Ezra Klein, WaPo: Mitt Romney’s wrong: You can balance the budget through taxes.
"Mitt Romney’s wrong: You can balance the budget through taxes. But you may not want to."
http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/08/09/mitt-romneys-wrong-you-can-balance-the-budget-through-taxes-but-you-may-not-want-to/
What Mitt Romney is suggesting here is that taxes have such a large and negative effect on growth that raising them does not lead to net new revenues, or at least not enough net new revenues that you can support federal spending in the 22 percent of GDP range. This is a convenient argument for Romney as it gives him a reason, beyond simple conservative dogma, to oppose any and all tax increases. But it’s not true. You can get from where we are to a balanced budget by raising taxes. You may not want to. But you can.
We know this from both international experience, historical experience, and economic modeling. Economist Bruce Bartlett, author of one of the best books on tax reform, notes that ”there are many countries with tax/GDP ratios well above our current or projected spending/GDP ratio. In other words, it could be done if we were willing to adopt European-style tax systems.” Len Burman, an economist at Syracuse university, makes a similar point. “Our taxes are at about 28 percent of GDP. In Denmark, the [tax burden] is closer to 48 percent. Their GDP per capita is about the same as ours.”
Joel Prakken, an economist at Macroeconomic Advisers, points out that “we had very nearly balanced budgets back in the 1960s through the mid-1970s when top marginal tax rates were much higher than they are now.”
Indeed, the average budget deficit from 1950 to 1980 was 1.17 percent of GDP. The average budget deficit under Ronald Reagan and George W. Bush — so, under the major tax-cutting presidents — was 3.1 percent of GDP. The average budget deficit under Bill Clinton was 0.7 percent of GDP. So, yes, tax cuts lead to deficits and tax increases close them.
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and they make their money within the difference between those two numbers (plus fees). That isn't the same as people who own gold or even stocks. That money is tied up and stays where it is.
I was pointing out that your basic idea that the money is taken out of the economy is simply wrong. Money collected through taxes are still part of the economy.
There is a point of diminishing returns but to some extent, yes I think it is more useful for the government to take your money and spend it than to allow you to use it all as you see fit.
You will not build a road or a bridge. There are some things we must do as a society and taxes are the way money is raised for the things society needs.
Eliminating money for barter is insane. The fact that you must go to this extreme to try to make a point indicates just how wrong you are on this.
Seizing your excess property to help others, to an extent.. yes. This is what we call property taxes and goes to things like schools. I am in favor of these things.
Income tax rates are near historic lows. Reagan screwed the pooch on this one. If he had just left things where they were we would have been fine. There was no debt problem until his failed economic policies came into play.
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