Friday, April 29, 2011

Three Economic Charts To Blow Your Mind

This is worth reading because it allows us to overturn conventional wisdom and ask good questions.  There is also something important here that needs to be said.  The bottom 50 % is not properly integrated into the tax system though they contribute through consumption taxes.

For them to contribute more efficiently we need to establish a base income model linked directly to deliverables such as rental costs, food and basic services such as medical and communication.  My personal preference is to link the core delivery of basic services to land based needs on the rural environment were  local capital is available to support personal initiative and wealth creation for even the elderly

It may sound utopian but it is not as this is what actually worked in non monetized societies of the past.  Reinventing the structure is the challenge when monetizing because money is associated with the natural inclination to impose wage slavery.

Most criticisms of such bottom up models are based on pure ignorance of economic systems and the ignorant fight for control of the apparent lolly.  We have become less barbaric during the past century, but still have far to go.

Surprisingly, the Chinese have much to teach us on this subject, though much of what is there is also an accident of history rather that intelligent planning.  It is a case of building from the least worse alternatives and hoping it all works out.

Three economic charts blow your mind

 Written By : John Hawkins

First off, here’s a breakdown of who pays into personal income taxes. Look at those numbers and SMELL the unfairness.

So, the top 10% of income earners pay 69.9% of the income tax while the bottom 50% of Americans pay 2.7%. Now, if we were actually going to make the tax code more “fair,” who would actually be paying more and who would be paying less? Maybe the rich aren’t getting quite as sweet a deal as you’d think if you got your information from Obama speeches and MSNBC.

Over the decades, tax rates have varied quite a bit. They’ve even gone up as high as 90% in some brackets. Yet, the actual amount of revenue coming in doesn’t change very much in relation to revenue. It’s almost as if conservatives are right and people do react to higher tax rates by changing their behavior. Maybe they work less, take more loopholes, lobby Congress to create loopholes, invest differently, move industry offshore, etc., etc…it really doesn’t matter.

The key thing to take away from this is that the amount of revenue the government can bring in via the income tax is, for whatever reason, more inelastic than most people think. That’s yet another reason to put more emphasis on balancing the budget via spending cuts as opposed to trying to fix the problem with tax increases.

Now, if Hauser’s law is as spot-on as it has been in the past and it’s going to be difficult to raise the government’s revenue level much beyond the 20% mark, this is one hell of a scary graph.

Notice that we’re up from 2.7% of GDP in 1965 to 9.1% (the halfway mark) in 2012 and then 100% of all of tax revenue in 2052. Some people may take a little comfort from that. After all, 2052 seems like a long time away — and so it is. But, don’t forget — we have a 14 trillion dollar debt we need to pay off and the federal government funds a lot of other things besides those entitlement programs. That money is where defense, intelligence, border security, government salaries, interest payments on the debt, welfare, and even Harry Reid’s precious Cowboy Poetry comes from. At one point do people look at the size of the deficit, size of the debt, and numbers like these and then conclude it’s not safe to lend us money anymore? It could be much sooner than we think unless we start showing the world we’re serious about controlling spiraling entitlement costs.

1 comment:

jackodonnell said...

Here's a better way to finance government:

“Tax Privilege, Not People”