Tuesday, November 18, 2008

How Can We Permanently Lower Taxes?

Here's a question:

Take a look at the U.S. budget pie chart by clicking on the link below and see if you can find any way to lower the deficit without cutting defense.

Republicans say that we need to be spending more on defense, but that we can cut the budget in other areas. Here's a hint--62 percent of the budget is composed of Medicare, Social Security, veterans' payments, pensions, etc., and interest. Defense is 20 percent of the budget and everything else Washington provides costs about 18 percent of the budget. Getting rid of Amtrak, foreign aid and entitlements is not going to do it.

Because at some point, taxes have to equal outlays, how or what can be cut that will result in significant savings in order to permanently keep taxes low?

http://en.wikipedia.org/wiki/Image:U.S._Federal_Spending_-_FY_2007.png

1 comment:

Marshall said...

Good points William though one wonders what stance the Republicans might take now that the Democrats are in control of the Legislative and Executive branches. You might also mention that they themselves added to the coming entitlement problems in passing the prescription drug benefit without, of course, a devoted revenue source.

It seems likely that we'll be seeing debates over whether marginal income tax rates on the highest earners should be 35% or 39.6%, hardly a philosophical question, while the Fed inflates the money supply. Maybe politicians figure the inflation tax is more palatable than direct taxation.