HACKER Q&A
📣 lifeplusplus

Isn't any discussion on taxes pointless if budget is never balanced?


I admit I don't have full idea how can govt continue working with ever deepening debt, not an economist. But the govt increases debt limit each time, what's the point of having a debt limit then?... whether govt spends money through budget or create money and distribute it through cheap loans, it's the same, isn't it?... more money supply in the system. i.e. instead of passing a budget that gives small business owners 10k in aid vs allowing small biz to borrow 10k at 1% rate for 30 year payback.. more or less the same thing, in first case budget was already in negative, just became more negative..but so what?

there has been ongoing discussion on taxing income vs wealth, taxing billionares, UBI, etc....

taxing wealth over income only makes sense if income taxes go down.. but even if they go down what's the point.. at this point why does govt even bother collecting taxes obviously doesn't care about how much debt it runs

somehow if govt decided to tax everyone 80%, and balance the budget, in few cycles even that budget will be not enough.

I am really confused about what are implications for govt to perpetually keep going in deeper debt, what would happen if govt just stopped taxing everything and just kept going in debt even faster?

  👤 dane-pgp Accepted Answer ✓
> But the govt increases debt limit each time, what's the point of having a debt limit then?

I'm not an economist either, but just because the government has repeatedly increased the debt limit doesn't mean that it will always do so. Imagine a bank offering an account holder more and more credit as their earning potential and credit rating increases. That doesn't mean they would offer infinite credit.

A good way of putting the US situation into context is to look at the national debt as a percentage of GDP for various countries in the world.[0] As you can see, there is still some way to go before the US reaches the levels of Portugal, Italy, and Greece (three of the derogatorily named PIGS countries[1]) and a huge gap before reaching the levels of Japan (which admittedly has its own problems[2]).

> taxing wealth over income only makes sense if income taxes go down.

Citation needed. The median US household pays the equivalent of about 8% of their net worth in taxes every year, but billionaires pay a much lower rate by that metric. So if a wealth tax was created for wealth over $100 million, it could be set such that billionaires only feel the same relative burden as the average family.

> in few cycles even that budget will be not enough.

Why do you say that? For some historic context, you can look at how the federal budget has varied over time as a percentage of GDP.[3] "During the 39-year period covered here [1971-2010], federal outlays grew somewhat faster – 0.6% per year – than GDP."

[0] https://worldpopulationreview.com/countries/countries-by-nat...

[1] https://en.wikipedia.org/wiki/PIGS_%28economics%29

[2] https://en.wikipedia.org/wiki/Lost_Decades

[3] http://stats.areppim.com/stats/stats_usxoutlaysxgdp.htm