david a
  • david a
  • Spokane, WA
  • United States

This conversation is closed.

What is the proper balance between raising taxes and cutting spending? Is it possible for a country to never have a deficit or surplus?

Regardless of nationality, it seems like everyone has a different opinion as to how much each person should give to and get from the government.

I often hear conservatives argue that cutting taxes will stimulate the economy and ultimately increase the surplus a government has to spend due to increased tax revenue and decreased unemployment etc.

I often hear progressives argue that raising taxes (especially on the wealthy) will stimulate the economy by lowering debt and making the currency more valuable.

There is a fundamental flaw in both arguments.

If you argue that cutting taxes across the board by 15% would eliminate unemployment and bring in more revenue then why not cut taxes by 30% (or 100%) to have the biggest surplus ever?

If you argue that raising taxes makes a nation wealthy then why not tax at 100% in order to be the richest country in the world?

There must be some place in the middle where a nation gets the best of both worlds. Shouldn't we have gathered enough data by now to know what the proper tax rate is?

What would happen if a country used technology to change the tax rate in real time such that there is never a deficit or a surplus?

For example, you log in to a website such as tax.gov and see a big % and actual monetary amount that you have to pay this year in order to stay balanced.

As a nation works harder and produces more the overall % everyone pays in taxes drops. Similarly, if a government cuts wasteful spending and/or social programs then the % everyone pays to stay balanced would also drop.

We also have the technology to track where every single unit of money is being spent so if the % starts to rise, citizens would be able to see where all the money is being spent and vote accordingly.

Could something like this work? If not then what is the perfect tax rate to keep a nation employed and producing while staying out of debt?

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    Apr 19 2011: Perhaps some level of deficit spending is advantageous. See:

    http://www.huffingtonpost.com/thornton-parker/america-needs-deficits_b_848203.html

    The question should be - how much and when?
    • Apr 19 2011: Quote from that article: "Each year's deficit adds to what is called the federal debt. But that is a poor name because it is not like a debt that you or I might have. It is actually the sum of dollars the government has created and people have saved since the nation was founded. It is a national asset that economists call our net financial wealth or total savings."

      Black is White. Up is Down. Debt is Equity. Only in the Huffington Post...
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        Apr 21 2011: I knew you would appreciate that one Revett!

        So from the point of view of investing in infrastructure, you don't consider federal debt acceptable?

        What about in times of war?