Help me with some math....
Someone, please help me with some math. Since Inauguration Day, the Democrats have proposed 3 major initiatives for COVID relief, infrastructure development and repairs and aid to families totaling $5.7 trillion. We’ve been told that these proposals will be funded by increased taxes on corporations and the wealthy. Before I break down some numbers further, let’s remember that our current federal budget is already $5.8T and our current revenues (tax receipts) are $3.5T so the government is already running a current year deficit of $2.3T. Let’s come back to that later.
The current population of the U.S. is about 331M – that’s everyone from 1 to whatever the current oldest person is. Dividing $5.7T by 331M nets out to $17,221 per person for these programs. Since my 3 and 7 year old grandsons don’t pay taxes yet and I suspect my 70+ year old in-laws are paying taxes on their retirement income, let’s adjust for those groups. People under 16 account for 26% of our population and those over 65 account for 16.5%, so the number of people actually in ‘full taxation’ mode are more like 190M. Again, dividing the 5.7T by 190M amounts to $29,953. We can argue that many of those over 65 are really high net worth individual paying substantive taxes but you can still see the tax bite is somewhere north of $20,000 per person.
We keep hearing that corporations and the wealthy need to pay ‘their fair share’, but can anyone tell me what that amounts to? Should the wealthy pay….10% more than present? 20% more? Even 50% more? Now….let’s come back to the current budget and not include the 3 new proposals. Remember - $5.8T budget and 3.5T revenues….WE WOULD NEED TO INCREASE CURRENT REVENUES BY 65%....just to have a balanced budget.
Not addressed here is the potential financial benefit some of the programs over time - jobs created for building roads and bridges, etc. Certainly, over time some of these programs will produce revenue, but does anyone remember the 'shovel ready' projects of 2009-10...and the number of jobs created over 4 years? If these projects do develop, some of those benefits will be offset by new entitlements resulting from universal pre-K and paid parental leave. I am also not addressing the potential negative employment impact of further extending unemployment benefits seemingly validated by the April jobs report. Money going out, not taxed and incentivizing staying home. Has anyone visited a restaurant recently and bemoaned the service?
Closing point….we have also heard that the new administration intends to put back in place many business regulations eased by the previous administration. More regulation on banks, corporations, etc. If I were still running my business and spent 65% more than I brought in, I would be out of business. Worse, if my business happened to be a bank and was lending far more than I had in reserves (think 2008 – 2010), I would have an alphabet soup of government agencies as my new best friends. But, with the ability to print unlimited amounts of new money coupled with the power to tax, our government can operate like no other entity. Who regulates the regulators?
Senior Sales Executive at Winnesota Regional Transportation
3 年Great read, Larry! Breaking things down to relatable numbers makes this issue easy to understand. Easy to understand that this Administration is in WAY over their head ??
President at Control Line Equipment, Inc.
3 年Sadly the same rules the government try to apply to wealthy don’t apply to themselves! Total hypocrisy. I’d love to spend 65% more than I take in too but we all know how far that would go. They would do well by looking in a mirror and set the example.
Larry, as always, great job analyzing the government’s insanity on spending and taxes. Somewhere along the way we need a president and Congress that says enough. We seem to continue to elect, on both sides, people who lose sight of the original goals they may have stood for. Pretty sad. Hope we survive.