Great Analogy of the US National Debt

Another thought is to create a national sales tax which is earmarked solely towards debt reduction...let's say 1% on all purchases except for property...and it applies to everyone...no excuses!

 

It would be a tax on top of income taxes that would never go away and would merely encourage more government spending in the future. It also requires a Constitutional amendment from all I've read not the Congress gives a (*)(*)(*)(*) about the Constitution.

I am an ardent supporter of a national consumption tax (with prebate) which requires a Constitutional amendment but I would insist on it also repealing the 16th Amendment ending income taxes. If memory serves me correctly it currently costs Americans about $350 billion a year just to calculate their income taxes. If that money was collected as a part of a consumption tax it wouldn't cost Americans a net penny more and would go a long ways towards balancing the budget. Add the that the dissolution of the IRS and we could realize more government savings.

Bottom line, either tax income or tax consumption but not both.

 

I agree here.. Also, one of the big problems i have with the idea of raising more taxes to help pay down the debt, is i don't trust the politicians to do that. I might go along with a short term increase in taxes, IF it were used to pay off the debt, AND spending was cut. But all the politicians do is spend.. no matter how much they get, they spend it all & then some. That is why i don't care about arguing about taxes anymore. I just want to stop the spending. Balance the budget, stop the spending, & bring some fiscal responsibility into the realm of govt. Is that too much to ask? Is that a terrorist plot? Is that an 'extreme' position? According to the big spending left, it is.

 

When the statement is made, "I don't trust the politicians" it is referring to Democrats and Republicans as they do and have controlled Congress for the last 100 years. Neither of these political parties has any intention of balancing the budget and paying down the national debt. When will we ever learn?

 

In other posts on PF I always state that IMO we should never pay higher taxes until spending caps are in place...I should have made this more clear on the previous post.

In BOLD above we do this everywhere in the USA today with State and County and City sales or property taxes so it is common. We do it within the federal government with fuel taxes on consumption.

My lowly position remains that every American should pay $50 to the federal government on July 4th or should be subjected to a federal sales tax on all consumption.

The primary reason for this preference is to force so-called Americans to participate in their nation, to help pay their way, and if angered to voice their opinions, and hopefully have more people vote...

 

Bull crap. First, when conservaties are in charge, they either run up deficits or drive the economy of a cliff (the GOP lorded over the housing bubble) which then result in huge deficits.

Second, those children are represented by their legal guardians, who may be dumb enough to buy into the line of pseudo-logic the right sells, and get stuck with the large debt of the Republican's budget and economic policies.

 

Federal fuel taxes are imposed on the industry and are collected prior to consumption. They are not a direct tax and when it comes to direct taxation the Congress is limited to "apportioned taxed" (i.e. based upon the population of the State) under Article I Section 8 or to "income taxes" under the 16th Amendment. It cannot impose a direct sales (consumption) tax on the people today.

The $50/person tax would be Constitutional under Article I Section 8 because it is apportioned based upon the population.

Federal fuel taxes are imposed on the industry and are collected prior to consumption. They are not a direct tax and when it comes to direct taxation the Congress is limited to "apportioned taxed" (i.e. based upon the population of the State) under Article I Section 8 or to "income taxes" under the 16th Amendment. It cannot impose a direct sales (consumption) tax on the people today.

The $50/person tax would be Constitutional under Article I Section 8 because it is apportioned based upon the population.

I'm actually going to contact my members of Congress and propose the $50/person tax for the 4th of July. That should shake them up a bit. LOL

 

That is becuase the vast majority of the American People want their goodies and benefits the way their parents and grandparents got those goodies and benefits and they don't care who pays as long as it isn't them.

This crosses ideological lines.

We're never going to learn becuase the American people think that just becuase they "paid into the system" for a lifetime that truly entitles them. It doesn't. that money was stolen from them and does not exist and Americans need to accept the truth. There is no such thing as Social Security. Social Security was a scam and the American People have been taken in by it for almost 100 years and it needs to go away.

 

Social Security/Medicare are not responsible for the national debt or for deficit spending... and can't be based upon existing law. They have dedicated FICA/Payroll taxes. It is true that they have a projected problem that they will not be able to pay the same level of benefits in the future but they are still sitting on about $2 trillion in taxes that have been collected and not spent.

The current deficits and all of the national debt relates to general expendatures caused by shortfalls in general taxation. Before event tackling SSI/Medicare we need to address general taxation and expendatures that are the cause of deficits and the national debt.

 

The government invested the excess payroll taxes of the past in T-bills, then spent that money.

Paying that money back is part of the debt.

$2T in T-bills.

The top 4 expenditures are SSI, Medicare, military, and interest on the debt. Those 4 equal total federal income.

As us boomers retire, income will fall, SSI & Medicare will increase significantly.

When the economy heats up, interest will need to rise, or another bubble / crash will happen. The interest on the debt will go up, even if we stop deficit spending today.

Military spending may fall, or, if our ememies think we are weak enough to attack, will increase.

 

http://auto.howstuffworks.com/fuel-efficiency/fuel-consumption/gas-price1.htm

I assume these excise taxes are based on the gallons consumed at the pump and are included in the gallon price of retail gasoline.

What does it say about the US citizenry if all so-called Americans won't pay a measly $50 each year on July 4th?

The arguments cannot be about the actual money because everyone pisses away $50 each year on non-essentials. How much each year do people spend on lottery tickets? On alcohol? Cigarettes? Casinos?

It's exactly like letting our kids remain at home for life, giving them shelter and food and clothing etc. and not charging them a dime. For a kid we don't need to charge them $1000/month in rent, but $200/month is okay for a period of time.

The $50 tax will NEVER be implemented so obviously we're just talking about the philosophy of human behavior...

 

That is SUCH an antiquated notion. The source of just about all private sector wealth is the government. Unless you sell ceramic mugs at street fairs.

 

?!? Government spends $4T, with a GDP of $15T.

The source of excessive wealth is government interference, primarily regulation that kills of competition (government sponsored monopolies). This is done directly by politicians in trade for contributions / insider information / future employment / etc. It is done indirectly by regulator capture, the revolving door between regulators and the businesses they regulate.

For example, Obamacare did nothing to reduce cost. The Democrats would have lost too much money from the healthcare industry, and the medical insurance providers.

As another example, what was done to "re-regulate" the financial industry? Little to none.

 

I don't necessarily disagree with that, but the fact remains that there are very few truly wealthy people who got that way without government contracts (aerospace, defense, road construction, ship building, etc). Even average earners got that way through government contracts. FOTM is, only the government can put together the kind of $$$ needed to build a Trident submarine or a Stealth bomber. And a lot of people have gotten wealthy off those.

 

This is contradicted by the facts. Just looking at the top 10 richest people in the US shows that none of them are involved in government spending programs.

http://www.forbes.com/forbes-400/

 

10 ain't enough to dent the actuarial tables.

 

I don't have the time to review the income sources for all of the wealthy individuals in America so the top ten was used as an example. Of note the US government doesn't create wealth, it consume wealth. Yes, some profit from this consumption but considering the budget of the United States those profits are very limited and generally spread out over tens of millions of Americans that have investments in stocks in corporations. Everyone that has a 401K plan profits to a small degree from expendatures by government but the vast majority of wealth in America is unrelated to government expendatures.

Remember one fact, there are a lot more financial transactions than there is GDP. Let's just track the money. An iron ore mine produces $100 worth of ore and sells it to a steel plant for $100. The steel plant makes steel from it and sells it for $150. That is in turn purchased by a foundry that further processes the steel and they sell it for $200. In turn a machine shop purchases that $200 in steel, machines it into parts and sells it for $400. That $400 in parts is installed on a product and the price goes to $450 as a part of the product. That $450 in product goes to a wholesaler and is resold to a retailer for $500. In turn that retailer sells it to the public for $1000. We've had $1000 added to the GDP because that is the retail cost of the new product but $2300 in financial transactions have taken place to bring that raw ore to market as a product. The US economy is far larger than just the GDP which only reflects the new products and services at the retail level of commerce.

 

The highest earners are in the finace industry. a significan number of the 1% are lawyers, doctors, actors, and sports figures.

My point is a CEO (for a medical insurance company for example) can draw a high salary because regulation prevents low cost competitors.

 

That's a tired old Republican saw that just doesn't have merit. The US gov has created $trillions of dollars of weath for tens of thousands of individuals. All of fabulously wealthy Orange County, CA was created by the US government. Just like banks take cash fom individual depositors and redistribute up the ladder, so does the gov. There are thousands of individuals who owe their personal Lear Jets to government contracts.

 

At what cost to the tax payer? Reallocation of money isn't creating wealth, it is creating wealthy, by robbing Peter to pay Paul.

Creating wealth mens there is more than there was. After government mucks around, there is less.

 

Of note the median family income in Orange County California is $74,334 per the 2010 census and that will hardly buy a Lear Jet. That is slightly higher than the median income for all of California which is $60,883 but not all that significantly higher.

http://quickfacts.census.gov/qfd/states/06/06059.html

Banks don't "take" anything from depositors but instead borrow money from them and pay interest on that borrowing. The government does take money from Americans and redistributes it which reduces personal wealth in turn reducing private reinvestment which creates wealth and jobs.

I would like to see a list of ten Americans that owe their wealth solely to government spending and that own Lear jets.

 

Moral of your story; stop using iron ore!

Just a little humor...

 

Try this math;

If the government extracts $2.3 trillion in taxation from the private sector, this is equivalent to taking $2.3 trillion in private sector wealth and giving it to the government.

Now, there is a huge cost for the government to process this $2.3 trillion before they ever spend a dime of it so subtract whatever this amount might be from the $2.3 trillion.

Next, what percentage of government spending is external to the physical USA? Whatever this amount might be, subtract this from the $2.3 trillion minus government overhead.

Whatever this final amount might be, this is what the government will spend back into the private sector. IMO this number might be $1.5 trillion.

SO...using the above numbers, the government removed $2.3 billion in private sector wealth and replaced it with $1.5 trillion. Yes the government does create some wealth, but in the process it is a net loss of private sector wealth...

 

The real robber barons are those who get wealthy off fat government contracts paid for with money stolen from those who actually produce wealth.

 

And, generally, they will spend it on things that do not produce much, if any, wealth. In many cases, they are wealth destroying activities. Solyndra, for instance, but hired some of the best and brightest engineers, pulling them out of the labor market when they might have gone on to produce real wealth somewhere else.