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by VladRussian 5564 days ago
what would you expect when you decrease taxes for the top and increase taxes for everybody?

The total tax burden is equal to government spending [minus any income from government owned productive enterprises]. That total tax burden is financed either through explicitly collected tax or through deficit. During recent decades, the skyrocketing government spending and decreased tax rates mainly for the top, caused skyrocketed deficit spending - the skyrocketing of the tax paid by everybody.

To illustrate, imagine the situation with 0% tax rates and the government financed by printing amount of money equal to 50% of GDP - that will make effective tax rate 33% as 100 dollars of produced goods and services will be presented with 150 dollars of money. So people who made 100 dollars will be able to buy only 66 dollars worth of goods and services - thus effectively have their 33% collected and spent by the government even with 0% explicit tax rate.

edit: please don't mistake described process for inflation which itself is another tax [in addition to described above] collected next year and the year after that and so on... on the earnings of this year.

The deficit tax can be thought of as a dilution in case when government would additionally issue itself a chunk of stock in your company in exchange for some "protection" to you.

1 comments

replying to myself as the parent post was already upvoted and this one may sound politically charged.

The reason for economical problems under Republicans is that business, and thus economy, doesn't do well when total tax burden is increased. The Republicans when in power, especially in 198x and 2001-2008, while decreasing nominal tax rates in some cases, have significantly increased the total tax burden.