Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Cutting US Income Taxes Will Blow Out The Budget

Politics / Taxes Mar 23, 2017 - 12:22 PM GMT

By: John_Mauldin


BY JOHN MAULDIN : The cost of health care runs well over $1.1 trillion. Social Security is almost $1 trillion. Defense spending is $620 billion.

Entitlement programs for our nation’s seniors and low-income individuals and families run $550 billion. (That includes food stamps, disability, affordable housing, earned-income tax credits, childcare tax credits, and so on.)

Where do you find $500 billion that you can take from the above items to balance the budget?

Incoherent, Contradictory, Dysfunctional Voters

Americans want two incompatible things: They want their taxes reduced, and they want more benefits. Or at least, they don’t want their benefits (or those of their parents or friends) cut.

And of course, they want more GDP growth—which is inconsistent with the growing debt.

Who actually pays the income taxes the federal government collects? Look at this chart.

Almost 80% of taxes is paid by people making $100,000 or more. That means just 2.7% of the taxpayers paid 51% of the taxes. Some 62% of individual filers paid a mere 5.7% of the taxes, and their average tax rate was 4.3% (not including Social Security taxes).

The top 1% of taxpayers accounted for more income taxes paid than the bottom 90% did. If you’re going to cut income taxes, you’re going to end up cutting taxes for “the rich.”

Here is the incoherent dissonance that Republicans are afraid to address: If they’re going to balance the budget, they’re going to have to either increase revenues or cut benefits. Since cutting benefits is a political nonstarter, they’re going to have to increase revenues.

In the Best-Case, Unrealistic Scenario, We Are Still $800 Billion Short

I will give Ways and Means Committee Chairman Brady kudos for trying to do that with his border adjustment tax. Let’s look past the fact that I think a BAT will cause a global recession: Brady’s motive is good.

He certainly recognizes that in order to cut income taxes he’s going to have to go to a consumption tax of some form. Seriously, that is an extraordinarily brave position for a Republican in the House leadership to take.

That Ryan has signed on to it says that he too realizes they have to do something radical.

Yes, repealing Obamacare and really restructuring health care might save a few hundred billion here and there. Maybe. Over time. (In October, I wrote "How to Rebuild Healthcare Right.")

Great, now we’re down to needing only another $800 billion to balance the budget. And we haven’t cut personal taxes or done anything with corporate taxes. Or come up with measures to create jobs.

Wake Up, American Voter!

I would like to think that the American voter would someday wake up and become less dysfunctional. I would also like the Jobs Fairy to create another 5 million high-paying middle-class jobs.

I think both events fall in about the same range of probability… as in, not going to happen.

Clowns to the left of me, jokers to the right, and here I am, stuck in the middle with the American electorate.

Conclusion? Unless we want to blow out the debt—and we could do that (later I will talk about how we should do that if we decide to do it in my free weekly publication Thoughts from the Frontline )—we are going to have to raise revenues.

But raising income taxes is precisely the opposite of what we need to do if we want to create more jobs and investments

Get a Bird’s-Eye View of the Economy with John Mauldin’s Thoughts from the Frontline

This wildly popular newsletter by celebrated economic commentator, John Mauldin, is a must-read for informed investors who want to go beyond the mainstream media hype and find out about the trends and traps to watch out for. Join hundreds of thousands of fans worldwide, as John uncovers macroeconomic truths in Thoughts from the Frontline. Get it free in your inbox every Monday.

John Mauldin Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in