And yet Americans think they are over taxed and support many things (like a war) that add to our National debt. Everything is connected everything has consequences.
Your share
We can’t control what others do and we can’t stop misfortune from striking. But we can control our own actions. Those who are financially prudent will most likely enjoy success, even if events don’t always go their way.
Some of us are overtaxed. However, the percentage of American households who do not contribute even a single dime to funding the federal government has increased from about 1 in 5 households in 1980 to 2 in 5 households.
Historically, the share of Americans with no federal income tax liability was much lower. For instance, it stood at 24% in 1962 and dropped to around 12.6% by 1969.
By 1980, roughly 20% of filers owed no income taxes, climbing to about 34% by 2000 as standard deductions, personal exemptions, and targeted credits (like the Earned Income Tax Credit) removed low-income wage earners from the tax rolls.
The percentage hovered around 40% in the mid-2000s and spiked closer to 49%–51% during the 2008–2009 Great Recession due to temporary tax relief and reduced incomes. In the subsequent decade, it stabilized around 44% of all U.S. households.
Peak (2021): Driven by major temporary COVID-19 relief legislation, stimulus checks, and expanded child tax credits, the share of households paying no federal income tax surged to 57%. 57%!!!!!!!!
As temporary pandemic provisions expired, the share returned closer to historical norms, with roughly 39.6% of households paying no individual income tax.
Where was your call for foregoing the tax cuts Congress approved in EGTRRA 2001, in 2008-2009, or 2021?
And yet, we run $2 Trillion in deficits because America has a spending problem, Congress buying votes – not a taxing problem. Tax revenues are up from $2 Trillion a year (2001) to $5 Trillion a year, while federal spending is up from $2 Trillion a year (2001) to $7 Trillion a year.
The problem is simply that Congress knows they can spend today to buy votes and send the bill to generations too young to vote and generations yet unborn.
We haven’t “cut” taxes in more than a couple of decades, in that revenue continues to increase.
Nor have we cut spending, despite the lies Democrats tell you about Medicaid cuts, welfare cuts, reductions in tax subsidies for Exchange coverage.
Our spending in each of those three areas is signficantly higher than it was before COVID.
We don’t have a problem in terms of insufficient revenue. We definitely have a spending problem!
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Interesting way you define cuts or not. In any case, what spending shall we cut?
My effective income tax rate is 18.8%. I don’t feel over taxed.
Anyone can build retirement income and live virtually tax free. That seems pretty good.
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Retirement? Continued enjoyment of retirement isn’t possible for the vast majority of today’s retirees if we don’t address excessive entitlement spending. The same is true for the rest of the Baby Boomers, Gen X and others who are within 15 years of pulling the plug.
Raise revenue by recovering some of the entitlement spend:
Create a nominal federal income tax, a per capita tax, on every American household with wages or other income – from whatever source, including transfer payments like Social Security, SNAP, TANF, etc. Need not be much, but everyone needs to be contributing something and filing a federal income tax return that confirms not only what they paid, but what they received from the federal government. That is, there is a check or electronic transfer or other payment made to the federal government.
Reconcile the funding for Social Security before the idiots in Congress decide to increase debt. I would give every living American (other than minors who only get a choice when they first start paying Social Security taxes) a choice of reducing their Social Security benefit (but not below poverty levels) or paying additional taxes, or options that reflect a combination of both. Seniors receiving benfeits are not exempt. Actuaries would calculate the amount each individual failed to contribute, and each individual would be given a choice on how to fill the funding gap they are responsible for – maintaining the progressivity of the system.
Change the investment policy for the trust funds to include various assets, including land, timber, oil reserves, mineral reserves, etc. – creating a sovereign wealth fund, a la Alaska and other states. Sub-federal sovereign wealth funds are commonly linked to fossil-fuel production, whereby states designate some portion of severance tax or royalty revenues for long-term investment. More than half of American states maintain energy severance taxes or royalties, with 10 having established one or more related funds. The largest ones operate in Texas, Alaska, and New Mexico (between $54 billion and $96 billion per state in 2024), although some of the most rapid recent growth has occurred in North Dakota ($11 billion). Such funds were developed during three distinct periods. Two were created in Texas during the mid-1800s, followed by six more during the 1970s and 1980s, and three more between 2008-14. All those established through constitutional amendment have endured.
With respect to other spending cuts:
Reduce federal prison spending by 50+% (excluding super max) – centralizing all federal prisoners in one location, say an Army or Air Force base that was scheduled to be closed or should be closed. All appeals, hearings, etc. conducted by zoom/teams. No more country club crap. Every federal prisoner would be charged 100% of the cost to maintain themselves in prison – their debt to society remains until fully paid.
Require every household with income covered under Medicaid to contribute towards the cost.
Return to “ending welfare as we know it”, a la President Clinton, where all federal welfare programs are temporary with a maximum of two years. After that, it is up to the states to decide what welfare they want to provide. Reduce federal subsidies for Medicaid and SNAP and other welfare programs by 20% per year, reduced to $0 after five years. After five years, each state is required to fund 100% of the cost of welfare programs for constituents in that state.
Reduce every line item, except Defense, the Department of Homeland Security (FBI, Secret Service, etc.), State and Interest on the National Debt, by 2% per year (of 2026 spend level) for 10 years (20% total, reducing 2037 spending to 80% of nominal 2026 spending), then freeze spending at that level to balance the budget in five years, running a surplus thereafter to pay down the National Debt, in turn, reducing interest on the National Debt.
Immediately all but eliminate various federal departments that duplicate state efforts – education, environmental protection, transportation, labor, and commerce, and expecially housing!!!!!! – limiting federal action to oversight, reducing federal employment over the next 5 years by 1MM or 40%. https://www.gao.gov/duplication-cost-savings
Reinstitute the draft (create government service), including any and every American who did not serve in the military in the past – “I Want You!” Start with the oldest and youngest adult Americans. So, for example, if there is a prosecutor or defense attorney who did not serve, I would draft them as a 2nd Lieutenant for JAG. Other attorneys could be drafted to serve in the Department of Justice and various other federal agencies, as necessary – including drafting incumbents currently employed as federal employees. Or, for example, if there are engineers who did not serve, I would draft them as privates or 2nd lieutenants to serve as engineers. Obviously, where folks are infirm or do not offer skills and capabilities needed in the military or in other federal agencies, they would be unfit for service – what we once called classified as “4F”. No age or gender limitations. Over time, that would lower the cost of the other 2.5MM or so federal civilian and military personnel perhaps by a third without negatively impacting capability and potentially improving capability. I served two years of my life, and my only regret was that I didn’t want to, and I could have been a better soldier. Think of it as government service if you like. There are over 150MM adult Americans who never served – quite the potential labor supply with significant skills and experience.
Raise revenue by raising leasing costs for use of federal lands, raising extraction and severance taxes, etc.
Raise international defense spending by our NATO and other treaty partners to recover excessive US defense spending from past years after WWII (where folks did not fulfill their commitments). (As Europe’s largest economy, Germany was long the focal point of criticism – for decades, it consistently spent around 1% to 1.4% of its GDP on defense. It only crossed the 2% threshold in 2024 following a major policy shift triggered by Russia’s invasion of Ukraine. France and Italy: Both nations historically hovered well below the line. Italy routinely spent around 1.4% of GDP, citing high national debt, while France hovered just under 2% for most of the 2010s before ramping up. Canada has been a perennial target of alliance criticism regarding defense outlays. Throughout the 2010s and early 2020s, Canadian defense spending rarely surpassed 1.3% to 1.5% of GDP. Historically one of the lowest-spending members relative to its economic size, Spain regularly anchored the bottom of NATO lists, spending between 0.9% and 1.2% of GDP well into the mid-2020s. Belgium and Luxembourg: These nations consistently allocated low percentages to defense. Luxembourg, due to its tiny military structure, historically sat below 1%, while Belgium long hovered around 1.3%.) If you want Americans to provide for your defense, you get to pay for it.
Limit foreign aid to countries that match the funds we provide, where such monies are used to improve infrastructure and productivity – no welfare spending permitted, no woke crap. Provide those funds via grants to US business enterprises to capitalize operations and construction in other countries, to engage in trade with the US, especially in terms of minerals and other critical products and services.
Limit foreign students to those who wish to come to America and become Americans – no guarantees made that they will be allowed to stay.
Require all legal immigrants to be sponsored, individually and financially. Apply that retroactively as necessary to recover taxpayer monies spent.
No funding of any kind for individuals who are not lawfully present, including those awaiting resolution of their claims for asylum. All federal spending will be suspended for states that provide any funding or services to those not lawfully present. States and the citizens thereof that do not coordinate with the federal government in enforcing federal laws will not receive any federal funds, including entitlements such as Medicare and Medicaid reimbursements and Social Security benefits. Coordinated enforcement of federal laws will reduce unnecessary spending.
Add a surcharge to the Panama Canal until such time as America recovers its investment.
Eliminate taxpayer subsidies for public exchange health coverage.
And, so much more.
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Tax the rich.* That’s where the money is, and there’s no way Jeff Bezos, or Donald Trump ‘earned’ ten thousand times more than my Dad did working as a farm hand. He had nine children and never paid income tax for years.
*Tax me. My household income was higher than the median (but not higher than the average.)
Tax till it hurts, then ease off.
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