Interesting podcast dispelling myths about US taxation.
44:27 "Elon Musk and his merry band of budget cutters seem to be focusing on symbolic things like DEI contracts, political subscriptions, federal employment that serve a culture war purpose for MAGA warriors. But in terms of the budget deficit, they're not even a rounding error." *
26:56 Myth one is that tax cuts pay for themselves. Tax cuts can bring some extra revenue. They almost never pay for themselves.
Myth two is that tax cuts will starve the beast by forcing Congress to cut spending, but historically it's the opposite. When we cut taxes, Congress increases spending, and when we raise taxes, Congress cut spending.
Myth three is that the middle class pays higher tax rates than the rich. This is not true. If you take a look at all combined federal taxes, the top 1% pays 33%. The middle class pays 12. The bottom pays roughly zero.
Myth four is that those old 91% tax rates in the 1950s produced all this new revenue. The reality is nobody actually paid the 91% tax rates back then. In fact, virtually nobody paid over 50% in a tax bracket and those tax brackets raised virtually no revenue.
Myth five is that Europe funds its bigger governments by taxing the rich more. In reality, they tax the rich about the same as the United States and the entire overage in tax revenue for Europe is the result of value added taxes, which are essentially national sales taxes that hit the middle class.
Myth six is that tax cuts for the rich are the reason we have large budget deficits. The reality is that since 2000, we've cut taxes by 2% of GDP, of which maybe 0.6% of GDP is on the rich, but we've increased spending by 6% of GDP, much bigger driver.
Myth seven asserts that taxing corporations and millionaires can eliminate the deficit. You could tax 'em at a hundred percent and seize all their wealth. It doesn't come close.
Myth eight is that most of the 2017 tax cuts went to corporations and the wealthy. The reality is while they received bigger tax cuts in terms of pure dollars as a share of the taxes they were paying, it was a roughly proportional income tax cut. Everybody got their tax rate dropped by about one percentage point.
Myth nine is that if we go back to the 1980 tax code, essentially repealing the Reagan bush and Trump tax cuts will have painless deficit reduction. In reality, if we did that, the tax burden on the middle class would go through the roof, not just the rich but the middle class to unacceptably high levels.
Myth 10 is that America's corporate taxes are far below international standards. The reality is we had the highest corporate tax rate in the developed world until 2017, and even right now after the 2017 corporate tax cuts, our statutory and effective corporate tax rate is still in the top one. Third. We also collect slightly more than other countries and business taxes when you include pass through corporations.
* DOGE claims $115 billion in savings — but its own 'wall of receipts' shows just $35 billion.
[This is 0.05% of the total budget of 6.9 trillion.]
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