Fiscal Policy
Yes, we gotta tax the rich, not because they have ALL the money, but because the government NEEDS more money, and they are the ones who can afford to pay. It's fair because the little people have a right to tax them. Don't forget that zillionaires' money comes from us, every time we pay for anything not produced locally, and every time we labor for a large corporation. Society is set up to benefit rich people the most, as it takes money to make money, and as he who can pay for the most lawyers and politicians gets to do "whatever I want."
We have to fund the government, there is no choice. Without a government, we little people will have no rights. I believe the government spends pretty much what we need it to, because if it spends too much, members of congress can make themselves heroes by identifying the "waste, fraud, and abuse." And they already have done this before 2025, and they do watch for overspending all the time, and they have a heck of a time trying to cut the budget, because the spending is almost all beneficial.
But Obama and the Republican congress did make one interesting deal called "the sequester." It blindly cut spending in many categories by a few percent, as an emergency backup plan to control the debt. It was incompetence, it was sneaky, and it worked like a charm, because by the time it went into effect, everyone was able to say "Don't blame us, blame that darn sequester!" Because the people of Sniddler's Gulch really weren't very smart. Just kidding. People are smart enough, but they have better things to do than watch fiscal policy all the time. Anyway, if we can't raise revenue, I think we should plan to say "Oh no, another sequester is happening" about every 5 years. And if it cuts too much, we can fix it.
Back farther in 1992, on a deliberately biased show on broadcast television (Trump now lies that they can't be biased, even when it's comedy), a famous pundit claimed that we shouldn't raise taxes because taxation pulls money out of the economy and wrecks it. They got me, I believed it. But I didn't realize how much government spending contributes to growing the economy, spurring job creation, while guiding things in the right direction. Now if the government were to take tax money and bury it in the backyard, yeah, that would be bad. But they don't, that money goes right back into the economy, hopefully the US economy.
Nowadays the pundits say something more like, "If we tax zillionaires, they'll stop investing, and the economy will die." What else are they going to do with their money, bury it in the backyard? No, they'll still invest, whether their profit is 30%, 20%, 10%, or 1%, they'll still invest, or else their competition will beat them in the richest zillionaire contest.
It's all a game to zillionaires anyway; they're playing games with our lives. So it's true, playing their games, they might hold off on investments, as they do to hurt Democratic incumbents in an election year, but giving up profit makes them nervous, so it won't last long. Those who hurt or abandon the country that made them rich are traitors.
What NOBODY is talking about is the dumbest tax, the payroll tax. (Trump did in his first term, and it fell on deaf ears every time.) Social Security and Medicare taxes are withheld from employee paychecks, and a matching amount has to be paid by the employer. These add up to 15.3% of wages. Self-employed people have to pay both parts, except they get a little discount, so they'll typically pay 11 to 13%, depending on their income and health insurance situation.
This is not income tax, it is on top of income tax, and payroll tax is not refundable, as income tax is. It's the true tax on kids that have after-school jobs, which is mean, leave them kids alone. Leave low-income workers alone too. If you have no empathy, think about how low-income people spend every dime they earn, so their payroll tax cut will be turned around right back into the economy. And they'll be less likely to default on debts, which would help to stabilize the economy. Taxing the poor is dumb.
The second reason that payroll tax is dumb is because social security tax has a cap, protecting HIGH income earners. It taxes LOW income and middle-class workers at a higher rate. No other tax works like that. Many normal people will work a whole career, paying the tax, and die without drawing any benefit, so the fairness argument is dumb. Rich people live longer to boot! "Oh the poor rich people won't draw a proportional benefit," things are tough all over. It's more fair to make that tax at least flat, not regressive.
A third reason that payroll tax is the dumbest tax is that it discourages the creation of American jobs. Jobs, HUMAN jobs, are pretty much the most important thing for an economy. So the US payroll tax sabotages the US economy.
Trump, of course, cut the wrong tax. Starting in 2018, the top corporate tax rate was drastically cut from 35% to 21%. That is a tax on PROFITS. If an employer made no profit, but employed hundreds of Americans, that would be the employer that needed a tax cut, but didn't get one. But the corporation that has two "workers" and 20 million in profits enjoyed a huge tax cut. The rich got richer, as American jobs were replaced by technology. And Trump's economy was no better than Obama's.
For those who have heard MSNBC talk about "Franklin Roosevelt's brilliant men" designing the brilliant payroll tax, it was supposed to top out at 6%, not 15.3%, which is stupidly high. We should gradually lower payroll taxes, replacing the revenue with higher taxes on income (graduated more steeply to tax zillionaires), capital gains and dividends (most of which go to the wealthy), corporate profits (same story, rich guys), and a stock transaction tax (richies and their stock-trading bots).
I think most people are aware that the trust funds are going to run out soon, but our incompetent government always wants to wait longer, hoping the trouble will magically disappear. Wishful thinking, lying to oneself, does incredible damage. This could have been fixed 20 years ago.
We can keep Social Security and Medicare going with a law that says: Any trust fund shortfall will be paid by the Treasury, the general fund. Again, if that doesn't work, we can change it then.
And for those like my congressman, who say things to the effect of, "Entitlements are too big, so let's raise the retirement age," no, dummy, the only thing wrong with social security is a weirdly-large baby boom generation is retiring. Once we get over this disproportionate hump, we can afford social security for generations to come.
We have to increase revenue, increase taxes. Because of the national debt, significant spending increases will be unrealistic, even with more revenue. My belief is that the national debt will destroy the value of the dollar when investors believe the US is no longer able to pay the interest on that monstrous debt. That will be followed by the government creating more and more dollars, causing hyper-inflation like Weimar Germany, or Zimbabwe, but even easier, because we can make electronic dollars now.
Honestly, I hope it's not too late to fix it. (That's not wishful thinking, that's calling a hail-Mary because we'll lose for sure if we don't score now.) We might switch from dollars to bitcoin, which seems like a scam to me. It would also be unethical to abandon the dollar when so many count on it. I'm afraid the vast middle class could become the vast poor class. Our best hope is to RAISE TAXES NOW and maybe we can dig out of this hole.
And we can look at history for another idea. World War 2 caused the US to do unprecedented debt spending. The debt was as big as the GDP. What ended up happening, intentional or not, was a lot of good old-fashioned pretty-high inflation, which shrinks dollars, and also shrinks debt. So after 30 years, the debt had shrunk so much that Jimmy Carter and Ronald Reagan decided to do more debt spending, which was fine. But it's not fine anymore. I don't know if intentional inflation is a good answer, but it worked before, and it seems preferable to hyper-inflation.
BUT WE HAVE TO STOP INCREASING THE DEBT.
Think about this: Instead of low taxes on all investors, done in the name of retirees, we should raise rates on investment taxes, which are mostly paid by people who are already wealthy. Along with these higher rates, do a tax credit for senior citizens, a credit that will compensate them for income AND payroll taxes, or any federal tax, because seniors work too. This will actually work right, to help seniors, not zillionaires.
I know "zillionaire" isn't a real thing. I just enjoy using it when referring to "millionaires and billionaires." And perhaps "trillionaires" sooner than we think, because the people of Sniddler's Gulch really weren't very smart. But sometimes, smart-to-average people can seem dumb, when they are choosing to listen to the wrong people.
Sniddler's Gulch was on Sesame Street. https://youtu.be/SRj0oub2TLY?si=TwMgIQAwKumqe6-E