GOP Tax Cuts Are Driving US Debt Ratio Higher: Analysis

[RayGravesGhost]

This from the Fiscal Times:


https://finance.yahoo.com/news/gop-tax-cuts-driving-us-160437971.html
GOP Tax Cuts Are Driving US Debt Ratio Higher: Analysis
Michael Rainey
Tue, March 28, 2023 at 12:04 PM EDT·2 min read

The argument in a nutshell:

“Tax cuts initially enacted during Republican trifectas in the past 25 years slashed taxes disproportionately for the wealthy and profitable corporations, severely reducing federal revenues. In fact, relative to earlier projections, spending is down, not up. But revenues are down significantly more. If not for the Bush tax cuts and their extensions — as well as the Trump tax cuts — revenues would be on track to keep pace with spending indefinitely, and the debt ratio (debt as a percentage of the economy) would be declining. Instead, these tax cuts have added $10 trillion to the debt since their enactment and are responsible for 57 percent of the increase in the debt ratio since 2001, and more than 90 percent of the increase in the debt ratio if the one-time costs of bills responding to COVID-19 and the Great Recession are excluded. Eventually, the tax cuts are projected to grow to more than 100 percent of the increase.”

Specifically, CAP says that the tax cuts passed under President George W. Bush will cost more than $8 trillion through the end of 2023, while the Trump tax cuts will cost $1.7 trillion. Republican plans to extend the Trump tax cuts would add $2.6 trillion to the total, while the effort to rescind IRS funding would add billions more.

 

[armbar73]

The tax code needs major reform. The tax the Rich philosophy doesn’t work. The rich are rich because they are smart and will figure out a way to live their money and pay even less taxes.

I’m in favor of a national sales tax. Rich people buy more stuff and pay more taxes. The not Rich buy things and still contribute proportionally, unlike today where a lot of people pay virtually nothing in taxes. Not to mention the cash businesses (like the hair stylist) that kills it and doesn’t pay any tax on their cash payments.

 

[GatorTheo]

Tax the rich doesn't work when you give them a truckload of loopholes.

 

[RayGravesGhost]

The tax code needs major reform. The tax the Rich philosophy doesn’t work. The rich are rich because they are smart and will figure out a way to live their money and pay even less taxes.

I wonder what examples of "not taxing the rich" you point to as "working"

I’m in favor of a national sales tax. Rich people buy more stuff and pay more taxes.

Wrong. Consumption taxes are a larger burden on the poor than the rich

As a percentage of income...your plan would tax the middle class & poor at a higher level than the rich for basic items like food, gasoline, electricity, etc

The not Rich buy things and still contribute proportionally, unlike today where a lot of people pay virtually nothing in taxes.

No the evidence says they would under contribute due to opportunities like financing options the rich gave access to not available to the poor

You want to swap bad tax codes for other unfair tax advantages

Not to mention the cash businesses (like the hair stylist) that kills it and doesn’t pay any tax on their cash payments.

So cash businesses are at the root of the problem?

So the cash expenditures that go in as business expenses you now want to tax?

Are you sure about the net effect of charging small businesses a broad new tax on all its purchases to operate and what that would mean for prices for all good and services?

 

[armbar73]

I wonder what examples of "not taxing the rich" you point to as "working"

I’m pretty sure I didn’t say not taxing the rich isn’t working. The general philosophy of taxing the Rich more doesn’t work in the long run. Eventually, they will move their money and not pay any taxes. We are already seeing it in states like CA where high income earners are leaving for tax reasons. So instead of the state getting something, they are getting nothing.

I’m not in saying they shouldn’t pay taxes. Not at all. I think it is ridiculous how many loopholes allow them to pay very little.

Wrong. Consumption taxes are a larger burden on the poor than the rich

As a percentage of income...your plan would tax the middle class & poor at a higher level than the rich for basic items like food, gasoline, electricity, etc

No the evidence says they would under contribute due to opportunities like financing options the rich gave access to not available to the poor

You want to swap bad tax codes for other unfair tax advantages

Fair point. Then maybe it is a hybrid better the current bracket system and a national sales tax. I’m not sure what the right answer is, but it’s not the current tax code. Here’s my issue:

Roughly 40% of US households pay $0 in taxes. I’m sorry, but even low income household should pay something. Which gets to my point about cash businesses. We know some who is a hair stylist. She’s busy and expensive. She claims income on about 50-60 percent of what she makes because a lot of people pay in cash. So she doesn’t pay income tax on half of her income. So yes, cash businesses are a part of the problem. The problem, no? Part of it, yes.

So cash businesses are at the root of the problem?

So the cash expenditures that go in as business expenses you now want to tax?

Are you sure about the net effect of charging small businesses a broad new tax on all its purchases to operate and what that would mean for prices for all good and services?

I’m not talked about cash expenditures. I’m talking about cash revenue that goes untaxed.

Does unfair tax policy excluded these types of business that pay no tax on revenue? That doesn’t sound very fair either.

 

[BamaFan1137]

Tax the rich doesn't work when you give them a truckload of loopholes.

So you're liberal on guns AND taxes?

The rich pay the majority of tax in this country, despite said loopholes. Pay no attention to the man behind the curtain...focus on the red herring instead.

 

[GatorTheo]

So you're liberal on guns AND taxes?

The rich pay the majority of tax in this country, despite said loopholes. Pay no attention to the man behind the curtain...focus on the red herring instead.

I'm moderate on guns and taxes.

While we waste a ton of money on non-productive people, the rich need to pay most of the taxes. Don't feel sorry for them....they are rich....they'll survive.

 

[BamaFan1137]

I'm moderate on guns and taxes.

Agree to disagree.

While we waste a ton of money on non-productive people, the rich need to pay most of the taxes. Don't feel sorry for them....they are rich....they'll survive.

So why mention the loopholes then if you already knew rich people pay the tax in this country?

Eliminating those loopholes would merely mean that rich people pay a few percentage points higher than damn near all tax that Americans currently pay.

 

[GatorTheo]

Agree to disagree.



So why mention the loopholes then if you already knew rich people pay the tax in this country?

Eliminating those loopholes would merely mean that rich people pay a few percentage points higher than damn near all tax that Americans currently pay.

Rich people in congress put loopholes in all the 'tax the rich' legislation, right?

 

[BamaFan1137]

Rich people in congress put loopholes in all the 'tax the rich' legislation, right?

Yea, I guess so. And yet....

 

[GatorTheo]

Yea, I guess so. And yet....

Taxes need to be much simpler and the rich need to bear most of the responsibility.

 

[JimGaster]

Revenues to the US Government have NEVER been higher! Anyone that thinks anything other than reckless, out of control government spend is causing our deficits is a pure idiot!

 

[RayGravesGhost]

I’m pretty sure I didn’t say not taxing the rich isn’t working. The general philosophy of taxing the Rich more doesn’t work in the long run. Eventually, they will move their money and not pay any taxes. We are already seeing it in states like CA where high income earners are leaving for tax reasons. So instead of the state getting something, they are getting nothing.

The general philosophy isn't failing...the ability for the tax code process to resist the lobbying efforts of the rich is what you're observing

I don't really understand how people are against a progressive tax system (the rich pay more than poor)

What distorts that system is the loopholes.
I think we all agree on that

Get rid of the loopholes...the system works

I’m not in saying they shouldn’t pay taxes. Not at all. I think it is ridiculous how many loopholes allow them to pay very little.

I think we all agree on that

Fair point. Then maybe it is a hybrid better the current bracket system and a national sales tax. I’m not sure what the right answer is, but it’s not the current tax code. Here’s my issue:

Roughly 40% of US households pay $0 in taxes. I’m sorry, but even low income household should pay something. Which gets to my point about cash businesses. We know some who is a hair stylist. She’s busy and expensive. She claims income on about 50-60 percent of what she makes because a lot of people pay in cash. So she doesn’t pay income tax on half of her income. So yes, cash businesses are a part of the problem. The problem, no? Part of it, yes.

Cash businesses cheating the tax code (theft) would exist under any system

Having a national sales tax would tax the hair stylist's customers but how would it stop not recording transactions? It would free the hair stylist from owing any tax at all.

When you say you want a national sales tax would it include purchases a business makes to produce its good & services too? The business is a customer during those purchases. If so, then you're simply shifting the tax burden to businesses who would then raise prices to compensate. You would shift the entire business production expenses to the customer and businesses would be freed from any income taxes.

I don't think that's your intention.

I’m not talked about cash expenditures. I’m talking about cash revenue that goes untaxed.

A business is a purchasing customer also

If you take their expenses as "purchases" a national sales tax would take a % portion of the purchases in the form of tax and leave the net of the revenue and the remaining expenses untaxed?

Does unfair tax policy excluded these types of business that pay no tax on revenue? That doesn’t sound very fair either.

No loopholes make the income tax system pretty unfair

The first place to look for alternatives is divorcing yourself from the idea of taxing income instead of wealth

Take a wild guess who decided that should be the system


I could g on but just consider this...

If taxes are a way to incentivize or de-incentivize societal behavior...like taxing the hell out of cigarettes

Why do we have considerably higher taxes on income (actual work) than not working (investing)?

 

[LinksGator]

Stop spending and giving money away and then stop printing money, every politician is too worried about votes instead of fiscal sanity. Biden is not even concerned about deficits or a healthy economy, and no president since Ronny has been either. It is hard to blame the GOP for this, it is all of government and it’s excessive size. Ray Graves even knew that! In total, about 59.9 percent of U.S. households paid income tax in 2022. The remaining 40.1 percent of households paid no individual income tax.

 

[RayGravesGhost]

The entire idea behind this article just flew over linksgator's head...

Did you miss premise of the article...or are you just acting willfully blind?


In fact, relative to earlier projections, spending is down, not up. But revenues are down significantly more. If not for the Bush tax cuts and their extensions — as well as the Trump tax cuts — revenues would be on track to keep pace with spending indefinitely, and the debt ratio (debt as a percentage of the economy) would be declining.

 

[BamaFan1137]

Taxes need to be much simpler

Agree.

and the rich need to bear most of the responsibility.

They do.