The tax thread

It really amazed me that one side was bent out of shape when Biden wanted to raise taxes on those making over $400,000.  How many protesting this in the Trump crowd was actually in this bracket?

Here's a little tax history - it's amazing that the reublicans are once again backing another tax cut for the rich that isn't balanced and nothing the DOGErs will come close to countering.

A Brief History of U.S. Taxes and Their Impact on National Debt

Taxes in the U.S. have fluctuated significantly over the past century, with major changes often reflecting shifts in political ideology and economic strategy. These changes have had profound effects on the national debt.

High Tax Rates in the Mid-20th Century

From the 1940s through the 1970s, the highest income tax rates were extremely high by today’s standards. During World War II, the top marginal tax rate (the rate on the highest portion of income) soared above 90% to help fund the war effort. Even after the war, the top rate remained around 70% during much of the postwar economic boom.

Despite these high tax rates, the U.S. economy thrived. The middle class expanded, infrastructure projects were funded, and national debt (as a percentage of GDP) declined significantly from its World War II peak.

Reagan's Tax Cuts and Debt Growth

In 1981, President Ronald Reagan ushered in a new era of tax policy, arguing that lower taxes would stimulate economic growth—a theory known as "supply-side economics" or "trickle-down economics." Under Reagan, the top marginal tax rate was slashed from 70% to 50% in 1981 and then further reduced to 28% by 1988.

However, these tax cuts, combined with increased military spending, led to a dramatic increase in national debt. The U.S. debt tripled under Reagan, rising from about $900 billion to $2.7 trillion. While economic growth did occur, the loss of tax revenue meant that the federal government had to borrow heavily to make up the difference.

Tax Rates and National Debt Under President Bill Clinton

During President Bill Clinton’s two terms (1993–2001), tax policy played a significant role in reducing the federal deficit and even generating a budget surplus—something rare in modern U.S. history.

Clinton’s Tax Policy: The 1993 Omnibus Budget Reconciliation Act

One of Clinton’s first major legislative moves was the Omnibus Budget Reconciliation Act of 1993, which raised taxes primarily on higher-income earners. Key provisions included:

• Raising the top marginal income tax rate from 31% to 39.6% for individuals earning over $250,000.
• Increasing the corporate tax rate on businesses earning more than $10 million from 34% to 35%.
• Raising fuel taxes to help generate additional revenue.

While Republicans and some economists at the time argued that these tax increases would hurt economic growth, the opposite happened.

The Economy and Debt Under Clinton

Despite the tax hikes, the 1990s saw one of the longest economic expansions in U.S. history, fueled by technological advances (especially the rise of the internet), global trade, and increased productivity. Clinton’s economic policies led to:

• Consistent GDP growth, averaging about 4% per year.
• Job creation of over 22 million new jobs.
• A reduction in the federal deficit each year until the U.S. reached a budget surplus in 1998—the first surplus since 1969.

By 2001, when Clinton left office, the U.S. had a budget surplus of $236 billion, and the national debt as a percentage of GDP had declined significantly. The federal government was even on track to eliminate the national debt within a decade if the surplus trend had continued.

What Happened After Clinton?

After Clinton left office, President George W. Bush cut taxes significantly in 2001 and 2003, reducing the top income tax rate back to 35%. These tax cuts, combined with increased spending on wars in Iraq and Afghanistan, turned the surplus back into deficits, and the national debt began rising again.

Trump’s Tax Cuts and Their Effect on Debt

In 2017, President Donald Trump passed the Tax Cuts and Jobs Act (TCJA), which lowered the corporate tax rate from 35% to 21% and reduced individual tax rates, especially for the wealthy. The Congressional Budget Office (CBO) estimated that this tax cut would increase the national debt by $1.9 trillion over a decade because the revenue loss was not fully offset by economic growth.

The tax cuts did lead to short-term economic growth, but the federal deficit widened significantly. Even before COVID-19 hit, the U.S. was running trillion-dollar deficits due to reduced tax revenue.

The Next Round of Tax Cuts Under Trump

If Trump were to pass another round of tax cuts in a second term, analysts predict another significant increase in debt. Proposals under discussion include:

• Making the 2017 tax cuts permanent, which would cost an additional $3.3 trillion over the next decade.
• Cutting corporate taxes further, possibly down to 15%, which would reduce revenue even more.
• Eliminating the payroll tax, which funds Social Security and Medicare, potentially leading to a funding crisis for these programs.

The national debt is already over $34 trillion, and another round of tax cuts without spending reductions would add trillions more. Without higher revenue or spending cuts, the government would have to borrow even more, increasing interest payments on the debt and potentially crowding out other critical investments.

The Bottom Line

Historically, tax cuts that are not offset by spending reductions or massive economic growth have significantly increased the national debt. The Reagan tax cuts led to major debt expansion, and Trump’s first tax cut followed a similar pattern. A second round of Trump tax cuts could add trillions more to the debt, raising concerns about long-term economic stability and the future of entitlement programs like Social Security and Medicare.

I'll repeat a previous post:

Debt keep the bond market afloat.

Who loves debt? The Republican elite. They'll tell you they hate it being concerned over the national debt. Especially useful comes to beating down a progressive initiative as being not national debt affordable.

But don't listen to what they say. Look at what they do. Republican administrations incur a lot more debt than the Democratic ones do.

Why? It keeps the bond market going and growing. The very rich invest in that market. They even get rewarded when their accrued Federal bond profit is exempted from Federal taxes. They roll their money into debt and when its due they redeem it, buy new debt, while accruing tax free interest.

The richest people love Modern Monetary Theory. They convince well meaning progressives or lefties that you can spend and spend without any consequence. Who owns all that debt? They do. When it come due, they’ll collect from you, your kids and your grand kids. Sure, taxes and more debit will help pay for the due debt coming. The rich will then buy the new debt. They will get additional income from the new debt while evading most tax. - Cory Doctorow

Its the best of possible all worlds for the very rich.

Do a tax cut that that primarily benefits them while also increasing our national debt.

They are enriched due to lower taxes while getting opportunities to profit in an enlarged bond market.

just as an aside - the national debt is not debt in any conventional sense of the word. we do not borrow money in order to finance the government. treasury securities are sold for other reasons, but not to finance spending.

carry on.