alt Hacker NewsThe tax rates in the US are low; that's why there is so much debt and so few services.
Anti-tax groups have long followed the 'Starve the Beast' strategy (and their opponents are completely incompetent and fall for it every time):
1) Cut taxes
2) Point out the resulting deficit, say we're spending
too much, and cut services
3) Repeat
Replies
Looking at the stats, the US public spending is about 40 per cent of the American GDP, which, though lower than most of the EU, is not really "low". 40 per cent of something as huge as the American economy is huge as well. Given that the US economy is a quarter of the global economy, US public spending is one tenth of the economic output of the entire mankind. That is not low.
https://www.oecd.org/en/data/indicators/general-government-s...
BTW Swiss public spending is lower (32 per cent), and Swiss sidewalks and roads are uniformly nice. At the same time, Germany is at 48 per cent and it has a big problem with aging infrastructure, railways, bridges etc. Swiss rail authority regularly refuses delayed German trains at the border in order not to cause chaos in the reliable Swiss railway network. Given the 32 vs. 48 per cent of public spending, you would expect it to be the other way round, but it isn't. The mapping between the volume of public spending and quality of public services is not that simple.
Maybe the problem in the US is that too much money gets siphoned away by various legal or illegal means. Famously, whenever places like California or NYC try to build something like a new subway line or a new high-speed rail, their project budgets balloon into absolutely insane volumes, much higher than comparable projects in France, Italy or Japan, and the main reason is that various special interests need to be satisfied, from the construction unions to various NIMBYs.
With such a flawed model of public spending, higher taxes will only result in higher waste.
> The wealthiest people pay a much lower tax rate because their typical form of income (capital gains) is taxed at a much lower rate than other people's (salary)...
A different way to think about this would be to say that a lower tax rate for capital gains is a trick (incentive) to get the wealthiest people to invest their wealth in the market, which provides capital for people trying to grow the economy and provide jobs, rather than spend their wealth on luxuries for themselves. In this way, we have an economy focused more on the needs and wants of regular people, and less on producing what wealthy people want.
Can you spot a flaw in that line of reasoning?