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Discussion: (3 comments)

  1. The point of the 18% of GDP figure over 50 years is that that is all the taxes the economy can absorb. Tax rates for all the different types of taxes have changed dramatically over the past 50 years, yet tax revenues always trend to 18% of GDP no matter what tax has what rate structure. You cannot extract more than that from the economy on a permanent basis, that is simply the public’s maximum pain tolerance for taxes. There is no raising more revenue as a percent of GDP, it cannot be done. The ONLY choice for long-term fiscal solvency is to reduce expenses. If we, collectively, refuse to do that, then we will go bankrupt. That’s all there is to it.

  2. Bob Zimmerman

    “Higher taxes never reduce the deficit. Governments spend whatever they take in and then whatever they can get away with.” – Milton Friedman
    “[T]he burden of government is not measured by how much it taxes, but by how much it spends.” — Milton Friedman

    1. Mark Fernald

      Both of the above comments are off base. Federal receipts were above 18% from 1995 to 2001, at a time of historically low unemployment and strong economic growth. Federal spending has averaged over 20% of GDP during the past 40 years, during both Democratic and Republican administrations. If we are serious about the deficit, we should raise the revenue necessary to pay the bills. If we are not willing to raise that revenue, we should be clear with voters what we propose to cut–Social Security? Medicare? Defense?

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