The KGB Oracle Forums General Public Discussion (SPECIAL ACCESS) KGB Political Debate Central We've heard it all before !

Lets separate these claims into two - a) I am not sure we could collect enough taxes, b) collecting enough taxes will break our economy.



a) Is demonstrably wrong win otherwise absurd example - if we were to confiscate and liquidate every asset held by US Gov and all US citizens we very can collect enough taxes. I don't think we even need to run numbers on this one.

b) Now, if we simply collect enough taxes, would it have detrimental effect on the economy? Absolutely, any level of taxation above 0% has some detrimental effect. How would you define “break our economy” and how would you compare it to the alternative? I would argue that deadweight loss from taxing to cover our existing level of spending would be demonstrably less than effects of a complete default or even reaching anywhere near 200% debt:GDP level.

Now, you will inevitably bring up Laffer curve, but even proponents and strict followers of this theory will tell you we are nowhere near maximum revenue point and at our present taxation level behavior is strictly linear. As a result the only logical conclusion that increasing taxation will increase revenue levels, for as long as any attempted tax dodging/loopholing is quashed.





“Either party” already has all the opportunities to spend more, just consult Ryan’s Plan if you want to see examples of “spend more” unconstrained by fiscal reality. His plan also has some cuts, but it is inconsequential in ’money in-money out’ scheme of things. Our government already is not forced to balance the budget, so spending is happening regardless of tax revenue.

What is also happening is that population that enables/benefits from this deficit spending is resisting paying for it, in effect offloading this debt to future generations. You can easily demonstrate that each year taxes are not raised means additional burden on people who are currently not even of age to vote get to pay for this debt while people that did get to die without paying the bill.

In fact, I will make a case that resisting taxation is supporting “taxation without representation” violation of future generations.



Actually, what Bernanke is doing is raising taxes on the poor and middle class. Corporations and wealthy typically derive wealth from a flow of money, while poor and middle class from face value of money. Pumping money into the system and diluting purchasing power of $ disproportionally affects “wrong people”.

What can Bernanke do when The Hill is so bat shit insane that they are refusing to increase taxes in fears of political fallout? Value has to be extracted out of the system in some way.



So reality of situation is as follows:



a. Extract value by on-going QE, in process enriching channels (connected and banks, since Bernanke doesn’t have other channel to the market)

b. Extract value by increasing taxation level, making it slightly more transparent and accountable system than a.





I agree with irresponsible monetary policy, and raise you irresponsible taxation policy. Both are at fault.





Raising taxes will not fix the system, but it will stop irresponsible offloading of this problem to future generations. Plus, it is my hope is that if average-Joe sees his taxes increased to accurately reflect fiscal situation there will be more political pressure to fix the system.