Are more and more taxes and bigger government good for your country or only for politicians?
I might get slammed for this but I honestly wouldn't care if our government was bigger and taxes were higher if I trusted how they were being used. If big government provided real, good, and fair healthcare options, spent more on education than prison, etc...I don't think many would care. Problem is, we all know it's not happening that way and don't have this trust.
So, I suppose though we benefit some, the taxes are better for the politicians than anyone else.
Right now taxes are lower than they were 25 years ago and yet many people do not feel the country is better off. In fact in the U.S. we are increasing the number of millionaires/billionaires yearly and they're younger! Interest rates are low. Wall street is at an all time high!
There is a psychological component which determines how people feel about the government and economy. Today even those with jobs and making a decent living do not (feel) good about the economy. It's a "catch 22". When consumers hold onto their money out of fear they stop buying products and manufactures start laying off people which makes consumers more uneasy about their own jobs so they tighten their belts even more. We won't see dramatic improvement in the economy until people (feel) positive about the future again.
Out sourcing manufacturing and phone customer service/support jobs to other countries along with a few bad trade agreements have probably hurt the economy far more than any tax increase. It also didn't help us to be fighting 2 wars costing over a trillion dollars for the past 10 years either. We owe China a ton of money!
It all depends on what the government is doing. If the added taxes and larger agencies are working to help the citizens, then the government is doing what it's supposed to. If the money is going to shady places and big agencies do nothing for the public, then we should start being concerned. It's easy to adopt the stance that taxes and big government are bad, but that viewpoint represents a misunderstanding of what government is there for. It is a vessel of safety, change and unity. If we demonize it, and treat it as our enemy, then we aren't using it to solve our problems. In a democracy, we only have ourselves to blame for bad politicians.
There is no benefit in gov't providing services beyond that which can only be provided by gov't as an essential service. Law enforcement, courts of law...etc. In every area in which gov't has actively involved itself in the marketplace, the result is always the same. Prices go up...quality and/or accessibility go down. The gov't has been distorting prices in the healthcare sector since 1965, and we have received exactly this result. The same can be said for education.
The tax argument is a totally different discussion. Taxes and actual revenue to the gov't are in no way related. When there are higher taxes the gov't collects the same percentage of revenue as it does when there are lower taxes. The size and scope of gov't is really not driven by tax rates or the number of new taxes created. When the highest marginal rates were over 90%, the gov't collected the same share of GDP in tax revenue as they did when rates were at 28%. The higher tax rates seen in the 40's and 50's were essentially a myth. Nobody actually paid those rates of 90% because there were countless ways in the tax code to avoid them. Signing up for money losing schemes on paper was an accounting art form at that time. The tax reform of the 80's lowered rates and simplified the tax code to eliminate many of these tax loopholes to simply create a somewhat more efficient system. But the net revenue collected as a % of the size of the economy did not change much.
The expansion of gov't tends to be driven by political salesman and the selling of new services of gov't which virtually always do more harm than good. There is a very big misconception about how tax rates impact gov't. Tax rates and the complexity behind the tax code has more of an impact on the activity within the private sector...which in turn can and does impact GDP. But no matter what rates have been since the end of WW2 the US treasury has collected about 15-20% of GDP. The size of gov't and the corresponding spending to fund gov't operations is not limited to the revenue collected by the gov't. The private sector creates wealth, and the public sector creates currency. The only way for currency to increase on a net basis, is for gov't to spend more than it takes in. This is how our monetary system grows. The concern is when the actual services provided by gov't crowd out private activity and limit the creation of wealth, which hinders productivity and is potentially inflationary.
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