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hunterpayne • today at 7:25 AM • 1 reply • view on HN

"That's why we need more general solutions like unrealized gains tax"

The problem with this is that is a good reason we don't tax unrealized gains. Yes, there are people using this as a loophole. But if you tax this, everytime home value goes up, there is a huge wave of bigger tax bills for every home owner and business owner. Which would crash the housing market overnight and probably kill 90% of the job creation in the economy. I'm sure you could make some carve outs for it, but if you do that, you probably won't collect much in tax revenue.

The biggest thing you don't seem to understand is that there is an economic concept called the Laffer curve. It relates tax rates to the total amount of tax a government takes in. And we are already at or near that tax rate. Increase taxes and the government won't take in more revenue. Growing the economy, that increases government tax revenue. But increasing tax rates past the optimum rate DECREASES not increases the tax revenue. Even ignoring the increased rates of tax avoidance, it constricts economic growth which reduces the employment tax revenue.

Basically, you can't tax your way to pay for your desired programs. Either allocate the budget you have or cancel the programs.

PS 1/2 of the federal budget is social spending, 1/6th is military (1/4 of which is the VA), 1/6 is interest on the debt and 1/6 is everything else the government does.


Replies

pnut • today at 9:54 AM

I don't know who "we" is to you, but this article (page 11) plots out position on the Laffer curve for 27 OECD countries, and indicates that the USA can handle a significantly higher tax burden before it becomes revenue optimised or counterproductive.

https://uu.diva-portal.org/smash/get/diva2:1148666/FULLTEXT0...