Sunday, January 2, 2011

Spending vs. Revenue



I’ve quoted from Veronique de Rugy before. She writes articles about taxes, revenue, and the economy all the time. And she’s a heck of a lot smarter than I am. She also backs up everything she writes with hard facts.

Here’s some hard facts for you from her latest.

From 1930 to 2010, tax revenue collection in the United States has never topped 20.9% [of GDP], averaging 16.5% of GDP over these 80 years. This comes despite the drastic historical fluctuation in the rate of taxes on the wealthiest Americans.

Generally, it’s about 18-19%. No matter what we do to raise or lower taxes. That’s because when we increase tax rate too much, we lower GDP, and thus lower the amount of tax revenue.

Why does this matter? Because in recent years, spending has gone from 20% of GDP to 24% of GDP, and is headed to 28% and beyond.

No matter what we do, we cannot make up this shortfall. In fact, we can’t even come close.

We don’t have a tax problem in the U.S. We have a spending problem. No new government programs should even be considered unless they can be shown to cut costs substantially. We all know that programs that claim to be “spending neutral” never are, so we’re going to have to go to ones that claim to cut costs in order to hope to achieve, at worst, spending neutral.

I’ll say it again. ObamaCare must be repealed before it destroys this country. We can’t afford it. We’re never going to be able to afford it. If you don’t believe me, look at what’s going on with countries that have tried similar programs. Look who has Universal Health Care and wants to get rid of it. We’re trying to start social programs in the United States that the rest of the world tried 30 years ago, and is now running away from.

The United States used to be a leader to prosperity. Now we’re a follower to doomsday.

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