by Don Fredrick, The Complete Obama Timeline, ©2023
(Nov. 27, 2023) — In response to my call for the slashing of federal spending, a die-hard Democrat wrote to me. He argued:
“You do know, Don, that we could reduce that deficit by a good amount if we just collected the taxes that are owed under present tax laws. By not raising any taxes [sic; tax rates], just collecting taxes legally owed, we could increase the revenues to the Treasury. We could do that simply by hiring more IRS auditors, and upgrading their computer systems. But your [sic; it is not mine] Republican Party has fought every attempt to upgrade our IRS. Every effort to improve our tax collection systems is fought tooth and nail by your [sic] Republican Party. The only people in the USA that [sic; who] get an advantage by having an old and faulty tax collection system are the super rich [sic; super-rich] and large and very profitabel [sic] corporations. And that is the segment of the USA population that your [sic] Republican Party truely [sic] wants to serve, usually at the expense of the rest of our country’s population.
When we start collecting all the taxes owed, then you can complain about the deficit and the National Debt.”
I responded:
First, the amount of taxes not collected because of cheating or fraud is nowhere near as much as the annual federal deficits. Second, if individual and corporate taxes were raised to the level needed to balance the budget without spending cuts the economy would collapse. The nation simply cannot afford to continue current levels of federal spending. The federal deficit this year will easily exceed $1.5 trillion. Even if it were “only” $1 trillion, that represents about $7,000 for every taxpayer in the U.S.!
I have pointed out in the past that at some point raising taxes is counterproductive because a high tax rate discourages work and productivity. Obviously a tax rate of zero would produce zero tax revenue. But a tax rate of 100 percent would also produce zero revenue because no one would bother working or producing if the government were to confiscate 100 percent of his income. History has shown that the drop off occurs at a taxation rate of about 18-19 percent. When the tax rate exceeds 18-19 percent, tax revenue actually declines because individuals and businesses become less productive. (For example, individuals work less overtime and businesses cancel expansion plans.) That is common sense and human nature.
The instinct of a typical politician (especially leftist/Marxist politicians) is to raise taxes so that the government will have more money to spend (to buy votes and to accumulate additional power and control). But that does not work. The higher the tax rate, the more likely the economy will stagnate or even collapse. In the interests of self-preservation, many individuals and businesses will continue to chug along, but cheating on taxes will increase, and black-market operations will expand. That is also common sense and human nature.
This is not a defense of Republicans. (It is not “my” Republican Party!) Republicans and Democrats alike eagerly spend tax receipts as if there is no tomorrow and continue to kick the can of accountability down the road. The difference between the two parties is merely in how and where they waste tax dollars. Both sides are irresponsible, corrupt, and arguably evil.
The political game played by Democrats is to increase spending in an effort to force the Republicans to accept higher taxes. The political game played by Republicans is to decrease taxes in an effort to force the Democrats to accept spending cuts. Neither game works because neither side gives in. The result is that the fiscal mess will continue and the debt will increase until the house of cards collapses. I believe we are close to that point, with interest on the national debt approaching $1 trillion per year.
As Hemingway wrote, bankruptcy occurs “two ways. Gradually, and then suddenly.” It is like cutting down a tree. Every additional inch of progress made by the axe or the chain saw moves the tree closer to collapse, even though it will remain standing and can appear stable for quite a while. Then, all of a sudden, the point is reached at which the tree can no longer stand. We are close to that point. Arguing over which politicians are using axes and which are using chain saws is irrelevant. Their combined actions will eventually fell the tree.
Your solution to a lack of orange juice is to squeeze the existing oranges even harder. My solution is to plant more orange trees.