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Cutting Taxes Without Cutting Spending Will Destroy Your Country

Our taxes are too high. That much is obvious. The USA has the highest taxes in the entire world if you add up all the payroll, income, corporate, sales, excise, estate, usage, and hidden taxes the typical American pays, with the possible exception of certain cities in Scandinavia which are even higher (Jesus).

As I’ve explained many times before, our taxes are too high because our government is way too big and does too much.

This means taxes should be reduced. The lower the taxes, particularly on the middle class, the more freedom and economic activity is created, which is healthy for an economy long-term. We could argue about the merits or problems of lowering taxes on the very poor or the very rich, but that would delude this particular conversation, so I’ll stick with the middle class as my example for the moment. Everyone, even most left-wingers, tend to agree that lowing the taxes on the middle class is a good thing.

Therefore, I support tax cuts always, and everywhere, no matter what the details are. High taxes are bad, lower taxes are good, period.

That being said, we have a problem. The US government spends a staggering $7 trillion a year. That’s trillion with a “T.” And it does it every friggin’ year. $7 trillion this year. Then $7 trillion next, and so on, forever, until the USA finally collapses, which it likely will.

Worse, the US federal government spends anywhere from half a trillion to 1.5 trillion more per year than it takes in as tax revenue. Many of the states are even worse.

So if you cut taxes, and if those taxes end up cutting government revenue (and they may not, more on this in a minute), and you don’t cut any government spending to match the revenue decrease, you’re simply speeding the day when the USA collapses economically.

This is what left-wingers scream about when right-wingers talk about cutting taxes. “You’re going to make deficits worse! How are you gonna pay for all this stuff?” They’re absolutely right. (They’re also liars, since they never scream about deficits when a left-wing president is in charge.)

Therefore, yes, you need to cut taxes, but you also need to cut spending at the same time. If you don’t, you’re just making everything else worse. You’re simply cutting taxes to ensure that either interest rates or inflation (or both) will eventually increase to cover the fact you’re still spending assloads of money you don’t have.

My biggest prediction about Trump that I never shared publicly would be that he would do a “George W. Bush,” in that he would eventually cut taxes, which is very good, but would increase government spending at the same time, which is very bad. It now appears I was right. Most likely, Trump will push through some kind of tax cut while increasing spending. Tax cuts are good, but increasing spending at the same time means you’re simply slamming your foot down on the accelerator to when the USA drives off a cliff. (Not that any Trump supporters care; they care more about Trump than the future of the USA.)

Since I know the topic will come up, it’s true that sometimes tax cuts actually increase revenue to the government. This happened during a few years under George W. Bush, where he cut taxes, and tax revenue increased due to increased economic activity. That’s all well and good, but there are problems with this:

1. It doesn’t matter if revenues increase unless they increase equal to or greater than the rate of government growth. If tax revenues increase by 5% or 8% while you’re increasing government spending by 10%, 20%, or more (which Bush did), you’re still fucked in the long-term.

2. The reason for most of the economic increase during the Bush years was because of economic bubbles. We all know how that turned out. Under Trump, we’re under the same bubbles again. Bonds, stocks, credit, and real estate are all in bubbles! Again! So all this “economic increase” is just a bunch of BS that will blow up a little later anyway… except with government spending that is even bigger.

I still support any tax cuts since I hate paying taxes and I stopped caring about the long-term future of the USA a very long time ago. But right-wingers, Republicans, and Trump worshippers shouldn’t delude themselves into thinking that cutting taxes while not cutting government spending just as much (or more) is a good idea. It’s a terrible idea, and it will destroy your country.

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38 Comments

  1. Cronos

    So which spendings exactly would you cut?

  2. Tony

    Even though I’m a liberal, I would mind Republicans so much if they actually cut spending along with taxes. Republicans are just better at marketing than Democrats, so the perception is that Republicans are more fiscally responsibly even though the debt has increased more under Republicans than Democrats.

    https://www.theatlantic.com/politics/archive/2012/10/gop-presidents-have-been-the-worst-contributors-to-the-federal-debt/264193/

    Ironically it was Clinton who did the best recently, but “fiscal conservatives” rejected another Clinton in favor of Trump, who will almost certainly increase the debt like other Republican presidents.

  3. blueguitar

    Just curious – are there any country case studies where the country had similar debt/deficits and rebounded financially?

    Thanks

  4. Caleb Jones

    So which spendings exactly would you cut?

    I would have massive spending cuts across the board on literally everything the federal government does, with the one exception of veteran’s benefits.

    Here’s an example of what I would do:

    https://calebjonesblog.com/if-i-was-president/

    the debt has increased more under Republicans than Democrats

    I know:

    https://calebjonesblog.com/republicans-are-for-big-government/

    Ironically it was Clinton who did the best recently, but “fiscal conservatives” rejected another Clinton in favor of Trump, who will almost certainly increase the debt like other Republican presidents.

    Hillary would have increased spending too, a lot, just like Obama did.

    It’s not an issue of one is good, one is bad. They’re both really, really bad.

    Just curious – are there any country case studies where the country had similar debt/deficits and rebounded financially?

    Sort of, but only after major crashes, like with Argentina. The future looks bad for the US, regardless of what happens.

  5. The New Yorker

    Hey Caleb,

    You know, funny thing is cutting taxes without cutting government spending is exactly what I’m learning in Macro class this week.

    Speaking of which, my professor claims that small time investors who wanna earn higher average market returns while minimizing risk and paying the lowest amount of fees should buy and hold “passively managed Index mutual fund portfolios,” since they have a long run average return of 7% after inflation.

    Which means that a deposit of about $184 every month in an Index Mutual Fund starting at age 20 will become 1 million dollars at age 70. Plus the later you start saving, the more you need to deposit every month. Long story short, my professor claims that this can turn people into millionaires.

    I know you’ve mentioned that you’re not an investment professional, so I’m simply interested in your take on this. Since this seems to good to be true, is it false garbage, true gold, or something else?

  6. Kurt

    The USA has the highest taxes in the entire world if you add up all the payroll, income, corporate, sales, excise, estate, usage, and hidden taxes the typical American pays

    ..and yet I read we have one of the lowest total tax burdens in the world vs. GDP every time I do any cursory research on this. I doubt I have or ever will investigate this topic as much as you have however, as it bores me to death (I know, I know, I should be more aware,  it’s the greatest expense I’ll ever have etc.)

    Can you direct me to a credible source that substantiates your argument here?

  7. Caleb Jones

    Since this seems to good to be true, is it false garbage, true gold, or something else?

    It’s true. The problem is very few humans in the real world ever do that.

    And I’m not sure why you think taking 50 years to get to $1 million is “too good to be true.” To me that’s way too long.

    and yet I read we have one of the lowest total tax burdens in the world vs. GDP every time I do any cursory research on this

    You said that before and I answered you before. I don’t like repeating myself so this will be the last time I say it: I am not talking about high taxes as a percentage of GDP. I’m only talking about taxes as a percentage of individual gross income. If I’m paying 30% or 40% or 50% in taxes (that’s total taxes, including taxes I don’t “see”), I don’t give a fuck what the GDP of my country is, and you shouldn’t either. Hong Kong has a tiny GDP, a great standard of living, and has a flat tax of only 17%, so GDP is not relevant to this discussion.

  8. Macro Investor

    Government is really out to lunch. All they know how to do is increase spending. They can never find ONE SINGLE THING that can be cut. Is this how Trump, Tillerson, Mnuchin and Ross ran businesses? Hell no. As conditions changed they laid people off right and left.

    The military is beyond nuts. The 7 aircraft carriers have more than enough planes to defend the homeland. The marines are more than enough ground troops for peace time. I’d bring everything home. Disband the army completely except for state national guard reservists. Disband the air force except a small nuclear deterrent (which subs/ICBMs also provide). The savings would pay off the debt in 10-20 years.

    I’d tell our allies, we will be there for you — but it might take a year or two to mobilize. Just like before WWI/II. If you want to be safe from invasion, you need to be able to last that long. In the meantime we will sell you all the weapons and supplies you have the hard cash to pay for.

  9. Investor

    Here’s an example of what I would do:

    https://calebjonesblog.com/if-i-was-president/

    You talk there about vetoing policies that are against constitution. Isnt that completely redundant? I dont know how it is in the US, but normally constitution always takes precedence so any law or regulation that contradicts it is automatically void and has no power. Of course it doesn’t mean that they cant try to do it but you can then always say you dont follow this new law because its not valid since its against constitution and then they have nothing to they can legally do.

  10. Jack Outside the Box

    Investor – In America, it’s not automatic. Lawmakers have every right to pass as many laws which violate the Constitution as they want. Those laws will stand until a private citizen challenges them in court. In order for the challenge to stand, the private individual must have “legal standing.” This means that they must be personally inconvenienced by this law. If they’re not, the courts will throw out the lawsuit due to “no standing” to sue. Also, it takes courage and time for a private citizen to sue the government, especially if he has a full time job.

    In the absence of a lawsuit from any of the people, either because of no legal standing or no courage, the law must be obeyed. Only the judicial branch of our government has the legal right to interpret the Constitution and it has no legal right to act unless something is brought to it by the people. Our courts are required under our Constitution to be reactive only.

    Also, our Constitution is written in generic language and can be interpreted in multiple ways. That’s why the Supreme Court has established case law and historical precedent to guide the lower courts!

     

     

  11. CrabRangoon

    It’ll only get worse with spending-Bernie Sanders is the most popular politician right now so that should tell you all you need to know.  Trump was an anomaly (not that he’s decreasing spending either).  When you get a true socialist in office like Sanders who wants to give away the farm for free, we’ll floor the gas pedal on driving the country off a financial cliff.  The country, and the west in general, is in it’s “Winter” phase as some call it so there’s really no stopping the decline.  History repeats itself over and over with each empire and we’re no different.

  12. The New Yorker

    Hey Caleb,

    You mentioned before that “your investments will never make you rich, only your business will.” What did you mean by that?

    Did you mean:

    1. Earnings from a self owned business increase much faster than interest from total personal investments?

    2. Location independent business offers a relatively more reliable source of money than investments, especially when those investments include stocks?

    3. According to the Efficient Market Hypothesis, it’s impossible to reliably become rich by investing?

    By the way, I’ve heard that Warren Buffett is very competent at investing,  But why hasn’t he been limited by the EMH?

  13. The New Yorker

    By the way Caleb,

    When I said “Index Mutual Funds earning 1 million after 50 years is too good to be true,” I meant that it sounds like really easy money that just requires patience. After all, not a lot of people in the US have a net worth of 1 million when they retire.

  14. The New Yorker

    And Caleb,

    Why do you say that very few people in the real world ever buy and hold index mutual funds? And why is that?

  15. POB

    Just curious – are there any country case studies where the country had similar debt/deficits and rebounded financially?

    Brazil did that for some years with the “Real Plan”.

    https://www.economist.com/blogs/americasview/2014/07/real-plan

    Basically we erased our inflation getting rid of our rotten currency. Then we created some “make believe” money attached to the dolar for the transition period. Finally we replaced that with a real coin, which is our current money.

    Problem is we recently had 16 years of big spending goverments, which led to another crisis, an impeached president – the second in less than 30 years – and got us back to being in economical jeopardy (although not even as close to the edge as we were in the 90s).

     

  16. Caleb Jones

    Government is really out to lunch. All they know how to do is increase spending. They can never find ONE SINGLE THING that can be cut. Is this how Trump, Tillerson, Mnuchin and Ross ran businesses? Hell no. As conditions changed they laid people off right and left.

    Yep. Yet another reason the USA is going to economically collapse.

    I dont know how it is in the US, but normally constitution always takes precedence so any law or regulation that contradicts it is automatically void and has no power.

    Incorrect. Just about every country with a constitution regularly passes laws that completely ignore it, and enforces those laws on their citizens.

    As I’ve said many times, modern-day humans hate small government. They’re not going to let a fancy piece of paper get in their way.

    Of course it doesn’t mean that they cant try to do it but you can then always say you dont follow this new law because its not valid since its against constitution and then they have nothing to they can legally do.

    …and your government will just laugh at you and throw you in jail or fine you anyway.

    Seriously dude. I don’t care what country you live in, tell a cop or judge that you’re not going to do what he says because it’s unconstitutional, and watch what happens.

    You mentioned before that “your investments will never make you rich, only your business will.” What did you mean by that?

    Your answer number one, plus if you try to get rich with your investments, you’ll lose money and that goes against investing rule number one.

    By the way, I’ve heard that Warren Buffett is very competent at investing,  But why hasn’t he been limited by the EMH?

    Please, for the love of god, stop listening to your college professors about how to make money. Jesus.

    When I said “Index Mutual Funds earning 1 million after 50 years is too good to be true,” I meant that it sounds like really easy money that just requires patience.

    Patience isn’t easy.

    After all, not a lot of people in the US have a net worth of 1 million when they retire.

    Exactly my point.

    Why do you say that very few people in the real world ever buy and hold index mutual funds? And why is that?

    The same reason why the divorce rate is 70%+. Doing something and sticking with it for 50 years straight without ever changing your mind is extremely difficult, even if you’re a disciplined person. It’s not how humans are designed.

    With investing, once someone starts piling up a bunch of money, they usually either spend it or start speculating with it and lose it.

  17. The New Yorker

    “Please, for the love of God, stop listening to your college professors about how to make money.”

    I literally laughed out loud at this, cuz this is exactly what I keep telling my Asian parents…that college is not where people actually learn to make money.

    But like you said yourself, not going to college is not going to be an option for most Asians. So I might as well plan out my goals for after college (already done), try to learn about economics and flush out the SP as best I can, though it’s harder to identify SP in business and STEM majors.

    Does college economic knowledge hold any weight at all? Or are they all just theoretical, impractical, socialist garbage? How do you tell practical, less biased knowledge from trash? Or do you think only real world, actual job market experience offers any valuable insight?

  18. Caleb Jones

    But like you said yourself, not going to college is not going to be an option for most Asians.

    I never said that and that’s one of the most wrong things anyone has ever said on my blogs. I never said going not going to college “wasn’t an option” for Asian guys, I said most Asian guys are going to hand their balls over to their parents because they’re pussies that way.

    You can choose to not go to college if you have the balls. You can stand up to your parents if you have the balls (I did when I was young). If you don’t, well…

    The rest of your questions are too off-topic for this post.

  19. kevin

    Good post

    BD..

    is there anyway to reduce corporatism? It seems to favor big government

    government today does not exist to make itself smaller

    ‘outsider’ politicians elected to high office have been ineffective ..unsure who could make a real difference

  20. Investor

    In the absence of a lawsuit from any of the people, either because of no legal standing or no courage, the law must be obeyed. Only the judicial branch of our government has the legal right to interpret the Constitution and it has no legal right to act unless something is brought to it by the people. Our courts are required under our Constitution to be reactive only.

    That is basically same as saying you live under a dictatorship.

    Also, our Constitution is written in generic language and can be interpreted in multiple ways.

    Law should always be written in such a way that it has only one possible interpretation otherwise its meaningless as everyone is free to interpret it how they want. Of course the end result is that it allows the government to be the interpretor here, but thats basically a tyrannical dictatorship.

  21. Investor

    Incorrect. Just about every country with a constitution regularly passes laws that completely ignore it, and enforces those laws on their citizens.

    As I’ve said many times, modern-day humans hate small government. They’re not going to let a fancy piece of paper get in their way.

    Yeah but the definition of consitution is that it takes precedence over any other law. Any governmental body that tries to enforce a law that contradicts a constitution is breaking the law by definition. If then the police tries to enforce such decisions they automatically become criminals and lose the police status, again by definition and a citizen is then free to deal with the police in the way they would deal with the criminals.

  22. Investor

    …and your government will just laugh at you and throw you in jail or fine you anyway.

    Seriously dude. I don’t care what country you live in, tell a cop or judge that you’re not going to do what he says because it’s unconstitutional, and watch what happens.

    I would tell the judge that he is breaking the law and say we call this a mistrial because clearly he is unqualified by not knowing the law. If he refuses to step down the police in the room is then obligated to arrest the judge. If they do not they are criminals and I can treat the whole building and everyone there as a kidnapping by a gang which includes the possibility to calling on a riot to demolish the whole building.

    This is the way to do it if government thinks they can get away with this kind of stuff its because citizens allow it.

  23. Caleb Jones

    is there anyway to reduce corporatism?

    Many ways, but society isn’t interested.

    It seems to favor big government.

    Not seems, corporatism is big government. Read this.

    Yeah but the definition of consitution is that it takes precedence over any other law. Any governmental body that tries to enforce a law that contradicts a constitution is breaking the law by definition. If then the police tries to enforce such decisions they automatically become criminals and lose the police status, again by definition and a citizen is then free to deal with the police in the way they would deal with the criminals.

    Technically you’re 100% correct and I agree with you fully. I’m saying that in the real world, it virtually never actually works this way.

    I would tell the judge that he is breaking the law and say we call this a mistrial because clearly he is unqualified by not knowing the law.

    He would just laugh (or more likely, get upset) and throw a contempt charge at you. Trust me, I know.

    If he refuses to step down the police in the room is then obligated to arrest the judge.

    That will never happen in the real world.

    If they do not they are criminals and I can treat the whole building and everyone there as a kidnapping by a gang which includes the possibility to calling on a riot to demolish the whole building.

    You’re logically correct, but again, that will never happen. You’d just go to jail.

    You’re thinking hypothetically and on paper. I’m talking about how humans behave the real world.

    This is the way to do it if government thinks they can get away with this kind of stuff its because citizens allow it.

    100% agree. And one of the reasons they allow it is because most people like big government. People like anarcho-caplitalists and true libertarians are very, very rare.

  24. joelsuf

     it’s true that sometimes tax cuts actually increase revenue to the government. This happened during a few years under George W. Bush, where he cut taxes, and tax revenue increased due to increased economic activity.

    Didn’t Dubya find a way to increase taxes AND Spending? Or was it Obombya who did that? I’m certain it was one of the two.

    People like anarcho-caplitalists and true libertarians are very, very rare.

    Allow me to be honest: I think if you sit anyone down and carefully explain how being libertarian can help everyone in the long term, they would agree. Most of the people I talked to after last year’s election were very reluctant to vote in the first place.

    And speaking of libertarians and anarcho-capitalists, have you heard of Arvin Vohra, Caleb? He seems like a younger version of Ron Paul.

  25. Caleb Jones

    Didn’t Dubya find a way to increase taxes AND Spending? Or was it Obombya who did that? I’m certain it was one of the two.

    Obama, as well as most other US presidents since the 1950’s.

    I think if you sit anyone down and carefully explain how being libertarian can help everyone in the long term, they would agree.

    Incorrect. That is the great libertarian hope… if we just explain it a certain way most people will suddenly see the light and become libertarian. It’s false. If that were the case it wouldn’t have been just 3% of people voting libertarian in the last election when we had two of the worst presidential candidates in the history of America.

    Most of the people I talked to after last year’s election were very reluctant to vote in the first place.

    Yet the vast majority of those people still voted for Trump or Hillary (if they voted at all) and directly against the libertarians. Thus my point.

    And speaking of libertarians and anarcho-capitalists, have you heard of Arvin Vohra, Caleb?

    No.

    He seems like a younger version of Ron Paul.

    That’s too bad, because that means he will accomplish nothing in government, like Ron Paul.

    I told Ron Paul supporters back in 2012 the exact same thing I told Trump supporters in 2016… that he had some good ideas but he won’t accomplish a thing. (And I was right.)

  26. Jack Outside the Box

    That is basically same as saying you live under a dictatorship.

    Nonsense! This is saying the opposite. The opposite situation (in which the government would be able to declare laws Unconstitutional without the people’s direct complaint) would be dictatorial. In the U.S. the people are given the burden of interpreting the Constitution themselves, and therefore, bringing lawsuits against the government only if one of the people believes a lower law has violated the higher.

    If no person believes a specific law is Unconstitutional, then the people have consented to being governed by the law in question. This ultimately forces the people’s vigilance, which is ultimately a good thing. The judiciary striking down laws which the people’s democratically elected representatives have passed, without any lawsuit or complaint from the people, would be presumptuous and inherently tyrannical!

    Law should always be written in such a way that it has only one possible interpretation

    Impossible! There has never been a law written in human history that has only one possible interpretation for all conceivable circumstances and social contexts in which the law is to be applied.

    otherwise its meaningless as everyone is free to interpret it how they want.

    No. It’s only meaningless if there is an infinity of plausible interpretations. That is not the case. That would be the opposite extreme. The nature of laws isn’t this bipolar.

    Of course the end result is that it allows the government to be the interpretor here, but thats basically a tyrannical dictatorship.

    Wrong again. First and foremost, the people bringing the lawsuit are the first interpreters, because the lawsuit wouldn’t have been even filed if at least one private citizen didn’t interpret the specific law as violating the Constitution. And there are plenty of checks and balances within the judiciary itself. Unfavorable legal rulings may be appealed to higher courts all the way up to the U.S. Supreme Court!

    And the Supreme Court is not invincible itself. Supreme Court judges are picked by the democratically elected president and must be confirmed by the democratically elected Senate. If the Supreme Court offers an interpretation of the Constitution that is outrageous to the American majority, the democratically elected Congress may amend the Constitution to nullify the Court’s interpretation. Or, barring that, Congress may impeach Supreme Court justices, control their financial salaries, and control the number of judges on any specific court or even move judges around to different courts. Congress may also pass laws stripping the judiciary of legal jurisdiction over particular portions of the law or even entire laws.

    Yeah but the definition of consitution is that it takes precedence over any other law. Any governmental body that tries to enforce a law that contradicts a constitution is breaking the law by definition. If then the police tries to enforce such decisions they automatically become criminals and lose the police status, again by definition and a citizen is then free to deal with the police in the way they would deal with the criminals.

    But the law may not be interpreted differently by every private citizen. There must be some final authority on what the Constitution means within the context of each specific situation, which may be different from other situations. What you are suggesting is that the people, even criminals, can interpret the law how they like, even in self-serving ways, and then just falsely declare that the judge who sentenced them to prison violated the Constitution, thus giving a “get out of jail free card” to all criminals. Obviously, society can’t work that way, especially if private citizens disagree with other private citizens on how to interpret the Constitution. There must be an overarching interpretive body to prevent chaos and self-serving interpretations from the people.

    I would tell the judge that he is breaking the law and say we call this a mistrial because clearly he is unqualified by not knowing the law.

    And what if the private citizen standing next to you disagrees with you? What makes you more authoritative than he? This is why we need official judges (albeit with checks and balances).

    If he refuses to step down the police in the room is then obligated to arrest the judge. If they do not they are criminals and I can treat the whole building and everyone there as a kidnapping by a gang which includes the possibility to calling on a riot to demolish the whole building.

    And if no one comes to your riot because no one agrees with you? Or if their opinions are split 50/50? Dude, what you are promoting is anarchy, not the rule of law. We can’t have everyone interpreting the law differently then everyone else. Nothing could be enforced that way. That’s why we need judges who serve as official arbiters (albeit with checks and balances).

    This is the way to do it if government thinks they can get away with this kind of stuff its because citizens allow it.

    But the law isn’t always clear because it is impossible to tailor the law to every conceivable circumstance or situation in which the law may be applied. Otherwise, every law would be 6,000 pages long. That’s why we need a judicial branch to interpret the law. If a law could have only one possible interpretation, we wouldn’t even need the judiciary at all. But such “one possible interpretation only” laws are only possible if they address extremely narrow subjects.

     

     

     

  27. Investor

    Impossible! There has never been a law written in human history that has only one possible interpretation for all conceivable circumstances and social contexts in which the law is to be applied.

    Any law that has more than one interpretation is by definition meaningless since everyone can say they interpreted it differently, its the same as not having a law then. If someone tries to enforce laws under such a system its a tyranical dictatorship by definition.

    And what if the private citizen standing next to you disagrees with you? What makes you more authoritative than he? This is why we need official judges (albeit with checks and balances).

    This is solved by now allowing multiple interpretations of the law. See now why there cannot be more than one interpretation?

    If something is written down then its clear and it can be interpreted in only one way. If it is not the case it needs to be written more clearly or come with accompanying explanations which interpretation(s) are allowed.

    And if no one comes to your riot because no one agrees with you? Or if their opinions are split 50/50? Dude, what you are promoting is anarchy, not the rule of law. We can’t have everyone interpreting the law differently then everyone else. Nothing could be enforced that way. That’s why we need judges who serve as official arbiters (albeit with checks and balances).

    Of course I would do that only if I had the means. Else I would do other things. All I am saying is I would have no ethical or moral restraints to take down the law system if I had such a means to do that and then would ask the government to support my case and if they did not I would declare them illegitimate and wage a war against them. You can imagine some famous people who would result in a riot in such a case or some people so rich they could hire enough merceneries to do this…

    But the law isn’t always clear because it is impossible to tailor the law to every conceivable circumstance or situation in which the law may be applied. Otherwise, every law would be 6,000 pages long. That’s why we need a judicial branch to interpret the law. If a law could have only one possible interpretation, we wouldn’t even need the judiciary at all. But such “one possible interpretation only” laws are only possible if they address extremely narrow subjects.

    No law has to be consice and to the point and general but clear of how it is applied. For example if it says there is freedom of speech without any other comments in consitution it means everyone can say anything they want and there can never be any legal consequences and that this is absolute. It also means that no one can appear in court even on the ground of what they had said because it is illegal to make a court case against them.

     

  28. No More Mr. Nice Guy

    The USA has the highest taxes in the entire world if you add up all the payroll, income, corporate, sales, excise, estate, usage, and hidden taxes the typical American pays, with the possible exception of certain cities in Scandinavia which are even higher (Jesus).

    You keep saying this, but when I do a simple search e.g. “international tax burden”, most of the evidence says different – that the US is slightly below average in total tax burden WRT to OECD countries.

    I brought this to your attention when you made the same claim on the Blackdragon blog, and you – quite rightly – declined to respond, since it was very off topic. But this seems like a perfect time to revisit, no?

    Here’s the best link I’ve found.  Note that it shows tax burden for the average worker’s salary, not as percentage of GDP.  And they show their work – how they did the comparisons.

    https://taxfoundation.org/comparison-tax-burden-labor-oecd-2016/

    While it’s not perfect, I find it pretty convincing.  But if you can point me to something equally convincing that supports your argument, maybe I will change my mind. I like that most of your stuff is based on facts, and intellectually honest.  But I really think you are barking up the wrong tree here.

     

  29. Caleb Jones

    My friend, did you even read the article you linked to? That article only calculates federal income tax and payroll tax… that’s all. It doesn’t factor in state income tax. It mentions it, but doesn’t factor it into the figures when it ranks the US against other nations. This is “ignoring the state income tax” thing is very common whenever someone compares US tax rates to other nations, most of whom don’t have states and/or don’t tax income at at province level. It’s not a accurate comparison.

    It also doesn’t include local/municipal taxes, sales taxes, property taxes, excise taxes, as well as corporate taxes passed on to the consumer. But even if you forget all of those other taxes Americans pay, if you just added in state income tax and nothing else (which 43 out of the 50 states have), the US would be more highly taxed than most of the other nations in the OECD.

    Come on. You’ve got to be more careful than this if you’re going to make an argument.

    Some guys get defensive when I say people in the USA pay some of the highest TOTAL taxes in the world. I will write a blog post about this, with sources. I’m not talking about as percentage of GDP, and I’m not talking about just federal and payroll taxes. I’m taking about all taxes the typical American has to pay in a given year. All of them. And there’s a lot.

    I know it’s hard to believe, but it’s true.

  30. Investor

    I know it’s hard to believe, but it’s true.

    Its easy to believe. The size of the military, the foreign military presence, all those “secret” government agencies… the money comes from somewhere.

    What I dont get is why it matters that USA has a high debt. Its not like anyone can force USA to pay it or start confiscating state property if they don’t pay. What I also don’t get is why would anyone lend money to a government who is clearly never going to pay it back. If I was the head of state Id just take advantage of these idiots and start borrowing crazy amounts of money from everywhere, use it to do lots of cool things and then announce that my government is never gonna repay any of it, ever, and declare the debt to be zero. Yes this means its a theft, but again, its not like the US government hasnt done similar or worse things before. And what do you expect from a government who ignores its own laws (constitution)?

  31. Investor

    I say people in the USA pay some of the highest TOTAL taxes in the world.

    Its not necessarily that bad to have high taxes it depends on what you get for it. For example if you get a totally free unlimited access to top notch state of the art healthcare and unemployment benefit that is related to your last earnings (for example in switzerland you can get up to 90% of your last salary for up two years if you become unemployed) then its very reasonable to pay taxes because you feel its like an insurance that gives you financial security no matter what happens. If you do not get these its completely unreasonable to pay any taxes above 5% and you should do everything you can to minimize your taxes that isnt going to get you in trouble. Of course in US this is expected that you get double screwed with taxes: pay high and dont get anything in return, because if you are US citizen the government thinks you should pay taxed even on money earned abroad whilst abroad, which is beyond ridiculous and just makes the US government look like fascist dictatorship.

  32. Caleb Jones

    What I dont get is why it matters that USA has a high debt. Its not like anyone can force USA to pay it or start confiscating state property if they don’t pay.

    The USA’s currency will eventually be destroyed because of it, and/or interest rates will skyrocket.

    What I also don’t get is why would anyone lend money to a government who is clearly never going to pay it back.

    Short-term opportunistic thinking.

    If I was the head of state Id just take advantage of these idiots and start borrowing crazy amounts of money from everywhere, use it to do lots of cool things and then announce that my government is never gonna repay any of it, ever, and declare the debt to be zero.

    Then other countries will refuse to lend you money for a very long time, if not forever.

    Its not necessarily that bad to have high taxes it depends on what you get for it.

    Speaking completely in general I agree with you, but that leads into a larger discussion about the quality of services the government provides and the long-term sustainability of Western European style socialism. But yes, part of the problem is Americans pay a huge amount of taxes and don’t get nearly enough personal benefit from it. I’ve said before that Americans pay enough taxes to get not only free insurance of all kinds, but a staff of personal security guards that protect your neighborhoods in addition to the police.

  33. Investor

    Then other countries will refuse to lend you money for a very long time, if not forever.

    Of course, but they shouldn’t have lent money in the first place, and governments should not borrow money. Its best to just do the things you can afford with the money you have now.

    I’ve said before that Americans pay enough taxes to get not only free insurance of all kinds, but a staff of personal security guards that protect your neighborhoods in addition to the police.

    Instead you have military bases around the world that do nothing for you personally but advance the ambition of the elite and paramilitary organizations that spy on you.

    Do you think that cryptos have a chance to change this? The best way to change what the government can get away with in regards to taxation is a refusal to pay taxes. Of course this is too risky for a person to do it and too hard for it cooirdinate in large groups to be effective. Except now with crytos its possible in some cases with minimal effort and near zero risk. That is for individuals and small companies. I saw that big companies already do this, especially if they think they are big enough they can decide not to give a shit what the government thinks. When the government goes bankrupt because no one is paying taxes anymore it will either collapse and some opportunist will take over the country and form a new government or they will have to rethink their taxation strategy.

  34. Investor

    By the way what would happen if you said that your business is online and is therefore decentralised so its not related to any particular country – so you dont have to pay income tax from it in any country?

  35. Investor

    interest rates will skyrocket.

    Isnt this a good thing? It will attract a lot of investors who want to buy dollars. Maybe not so good for everyone but for someone who isnt in debt and has a lot of liquid capital this is a dream come true.

  36. Caleb Jones

    Of course, but they shouldn’t have lent money in the first place, and governments should not borrow money. Its best to just do the things you can afford with the money you have now.

    Of course I agree. The problem is the governments of the world don’t.

    Instead you have military bases around the world that do nothing for you personally but advance the ambition of the elite and paramilitary organizations that spy on you.

    Yep. It sucks.

    Do you think that cryptos have a chance to change this?

    Sure, a chance.

    By the way what would happen if you said that your business is online and is therefore decentralised so its not related to any particular country – so you dont have to pay income tax from it in any country?

    It’s quite possible to pay 0% business/corporate taxes. The problem is that money then flows to me as an individual, who indeed will be a citizen of some country somewhere, who will likely want their taxes.

    It’s entirely possible to legally pay 0% taxes across the board with five flags. I know men who have done this, but it requires some odd lifestyle things that I don’t want to do. My goal is to get it at or below 4%; very doable without going really crazy with a weird lifestyle.

    Isnt this a good thing?

    Interest rates rising back to a free market norm of 6% or 8% would be a good thing in the long-term once the pain of the transition is over with, but if you go crazy with borrowing/printing like you’re suggesting, you’re risking interest rates north of ranges like 20%, which would be a horrible thing for your economy.

  37. Investor

    Interest rates rising back to a free market norm of 6% or 8% would be a good thing in the long-term once the pain of the transition is over with, but if you go crazy with borrowing/printing like you’re suggesting, you’re risking interest rates north of ranges like 20%, which would be a horrible thing for your economy.

    Maybe this is a stupid question but then why arent the interest rates rising? If you have such high debt which does result probably in more borrowing and in the case of dollar def printing then according to what you say interests rates should be going up.

  38. Caleb Jones

    Maybe this is a stupid question but then why arent the interest rates rising? If you have such high debt which does result probably in more borrowing and in the case of dollar def printing then according to what you say interests rates should be going up.

    Correct. The Federal Reserve is artificially holding interest rates down. If interest rates go up to where they should be, there would be a recession, which they don’t want. The problem is we need a recession to help correct the bubbles in our economy, as I described here.