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0 pointsmissedthecue8mo ago0 comments

Eventually the interest payments crowd out most other government spending, or require significant across the board tax increases to maintain current levels of spend.

The US is currently at $1T+ a year in tax revenues that instantly go right out the door toward paying bond interest. It will likely be $2T within 10 years, even fewer if rates don't come down in that time. It's compounding and therefore exponential.

Situations like Japan are even more dire. A small increase in the interest rate results in a HUGE increase in interest expense at 260% debt to GDP ratios. Worse, their population is naturally shrinking a million people a year on account of their decades-long birth rate implosion. Hard to outgrow that.

0 comments

fsckboy8mo ago

>Eventually the interest payments crowd out most other government spending

false.

you are neglecting economic growth which increases tax receipts but does not increase the debt.

if government expenditure grows faster than economic growth, yes, bankruptcy is in the future.

Buttons8408mo ago

So lets raise taxes now and pay it off. Who should we tax? Should we squeeze blood from stones and try to get the poor to pay more taxes, or should we tax the wealthy?

Who am I kidding. The current administration showed us--what was it? last week?--that they prefer cutting taxes for the wealthy and increasing the deficit.

Republicans ALWAYS increase the deficit. Democrats usually do, but not always.

It looks like we'll probably let the generation that created this mess retire like normal, and instead try to fix it by making their children and grandchildren work until death.

RickJWagner8mo ago

You can’t tax the rich enough to pay off the debt. They already pay the overwhelming majority of taxes.

One company alone— Berkshire Hathaway— paid almost $27 Billion in taxes for 2024. That’s about 5% of all corporate taxes paid.

To really make money, you have to tax a bunch of smaller fish, not a handful of bigger fish. You need big numbers.

That’s politically unpalatable, especially for Republicans. ( Though Democrats seem to have no appetite for it either. )

In the past, Republicans would cut taxes ( popular ) while not spending as much ( unpopular ). Democrats would not cut taxes ( unpopular ) while spending more ( popular ).

Sadly, today both parties are acting like undisciplined parents. Everybody wants to give out the treats ( spend big ) while nobody wants to earn the paycheck ( raise the taxes ). It’s a bipartisan formula for disaster.

Buttons8408mo ago

> You can’t tax the rich enough to pay off the debt. They already pay the overwhelming majority of taxes.

Yes. This means that if we double the taxes on the wealthy we will roughly double our total taxes collected. A neat trick.

It's true that the top 50% pay 97% of taxes, but that's not the slam dunk you think it is, because the top 50% have 97.5% of the wealth (see sources).

Your suggestion to tax the poor is stupid, because the poor have nothing more to give. Even if we could extract 10x the amount of taxes from the poor, it would barely be a blip. If the bottom 50% paid 10x the taxes, then they'd be contributing, what, like 15% of all taxes? We're going to take from the poor, take food out of their mouths, for 15% more taxes? Like I said before, its like trying to squeeze blood from a stone, there's just nothing there to squeeze.

https://taxfoundation.org/data/all/federal/latest-federal-in... https://usafacts.org/articles/who-owns-american-wealth/

1 more reply

missedthecueOP8mo ago

It will probably have to look something like western Europe with massive across the board tax increases. I make $60k a year in the USA and my tax rates are about 12%, with no VAT. They'd probably need to look more like France, where a $60k income is hit with a 42% effective tax (adjusted for progressive rates) before 20% VAT is paid at the store.

fsckboy8mo ago

vat is simply corporate income tax, it's a tax on "value added", i.e. profit or income. I don't know in europe whether that is on top of other corporate income tax or not.

2 more replies

WalterBright8mo ago

Tax cuts for the wealthy were not in the BBB.

FreakLegion8mo ago

The BBB increased the QSBS exclusion and gross asset value limit by 50% and quadrupled the SALT deduction, among other things. I guess you could argue the meaning of "for the wealthy" here, but it would be hard to do in good faith.

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maxerickson8mo ago

If the baseline is whatever you say it is, what's the point of discussing it with you?

1 more reply

Buttons8408mo ago

Are you saying that extending that Trump tax cuts is not a tax cut, because it's only extending and maintaining the status quo?

Or are you saying the Trump tax cuts never benefited the wealthy at all?

1 more reply

maxerickson8mo ago

It's more fun to think that it's the deficit that is going to the interest payments.

j / k navigate · click thread line to collapse

0 comments

fsckboy8mo ago

>Eventually the interest payments crowd out most other government spending

false.

you are neglecting economic growth which increases tax receipts but does not increase the debt.

if government expenditure grows faster than economic growth, yes, bankruptcy is in the future.

Buttons8408mo ago

So lets raise taxes now and pay it off. Who should we tax? Should we squeeze blood from stones and try to get the poor to pay more taxes, or should we tax the wealthy?

Who am I kidding. The current administration showed us--what was it? last week?--that they prefer cutting taxes for the wealthy and increasing the deficit.

Republicans ALWAYS increase the deficit. Democrats usually do, but not always.

It looks like we'll probably let the generation that created this mess retire like normal, and instead try to fix it by making their children and grandchildren work until death.

RickJWagner8mo ago

You can’t tax the rich enough to pay off the debt. They already pay the overwhelming majority of taxes.

One company alone— Berkshire Hathaway— paid almost $27 Billion in taxes for 2024. That’s about 5% of all corporate taxes paid.

To really make money, you have to tax a bunch of smaller fish, not a handful of bigger fish. You need big numbers.

That’s politically unpalatable, especially for Republicans. ( Though Democrats seem to have no appetite for it either. )

In the past, Republicans would cut taxes ( popular ) while not spending as much ( unpopular ). Democrats would not cut taxes ( unpopular ) while spending more ( popular ).

Buttons8408mo ago

> You can’t tax the rich enough to pay off the debt. They already pay the overwhelming majority of taxes.

Yes. This means that if we double the taxes on the wealthy we will roughly double our total taxes collected. A neat trick.

It's true that the top 50% pay 97% of taxes, but that's not the slam dunk you think it is, because the top 50% have 97.5% of the wealth (see sources).

https://taxfoundation.org/data/all/federal/latest-federal-in... https://usafacts.org/articles/who-owns-american-wealth/

1 more reply

missedthecueOP8mo ago

fsckboy8mo ago

vat is simply corporate income tax, it's a tax on "value added", i.e. profit or income. I don't know in europe whether that is on top of other corporate income tax or not.

2 more replies

WalterBright8mo ago

Tax cuts for the wealthy were not in the BBB.

FreakLegion8mo ago

1 more reply

maxerickson8mo ago

If the baseline is whatever you say it is, what's the point of discussing it with you?

1 more reply

Buttons8408mo ago

Are you saying that extending that Trump tax cuts is not a tax cut, because it's only extending and maintaining the status quo?

Or are you saying the Trump tax cuts never benefited the wealthy at all?

1 more reply

maxerickson8mo ago

It's more fun to think that it's the deficit that is going to the interest payments.

j / k navigate · click thread line to collapse