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Topic: Federal Debt and Deficit

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utee94

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Re: Federal Debt and Deficit
« Reply #378 on: July 18, 2025, 10:39:28 AM »
Incorrect.

Everyone died of dysentery, on the Oregon Trail. 
I'm talking back in the Old Country and well before anyone was taking covered wagons out west...

Gigem

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Re: Federal Debt and Deficit
« Reply #379 on: July 18, 2025, 10:46:13 AM »
Was this just too scary for anyone to even comment?
Given our current politics nobody will add even 0.01% to any tax. 

medinabuckeye1

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Re: Federal Debt and Deficit
« Reply #380 on: July 18, 2025, 12:17:54 PM »
Given our current politics nobody will add even 0.01% to any tax.
Nor reduce benefits either.  

For reference, Medicare was ALREADY in a heap of trouble BEFORE the Rx coverage was added.  At the time Senator John McCain opposed the addition on the basis of fiscal sanity.  His argument, as I recall, was basically that if we wanted to add a HUMONGOUS new expenditure (Rx coverage) to an already insolvent program then we HAD TO also increase the rate to at least cover the addition.  

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 passed:
  • 220-215 in the HoR
  • 54-44 in the Senate
It was signed by President Bush and was VERY popular with the voters.  


There was some Democratic opposition but it wasn't on fiscal grounds it was on Rx pricing issues.  The Republican opposition was mostly on fiscal grounds but was stifled by party leadership.  The debt situation would obviously be substantially less bad if this either hadn't been passed or had included some kind of tax increase to pay for it.  It is easy to blame "the politicians" for not doing that but at the end of the day, this was quite popular with "we the people" so it is on us.  

Cincydawg

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Re: Federal Debt and Deficit
« Reply #381 on: July 18, 2025, 12:33:08 PM »
Given our current politics nobody will add even 0.01% to any tax.
Aside from this barrier is the striking evidence that higher marginal tax rates don't generate more tax revenue.

medinabuckeye1

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Re: Federal Debt and Deficit
« Reply #382 on: July 18, 2025, 02:37:23 PM »
Aside from this barrier is the striking evidence that higher marginal tax rates don't generate more tax revenue.
Yes and no.  

Raising the top marginal rate has little-or-no impact for a few reasons:

This is why US Government revenues have been a little under 20% of GDP consistently for most of a century despite the top marginal rate varying from as high as 91% to as low as 28%.  However, you CAN raise additional revenue by increasing things like SSI and Medicare taxes because there is a LOT more money there and the people paying it generally don't have the flexibility that "the rich" tend to have.  


Cincydawg

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Re: Federal Debt and Deficit
« Reply #383 on: July 18, 2025, 02:41:29 PM »
 Denmark’s top statutory personal income tax rate of 55.9 percent applies to all income over 1.3 times the average income. From a U.S. perspective, this means that all income over $82,000 (1.3 times the average U.S. income of about $63,000) would be taxed at 55.9 percent.

utee94

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Re: Federal Debt and Deficit
« Reply #384 on: July 18, 2025, 02:44:13 PM »
Denmark’s top statutory personal income tax rate of 55.9 percent applies to all income over 1.3 times the average income. From a U.S. perspective, this means that all income over $82,000 (1.3 times the average U.S. income of about $63,000) would be taxed at 55.9 percent.
oof.  That would leave a mark.

A... DEN... mark.

Cincydawg

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Re: Federal Debt and Deficit
« Reply #385 on: July 18, 2025, 02:44:59 PM »
I agree that higher marginal rates on the "middle" would likely increase revenue, it might also send us into recession which would counter that.  If done judiciously, it could work.  You can see how Denmark does it, they have a high marginal tax rate on fairly modest income, but just raising the top marginal rate on higher incomes doesn't seem to raise much if any additional revenue.

I think Republicans COULD have inserted at higher rate of say 45% on income above ~a million for imagery sake.  Then they could claim to have raised taxes on the "wealthy".  I know the notion was kicked about briefly.

Cincydawg

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Re: Federal Debt and Deficit
« Reply #386 on: July 18, 2025, 02:58:34 PM »
In 2021, Denmark collected about 9.6 percent of GDP through the VAT, Norway 8.2 percent, and Sweden 9.2 percent. All three countries have VAT rates of 25 percent. The United States does not have a national sales tax or VAT. Instead, there are state and local sales taxes. The average tax rate across the country (weighted by population) is about 7.5 percent. Due to the much lower rate, combined with a narrower base, U.S. sales taxes collect only about 2 percent of GDP in revenue.

medinabuckeye1

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Re: Federal Debt and Deficit
« Reply #387 on: July 18, 2025, 03:19:02 PM »
In 2021, Denmark collected about 9.6 percent of GDP through the VAT, Norway 8.2 percent, and Sweden 9.2 percent. All three countries have VAT rates of 25 percent. The United States does not have a national sales tax or VAT. Instead, there are state and local sales taxes. The average tax rate across the country (weighted by population) is about 7.5 percent. Due to the much lower rate, combined with a narrower base, U.S. sales taxes collect only about 2 percent of GDP in revenue.
You have mentioned in this thread a few times that the European Countries that DO collect an appreciably higher percentage of GDP in taxes "hit the middle class a lot harder than we do" and that was the point I was driving at here.  

Denmark's 55.9% highest marginal rate isn't really all that much higher than the US's 37%.  The MUCH bigger difference is that the US highest rate doesn't kick in until $609,351 for a single or $731,201 for MFJ.  

MFJ in the US at $82,000 are only paying 12% (until $94,301 then it jumps to 22%).  Denmark vs US marginal rate differences (based on what was posted here, I didn't double-check using MFJ table):
  • 43.9% higher in Denmark from $82,000 to $94,300:   55.9 vs 12%
  • 33.9% higher in Denmark from $94,301 to 201,050:  55.9 vs 22%
  • 31.9% higher in Denmark from $201,051 to $383,900:  55.9 vs 24%
  • 23.9% higher in Denmark from $383,901 to $487,450:  55.9 vs 32%
  • 20.9% higher in Denmark from $487,451 to $731,200:  55.9 vs 35%
  • 18.9% higher in Denmark from $731,201 up:  55.9% vs 37%.  
Our rates are MUCH more progressive AND we have roughly 1/3 the sales taxes.  Bottom line, our middle class pays a LOT less, our rich pay a little less.  If you want to appreciably increase Governmental Revenues you can't do it by only taxing "the rich" unless you redefine "rich" as more-or-less anyone with a job like Bill Clinton did.  It DID work for him.  Federal Revenues rose from a little under 17% of GDP when he took office to a little under 20% of GDP when he left office eight years later.  The budget balanced was because of that AND because spending dropped from a little over 21% of GDP in 1990-1992 to about 17.5% of GDP in 1999-2001.  

Cincydawg

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Re: Federal Debt and Deficit
« Reply #388 on: July 18, 2025, 03:23:52 PM »
They article lists our top marginal tax rates as being 43.9%  as I recall because they properly include average state income tax rates.

So, yes, the top marginal rate isn't all that different, Norway's is lower but that's a special case.  The difference as noted is how soon it attaches at relatively modest incomes.  I don't know how standard deductions work there.

medinabuckeye1

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Re: Federal Debt and Deficit
« Reply #389 on: July 18, 2025, 03:32:59 PM »
I don't know how standard deductions work there.
That is a humongous difference.  For me, my family W2 income is enough to get out of the 12% bracket but when you remember that I have four kids so I get the MFJ standard deduction of $29,200 and the $5k that I have withheld for childcare and the $3,300 that I have withheld for unreimbursed healthcare and the share of my healthcare that I pay that is paid with pretax dollars my overall taxable income is almost $50k less than my W2 income.  If Denmark's deductions are less than that $82k top marginal rate hits even more people but if they are more then it hits less and I'm not doing the research to figure that out.  

The underlying point remains that you can't raise appreciably more revenue without appreciably increasing taxes on people that I (and most of us) aren't thinking about when AOC says to "Tax the Rich".  

medinabuckeye1

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Re: Federal Debt and Deficit
« Reply #390 on: July 18, 2025, 03:36:09 PM »
I think Republicans COULD have inserted at higher rate of say 45% on income above ~a million for imagery sake.  Then they could claim to have raised taxes on the "wealthy".  I know the notion was kicked about briefly.
You've raised this issue a few times and politically it would have been a smart move for the Republicans although the economics of it are dubious so they put either country or donors over party and didn't do it.  

As a practical matter it would be smart politics because the bulk of those impacted would be Democrats and it would be a way for them to say "we taxed the rich, the Democrats didn't".  Let AOC choke on that, LoL.  

Fiscally though, it wouldn't raise enough money to make a noticeable difference.  

utee94

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Re: Federal Debt and Deficit
« Reply #391 on: July 18, 2025, 03:44:21 PM »
You've raised this issue a few times and politically it would have been a smart move for the Republicans although the economics of it are dubious so they put either country or donors over party and didn't do it. 

As a practical matter it would be smart politics because the bulk of those impacted would be Democrats and it would be a way for them to say "we taxed the rich, the Democrats didn't".  Let AOC choke on that, LoL. 

Fiscally though, it wouldn't raise enough money to make a noticeable difference. 
Which is another reason to go ahead and do it and put to rest the idea that it would make a difference.

But yeah, ideologically I'm also not in favor of ANY more taxes, the government already takes more than it should and wastes far too much of that.

 

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