Let me preface this comment by stating that I am not averse to raising the tax rates paid by the wealthy, only that I believe “revenue” for a government that neither needs nor uses revenue from any source is not sufficient justification for taxation.
By increasing government revenue through raising taxes on the wealthiest Americans, we could fully fund our welfare state, invest in repairing and improving our aging infrastructure, provide health care as a right, and provide higher education opportunities to more Americans.
This represents outdated gold standard logic that is responsible for holding back our nation from realizing many benefits we could be enjoying as many much less wealthy nations do. With a monetary system built around defending a gold reserve, taxation was the main tool used to allow the government to provision itself and pay for social benefits while keeping the total money supply within the value of the reserve.
Sans a gold reserve to defend our fiat system effectively disconnects taxation from spending and completely changed the definition of deficits, debt, and inflation. As long as the debt is only denominated in the currency Congress can create on demand as a no-cost commodity there is no level that is “unaffordable”, but the Treasury bonds most think of in connection with debt are also entirely unnecessary as a “funding” mechanism.
Spending “must” precede both tax collection and bond issue or there is no currency to collect or borrow. The act of spending “funds” spending and the only effort involved is marking up Treasury’s spending accounts via keystrokes at the Fed. This is not to make light of the importance of taxation in managing the economy, only that it isn’t “required” as a prerequisite to “pay for” spending. Spending pays for both taxes and bonds, not the other way around.
The best way to deal with excessive wealth accumulation is to make it irrelevant to properly funding the government. Once the wealthy lose their importance as a perceived source of revenue there are 99 reasons to tax them heavily without fear of disrupting the flow of money in the economy. I’m pretty sure this will lead to much higher top marginal rates to prevent manipulation of our democratic process.
Offering tax credit for beneficial investment in the economy is how we got our best decades, but it only works if the tax rate is sufficient to offset risk involved in such investments. In the absence of the ability to overcome political pressure against such rate increases, there is no need to avoid spending on the public purpose. As long as the resources exist to balance the demand created by spending in deficit there is no inflation risk. Congress must define objectives and properly fund them, regardless of taxation levels.
