a more manageable level.
I would want to hear how they plan on increasing tax revenues from corporations and scofflaws! Corporate taxes used to be a significant portion of Federal Revenue.
Both parties seem to be into borrow and spend. Yes we had tax increases but borrow and spend is disaster. We need to do better. Yes, the wealthy should pay their share. But a bit of belt tightening by the middle class is also needed.
Yes, we like some of the gee whiz ideas suggested for govt to provide but yes we must figure out how to pay for them. Borrowing more is nit the answer.
Same old same old. Everyone wants more govt services and for someone else to pay for them. At some point you run out of other people’s money. People willing to pay for services works better.
Sure taxing the wealthy is ok with me. They are very clever at resisting new taxes and can hire lobbyists to make it happen.
Getting Congress to raise taxes even on the wealthy continues to be a challenge. Borrowing raising national debt is much better politics. Voters pretend not to care (about resulting inflation and rising interest rates).
Ugghh. Tax cuts over the last 50 years have mostly benefitted the wealthy and corporations. This is a fact! And yet, you’re suggesting the middle class needs to tighten their belt. Ridiculous.
Because of the large/huge numbers of people in said middle classes, that’s where the money is. As has been brought up in other threads if you want a European style setup you need a broad tax such as a VAT.
Still getting your news from the chattering heads on TV, I see.
Q: “Who has more wealth, the middle class or the Top 10% in the US?
A: 1. Top 10%: According to data from the St. Louis Fed, the top 10% of U.S. households control roughly 67% to 69% of total household wealth in the nation. [1, 2]
Middle Class: Traditional middle-class brackets (such as the middle 20% or middle 60% of income earners) hold a significantly smaller fraction, typically ranging from 8% to 26% of total national wealth depending on how the middle-class range is defined. [1, 2]
The Top 1% Comparison: Even on an individual tier level, just the top 1% of Americans holds more total wealth than the entire middle class combined. [1]
We have a fundamental and long standing belief in this country that protects private property rights, once only reserved for the very few in most societies. As a result, out tax system is one that is based on taxing the transfer of property not simply the mere ownership of it. So, unless your plan is now to change that basic idea (beyond what is done to support local services) and begin a process of seizure of sum or all of that property for re-distribution, the tax revenue is largely limited to income and then transactions for the most part.
So @DrBob2 is correct, if you want to gather more tax revenue, it will work its way into the middle class in the form of VAT, as it has in many places in Europe. Those that save more than they spend will inevitably accrue more in wealth (property) than those that can’t or don’t. Complaining about what is a feature of opening economies rather than a bug, it seems pointless.
About 31% of U.S. households earn enough to be considered upper middle class, a roughly threefold increase since 1979, making it the nation’s largest economic group, the research found…
The findings underscore a broader shift in the U.S. economy: As more households move up the income ladder, consumer demand is tilting toward higher-end goods and services. The so-called “K-shaped” economy — in which higher-income consumers are spending more while lower-income households pull back — has become a hallmark of the post-COVID economy.
The crafty Europeans realized over time that they had to generate new revenue streams to pay for the health care of their rapidly rising post-WWII populations. Virtually all those crazy socialists adopted a VAT to pay for expanding social safety nets.
The last 40 years has seen a massive shift of wealth from the middle class to the ultra wealthy. And at some point the ultra wealthy are going to run out of middle class money…
I don’t think that is definitive, or factual. We can simply make the income tax code more progressive as well as eliminate some of the tax breaks afforded the ultra-wealthy and it would not mean we either would have to have a VAT or that it would impact the middle class.
We already have one of the most progressive tax codes in the world. You can eliminate some tax breaks and we should do so. We need to have a serious reckoning on allowing for the wealthy to borrow against holdings without treating that as a transfer. It needs to end and provides a disproportionate advantage. That aside, it won’t materially change where or how wealth concentrates. More importantly, it’s not a finite number of chips being taken from one to give to another. The middle class makes more and has more wealth than ever in actual dollars. The pie is expanding but does disproportionately favor those with the most chips in play.
There is roughly 9 Trillion held by all the billionaires in the US. Let’s say that generates 10% per year in income on average or $900Bil. Make it so progressive that you take 100% in tax revenue. It would only either cut the annual deficit to about $1.1 trillion or put $5k in the pocket of each person in the bottom 50%. There’s a reason why in Europe even average tax rates for the lower and middle class near 50%. There isn’t enough wealth to tax. The consequence is it works its way into the lower income levels.
The math is what it is, unless you can explain it to me otherwise.
Who stated that it needed to change how wealth concentrates?
Even when we had higher tax rates, wealth still concentrated - just not to this extreme.
??? I would think you would be on board with cutting the annual deficit by $1T. Are you not?
Additionally, no one becomes a billionaire making 10% a year so your number would be way off. I would be insulted if I was a billionaire and you thought so little of my skills.
Regardless, it does not need to be JUST billionaires. There virtually 0 multi-millionaires that are middle class. I think the Buffett tax rate (incomes greater than $1 million a year having a min rate) would be a better place to start. The top 1% of household income is less than 700k. If you are making $1M a year, you are in the top 0.X% - not middle class.
I am and used an extreme example of taxing income for the wealthiest at 100% to illustrate the point that it won’t materially change the circumstances by even the most progressive of tax policies. We do need to reduce the deficit by a combination of measures but it won’t material change the concentration of wealth. 100% taxation is not feasible. Billionaires would leave at that point.
Sheez, 10% represents the average of TAXABLE income generated. Unrealized capital appreciation is excluded, assuming you don’t intend to implement a wealth tax.
You’re muddling concepts. There are plenty of millionaires in the middle class. There is a much smaller % earning in income north of 1mil a year. Once you include state, local, ACA surcharge and Federal, the marginal tax rate hits 60% in some areas of the US. If you’re talking about long term capital gains or dividends in excess of 1mil and want to adjust the rate up, I don’t have an issue with it or just simply a flat tax regardless of the source of income. The top 1% earn roughly 3.3 trillion annually and roughly 1/2 of that is from investment, dividend and other passive income sources. Let’s double the rate and just treat it as ordinary income taxed at 50%. In theory, it increases total tax revenue by $400 billion annually. But, at that rate, the wealthy will move into other asset classes. Even if they don’t what does it do to change the concentration of wealth? Almost nothing, when you pick up a calculator and start doing the math, it just doesn’t move the needle in terms of changing the dynamic between the haves and has less.
