John Kennedy unleashed a truth bomb that hit this RINO sellout like a ton of bricks
Louisiana Senator John Kennedy’s patience had worn thin. Kennedy spoke out as only he knows how. And John Kennedy unleashed a truth bomb that hit this RINO sellout like a ton of bricks. Kennedy blasts [...]
BIG GOVERNMENT SMALL PEOPLE SMALL GOVERNMENT BIG PEOPLE MAKES PERFECT SENSE. STOP REPARATIONS FOR THIS IS JUST ONE CASE OVER DISRUCTION AND CAUISING MORE DIVISION. LET THE PEOPLE WORK IT OUT AND GOV. GET OUT OF THE WAY
U.S. National Debt Crisis and Potential Solutions
Ronald W. Spahr, Professor of Finance, Emeritus
At the end of the 2024 Fiscal Year, September 30, 2024, the U. S. national debt was $35.46 trillion, an increase of $2.30 trillion from 2023 and up from $26.95 trillion in FY 2020. This represents an unsustainable 7.11 percent annual compound growth rate over four years. The annual compound growth rate over the previous eight FYs was 7.26 percent including the COVID driven year over year increase of 18.60 percent from FY 2019 to FY 2020. Thus, U.S. National debt represents an existential crisis that must be addressed immediately. Economically and politically viable solutions fall between substantially reducing the national debt growth rate and/or increasing the economic growth rate and tax revenues for the U.S. Economy, or both.
The projected annual savings from the DOGE (Department of Government Efficiency) currently being formed, is estimated to be in the neighborhood of $2.00 trillion. If successful, this will help stem the growth in the national debt; however, this probably is an optimistic projection, which suggests that additional tax revenues will be required to reduce the deficit to zero and beginning to pay down principle on the debt.
Our current overly complex tax system contributes of our cost of government. Estimates for the cost of compliance with the tax system and IRS are up to $1 trillion per year and the U.S. In addition, because of tax system complexity, the US Treasury forgoes an estimated $450 billion per year in unreported taxes. Total compliance cost could be reduced by approximately 80 percent by simply implementing a simple personal flat tax system of about 22 percent with a standard deduction of $40 thousand for a family of four. This would implement a desirable graduated tax, reduce tax compliance cost by my estimate of 80 percent and reduce most individuals’ tax filings to a post card. Many countries have already implement flat tax systems, including Czech Republic (15 percent), Estonia (20 percent), Hungary (15 percent), Latvia (23 percent), and Russia (13 percent) Also, Bolivia, Georgia, Greenland, Kazakhstan, Lithuania, Mongolia, and Romania have flat personal taxes.
The initial reaction for most is that to increase tax revenues, tax rates need to be increased. However, a much more effective and beneficial way to increase taxes is to increase economic growth in the private sector. Contrary to most citizens and to many economists, empirical evidence and corporate finance theory suggest that business tax revenues may be increased by reducing business tax rates and regulations. I am not an economist but rather a finance professor. We usually think differently than many macro-economists, however, in all elementary level economics courses, land, labor and capital are considered the factors of production. Reducing any of these three factors will reduce production, which is the basic contributor to GDP. Taxing capital via a corporate/business income tax reduces the stock of capital available to private enterprise, inhibiting the multiplier effect of our free market system. By combining the factors of production, free enterprise magnifies the values of these inputs. Put simply, 2 plus 2 equals 6. The beauty of free markets is that the value of the outputs are greater than the values of the inputs. This is labeled “market value added” in finance.
As a finance professor for over 50 years, some of my research has shown that business taxes are most detrimental to value, production, and economic productivity. All taxes are not equal in effecting the macro-economy. Personal taxes reduce the ability of the private sector to consume, where consumption is mainly transferred to government; however, taxes on business reduces output and inhibits the multiplier effect.
My more recent work in corporate finance theory adds government as private firms’ third financial stakeholder, in addition to stockholders and debtholders. Government may be considered a financial stakeholder of private firms because of confiscatory taxes extracted from private firms. Taxes directly reduce revenues to stockholders (owners) of the firm, thus reducing economic ability and incentives associated with producing a product. Business taxes transfer resources to government to be consumed or possibly investment. However, the reduced market system emphasis for government results in the market multiplier effect being substantially reduced. In other words, for government 2 plus 2 may still equal four.
Other recent work emphasizing “Macro-Finance” demonstrates that government’s aggregate financial stake in a country’s firms is a primary, most important, factor in attracting both cross-border foreign direct investment (FDI) and foreign portfolio investment (FPI). Governments with greater financial stake in firms in their country attract less FDI and FPI that in addition of domestically generated capital serve to increase capital investment, job creation and standard of living.
Thus, as shown repeatedly in many countries reducing taxes and tax rates on businesses actually increase tax revenues by increasing aggregate productivity and GDP. Increase productivity of private business will not only increase taxes paid by business themselves, but increase tax revenues on increase personal/investment income, capital gains on personal/investment wealth, and taxes on debt interest.
It looks like it’s time to start a primary campaign against ALL GOP RINOS. That is a threat, Ultimatum or whatever you want to call it. Either get on President Trumps agenda or get out of congress and get a real job. I’m sick of this “kick the can down the road” crap. You were given a MANDATE by over 70 MILLION patriotic Americans now it’s time to fulfill your duty to that mandate or get the hell out of government.🤬
Thanks! I appreciate the fact that your comment isn’t ten pages long and yet comes to the basics of the problem! You are spot on, though and I truly appreciate that!
Thank you agree 100%
Finally some common sense!! Well stated!