[Editor’s Note:
As we’re coming up on the end of the year, we thought it would be
appropriate to republish some of our most popular articles from 2017.
Today’s was originally published on April 24]
December 18, 2017
Sovereign Valley Farm, Chile
In a poll conducted a few days ago by NBC News / Wall Street Journal, a record 57% of Americans responded that they want MORE government in their lives, and that the government should be doing more to solve people’s problems.
That’s the highest percentage since they started asking this question in 1995.
In fact, 57% is nearly double what people responded in the mid-90s.
Furthermore, the number of Americans who feel the opposite, i.e. responded that the government is doing too many things that should be left to private businesses and individuals, fell to a near record-low 39%.
Bottom line: people want more government.
It’s hard to even know where to begin with this.
First- more government is nearly an impossibility.
As I’ve written several times in the past, the US federal government already spends almost all of its tax revenue on mandatory entitlements like Social Security, and interest on the debt.
They could literally cut nearly everything we think of as government-- national parks, Homeland Security, even the IRS-- and still not make a dent in paying down the national debt.
According to the US government’s own financial statements, their net operating loss in 2016 was an unbelievable $1.05 TRILLION.
Think about that-- they lost more than a trillion dollars in a completely unremarkable year.
They weren’t waging world war, funding a major infrastructure project, or dealing with an economic crisis.
It was just business as usual. And they STILL lost over a trillion dollars.
More government is going to cost even more money that they don’t have... which means even more debt and even more pain in the future.
The usual refrain is to pay for more government programs by raising taxes on the rich, or big corporations, or whoever the evil villain du jour is.
Anyone who thinks this actually works needs to study history.
Simply put, RAISING TAXES DOES NOT RAISE TAX REVENUE.
I wish every Bernie Sanders voter could understand this very simple fact:
Since the end of World War II, US federal government tax revenue as a percentage of GDP has been nearly constant at 17%.
In other words, while the actual dollar amount of tax revenue goes up every year due to inflation and economic expansion, the government’s slice of the total economic pie is 17%.
Yet during the previous eight decades, actual -tax rates- have been all over the board-- sometimes rates were higher, sometimes rates were lower.
Back in 1963, for example, the highest marginal tax rate on individuals exceeded an unbelievable 90%.
I’m sure there are plenty of Americans who would love to see the wealthiest citizens paying 90% again.
Yet in 1963, even with rates that high, the total amount of tax revenue that the US government collected was 16.7% of GDP.
In 1988 when the highest tax rate was slashed to just 28% under Ronald Reagan, total tax revenue 17.3% of GDP.
It doesn’t matter if tax rates were high or low-- the actual tax revenue that the government collects stays constant at around 17% of GDP.
This raises a point that these socialists never seem to understand:
If the government’s slice of the pie never seems to change no matter how high or how low tax rates are, shouldn’t they focus on making the pie bigger?
Duh.
And it seems intuitive that higher taxes obstruct economic growth (i.e. make the pie smaller) because there’s less money in people’s pockets to spend and invest.
Then, of course, we have to touch on the issue of competence.
It’s absurd to want a government that has a nearly interminable track record of overreach, waste, and failure, to be even MORE involved in people’s lives.
We’re talking about the same institution that wastes taxpayer money to study monkeys on treadmills...
... or spent $1 billion to destroy $16 billion worth of perfectly good ammunition…
... or $2 billion to build a website.
It’s extraordinary that these people are already in charge of educating our children, regulating our savings, and now our medical care.
It’s even more appalling that given such dismal performance people want more.
As the old saying goes, the classic definition of insanity is trying the same thing over and over again and expecting a different result.
A final point I’ll mention is that it’s concerning to see people in the Land of the Free and Home of the Brave expect the government to solve their problems.
What ever happened to self-reliance? The pioneering spirit? Good ole’ American can-do ingenuity?
In truth there are countless ways for a motivated person to solve problems. Or at least to make forward progress.
For example, to all these kids that have their hands out demanding free university education, I always ask the same questions:
How many books did you read in the last twelve months?
How many FREE online courses from Harvard and MIT did you take?
Are you actually doing anything to help yourself? Or are you just whining on social media about how no one is giving you anything for free?
America was founded as a place where people take responsibility for themselves.
But this now seems to be an outdated, minority view.
The Land of the Free is truly becoming the Land of Getting Free Stuff.
In a poll conducted a few days ago by NBC News / Wall Street Journal, a record 57% of Americans responded that they want MORE government in their lives, and that the government should be doing more to solve people’s problems.
That’s the highest percentage since they started asking this question in 1995.
In fact, 57% is nearly double what people responded in the mid-90s.
Furthermore, the number of Americans who feel the opposite, i.e. responded that the government is doing too many things that should be left to private businesses and individuals, fell to a near record-low 39%.
Bottom line: people want more government.
It’s hard to even know where to begin with this.
First- more government is nearly an impossibility.
As I’ve written several times in the past, the US federal government already spends almost all of its tax revenue on mandatory entitlements like Social Security, and interest on the debt.
They could literally cut nearly everything we think of as government-- national parks, Homeland Security, even the IRS-- and still not make a dent in paying down the national debt.
According to the US government’s own financial statements, their net operating loss in 2016 was an unbelievable $1.05 TRILLION.
Think about that-- they lost more than a trillion dollars in a completely unremarkable year.
They weren’t waging world war, funding a major infrastructure project, or dealing with an economic crisis.
It was just business as usual. And they STILL lost over a trillion dollars.
More government is going to cost even more money that they don’t have... which means even more debt and even more pain in the future.
The usual refrain is to pay for more government programs by raising taxes on the rich, or big corporations, or whoever the evil villain du jour is.
Anyone who thinks this actually works needs to study history.
Simply put, RAISING TAXES DOES NOT RAISE TAX REVENUE.
I wish every Bernie Sanders voter could understand this very simple fact:
Since the end of World War II, US federal government tax revenue as a percentage of GDP has been nearly constant at 17%.
In other words, while the actual dollar amount of tax revenue goes up every year due to inflation and economic expansion, the government’s slice of the total economic pie is 17%.
Yet during the previous eight decades, actual -tax rates- have been all over the board-- sometimes rates were higher, sometimes rates were lower.
Back in 1963, for example, the highest marginal tax rate on individuals exceeded an unbelievable 90%.
I’m sure there are plenty of Americans who would love to see the wealthiest citizens paying 90% again.
Yet in 1963, even with rates that high, the total amount of tax revenue that the US government collected was 16.7% of GDP.
In 1988 when the highest tax rate was slashed to just 28% under Ronald Reagan, total tax revenue 17.3% of GDP.
It doesn’t matter if tax rates were high or low-- the actual tax revenue that the government collects stays constant at around 17% of GDP.
This raises a point that these socialists never seem to understand:
If the government’s slice of the pie never seems to change no matter how high or how low tax rates are, shouldn’t they focus on making the pie bigger?
Duh.
And it seems intuitive that higher taxes obstruct economic growth (i.e. make the pie smaller) because there’s less money in people’s pockets to spend and invest.
Then, of course, we have to touch on the issue of competence.
It’s absurd to want a government that has a nearly interminable track record of overreach, waste, and failure, to be even MORE involved in people’s lives.
We’re talking about the same institution that wastes taxpayer money to study monkeys on treadmills...
... or spent $1 billion to destroy $16 billion worth of perfectly good ammunition…
... or $2 billion to build a website.
It’s extraordinary that these people are already in charge of educating our children, regulating our savings, and now our medical care.
It’s even more appalling that given such dismal performance people want more.
As the old saying goes, the classic definition of insanity is trying the same thing over and over again and expecting a different result.
A final point I’ll mention is that it’s concerning to see people in the Land of the Free and Home of the Brave expect the government to solve their problems.
What ever happened to self-reliance? The pioneering spirit? Good ole’ American can-do ingenuity?
In truth there are countless ways for a motivated person to solve problems. Or at least to make forward progress.
For example, to all these kids that have their hands out demanding free university education, I always ask the same questions:
How many books did you read in the last twelve months?
How many FREE online courses from Harvard and MIT did you take?
Are you actually doing anything to help yourself? Or are you just whining on social media about how no one is giving you anything for free?
America was founded as a place where people take responsibility for themselves.
But this now seems to be an outdated, minority view.
The Land of the Free is truly becoming the Land of Getting Free Stuff.
Until tomorrow,
Simon Black
Founder, SovereignMan.com
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