Reject the Democrats' High Taxes
S E E D E D C O N T E N T
Recently a number of Democrats have called for a complete government takeover of our health care system. Since Americans currently spend almost $350 billion annually on health care, this would result in the government directly controlling another 17% of our economy.
Senator Kamala Harris (D, CA) would like to see Medicare for All . Other senators like Elizabeth Warren (D, MA), Kirsten Gillibrand (D, NY), and Bernie Sanders (I, VT) strongly support the concept. They say that health care is a basic human right and therefore every American should receive health care regardless of their ability to pay.
To pay for these and other programs, Democrats want to raise the top marginal income tax rate to 70% and add a new tax on wealth. They say this will enable the federal government to increase the amount they take from Americans to well over the nearly $4 trillion they now collect annually.
In total, government at all levels takes about 25% of our income, which is significantly less than the 33% average rate for most major economies .
These policy proposals raise a very basic question: “What, exactly, is the role of government in the U.S. economy?”
While there is some debate about the size of government and the depth of its role, there has generally been an accepted answer. The preamble to the Constitution says that the purpose of our federal government is to “establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare and secure the blessings of liberty to ourselves and our posterity.”
That definition can be summarized as having two basic functions: providing public goods and income maintenance programs. Public goods, like a legal system, defense of the country, and education are services available to all members of society, essentially without a direct cost, but rather through taxation of the entire population.
There is some debate regarding which goods should be considered public goods. For instance, the conclusion regarding education is that government, mostly at the local and state levels, should consider kindergarten through 12 th grade as a public good. Recently there has been discussion about making at least two years of college a public good.
The second general function of government is to redistribute income away from those who have earned it and toward those who, for whatever reason, have not earned it. The taking is accomplished by taxing income, wages, consumption, and/or some assets. The income is then given to people through Social Security, Medicare, Medicaid, welfare, food stamps, unemployment compensation and other income maintenance programs.
The Democratic proposals ask us to determine if healthcare and another two years of education should be considered a public good. If so, then taxes must be raised significantly. In addition, there is always the problem of efficiency loss when converting a service from the private sector to the public sector.
The Dems argue that the U.S is the world’s wealthiest country and can afford these programs. They also note that the average rate of taxation in the U.S. is low compared to the rest of the world and should be raised.
They propose to increase the average tax rate by initially holding the middle rates constant and doubling the rates for the highest income earners. With that increase the U.S. average tax rate will be about the same as the world’s average.
The Democrats also argue that high tax rates won’t necessarily slow economic growth. The highest tax rate was 70% in the 1950s and the economy grew faster than it is growing today.
It appears, however, that most Americans do not embrace these ideas.
The Constitution tells us that the federal government must “secure the blessings of liberty to ourselves and our posterity.” This means that the government must provide income maintenance in such a manner than it encourages individual freedom and individual responsibility. Government must also that actions taken today that don’t place unbearable burdens on future generations.
A smaller, less intrusive government seems to be the way to accomplish that. That means less taxation, not more. It also means economic growth, not curing perceived social injustices, should be the top priority of the federal government.
The arguments of the Dems are easily debunked. By raising the top income tax rates, less capital would be created, which would slow growth in today and tomorrow’s capital-intensive economy. In the 1950s we had a labor-intensive economy and didn’t need large amounts of capital. Today tax policy should encourage capital formation in order to encourage economic growth.
The U.S. went from birth to the most powerful and prosperous nation in the world in about 150 years. Other countries were hundreds, and many countries, thousands of years older. That happened because we had a freedom-oriented country with small government and low taxation.
In 2018, the economy likely grew at over 3% annually. That’s the best year since 2005. That growth occurred because Congress cut income taxes and growth stifling regulations were eliminated. Lower taxes and less government led to more growth. More growth means more opportunities and a higher standard of living for all Americans.
Reject big-government, high-tax proposals.
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“The Constitution tells us that the federal government must “secure the blessings of liberty to ourselves and our posterity.” This means that the government must provide income maintenance in such a manner than it encourages individual freedom and individual responsibility. Government must also that actions taken today that don’t place unbearable burdens on future generations.
A smaller, less intrusive government seems to be the way to accomplish that. That means less taxation, not more. It also means economic growth, not curing perceived social injustices, should be the top priority of the federal government.
The arguments of the Dems are easily debunked. By raising the top income tax rates, less capital would be created, which would slow growth in today and tomorrow’s capital-intensive economy. In the 1950s we had a labor-intensive economy and didn’t need large amounts of capital. Today tax policy should encourage capital formation in order to encourage economic growth.”
These knuckleheaded Democrats will never learn. Even the commies know high taxes kill economies.
Maybe the progressives dream is to make to while world equally poor....
I would love to see a deeper dive into this, but I don't have the time to really dig. A quick review from the Tax Foundation found this :
How could it be that the tax code of the 1950s had a top marginal tax rate of 91 percent, but resulted in an effective tax rate of only 42 percent on the wealthiest taxpayers? In fact, the situation is even stranger. The 42.0 percent tax rate on the top 1 percent takes into account all taxes levied by federal, state, and local governments, including: income, payroll, corporate, excise, property, and estate taxes. When we look at income taxes specifically, the top 1 percent of taxpayers paid an average effective rate of only 16.9 percent in income taxes during the 1950s
There are a few reasons for the discrepancy between the 91 percent top marginal income tax rate and the 16.9 percent effective income tax rate of the 1950s.
This doesn't go into possible tax avoidance steps they took back then but it would be interesting to find out just how much tax the "rich" really paid.
FYI - I was against the tax break that Trump signed. I would much rather the tax rate remained the same and Washington used the monies to pay down the debt as I believe that is the bigger problem that we face. But as we all know, Washington cannot be counted on to actually pay the debt, they just find more ways to spend more money.
Yeah, effective tax rate comparison is the key.
Using the higher "base" tax rates of the 50's is really a non-sequitur on that alone.
But since she's dumber than a half a bag of salt free peanuts, AOC doesn't have a real clue about that.
That’s the Ocrazyo way!
The Fed can't even run the VA well. Last i checked that was for about 10 million or so Vets.
So how does anyone really expect them to do better with 320 million more Americans?
Not gonna happen people, not gonna happen.
The United States spends $3.5 trillion annually on health care. That's about $11,000 spent for each person in the United States. Health care in the United States has become the largest transfer of wealth from the many into the hands of a few.
18 pct of the US GDP is being transferred to 10 pct of the US labor force. The median income for the United States is $63,100 while the median income in US healthcare is $28,700 . The median wage in healthcare is lower than for all other occupations in the United States. Someone is making a helluva lot of money from healthcare. And it isn't the healthcare workers.
The private sector doesn't want the public money gravy train to go away. A few people are enriching themselves without the bothersome necessity of even making a profit. 43 pct of healthcare spending comes from public funds. In fact, the private sector healthcare system is demanding that the government pump even more money into the healthcare system to lessen the burden on business to provide health insurance.
In economic terms, the US healthcare system has become a hodgepodge of bad investments, wasted capital, and economic losses supported primarily by public funds. The role of government has only been to provide the money (or to force private citizens to pay more money). But it's the private sector that has been wasting that money. How much of our GDP do we need to continue throwing away to support waste, fraud, and abuse?
Good question. Waste, fraud, and abuse are what government does best.