Revenue Models & Tax Theory

[FLaw47]

There was a reddit post sort of on this that I commented on. I then fed my comments back through ChatGPT to tighten things up but what are people's thoughts on the below? Please feel free to suggest your own ideas (but if you bring up a flat tax or "Fair Tax" be prepared to be attacked).

For the sake of keeping this thread on topic, please assume that the goal of the tax changes is to keep tax revenues the same or increase them to pay down the debt. If we talk about tax theory itself we can remain non-partisan. Discussing spending cuts will inevitably lead us down a partisan wormhole. Please feel free to make your own thread if that is what you'd like to discuss.

If we were serious about reducing the federal deficit and making the tax code more efficient, I think the conversation would have to include some fairly unglamorous changes. A few thoughts:

1. Social Security
Lifting or removing the Social Security payroll tax cap seems like the most straightforward way to address most of the program’s funding gap.

2. Broader tax base
If the U.S. wants the kind of fiscal capacity that many European countries have, it probably means taxes go up somewhat across the board—not just on high earners. Those countries fund their systems with broader tax bases than we do.

3. Introduce a VAT
Sales taxes have issues, but a value-added tax is the backbone of revenue systems in most developed countries. It’s relatively efficient, hard to evade, and raises a lot of revenue with a broad base.

4. Reform capital taxation
A few changes that seem worth discussing:

• Tax capital gains closer to ordinary income, at least for higher earners
• Eliminate stepped-up basis at death
• Consider increasing the estate tax

Much of high-end income comes from capital, and the current system creates a lot of avoidance opportunities.

5. Corporate tax reform
There’s a strong argument that corporate taxes are inefficient and mostly passed on to workers, consumers, or shareholders anyway. It might make more sense to tax those parties directly rather than the corporation itself.

6. Reduce distortionary subsidies
Some parts of the tax code mostly just inflate prices in the markets they target. For example:

• The mortgage interest deduction likely raises housing prices
• Similar targeted subsidies often distort markets more than they help

7. Consider alternative tax bases
Land value taxes are interesting because they’re difficult to avoid and don’t distort economic behavior the way many other taxes do.

8. Simplify retirement taxation
One idea I’ve wondered about: moving entirely to Roth-style retirement accounts. Tax the money when it goes in rather than when it comes out. That would simplify decision-making for savers and eliminate a lot of tax-planning games.

 

[baltimorened]

There was a reddit post sort of on this that I commented on. I then fed my comments back through ChatGPT to tighten things up but what are people's thoughts on the below? Please feel free to suggest your own ideas (but if you bring up a flat tax or "Fair Tax" be prepared to be attacked)

If we were serious about reducing the federal deficit and making the tax code more efficient, I think the conversation would have to include some fairly unglamorous changes. A few thoughts:

1. Social Security
Lifting or removing the Social Security payroll tax cap seems like the most straightforward way to address most of the program’s funding gap.

2. Broader tax base
If the U.S. wants the kind of fiscal capacity that many European countries have, it probably means taxes go up somewhat across the board—not just on high earners. Those countries fund their systems with broader tax bases than we do.

3. Introduce a VAT
Sales taxes have issues, but a value-added tax is the backbone of revenue systems in most developed countries. It’s relatively efficient, hard to evade, and raises a lot of revenue with a broad base.

4. Reform capital taxation
A few changes that seem worth discussing:

• Tax capital gains closer to ordinary income, at least for higher earners
• Eliminate stepped-up basis at death
• Consider increasing the estate tax

Much of high-end income comes from capital, and the current system creates a lot of avoidance opportunities.

5. Corporate tax reform
There’s a strong argument that corporate taxes are inefficient and mostly passed on to workers, consumers, or shareholders anyway. It might make more sense to tax those parties directly rather than the corporation itself.

6. Reduce distortionary subsidies
Some parts of the tax code mostly just inflate prices in the markets they target. For example:

• The mortgage interest deduction likely raises housing prices
• Similar targeted subsidies often distort markets more than they help

7. Consider alternative tax bases
Land value taxes are interesting because they’re difficult to avoid and don’t distort economic behavior the way many other taxes do.

8. Simplify retirement taxation
One idea I’ve wondered about: moving entirely to Roth-style retirement accounts. Tax the money when it goes in rather than when it comes out. That would simplify decision-making for savers and eliminate a lot of tax-planning games.

Boy Flaw, this should make for a great thread, seriously. I can already see those on the left leaning toward a lot of ideas that tilt toward taxing high earners and those on the right pointing out that you didn't present the idea of reducing spending.

But, you put out a lot to unpack. Let me catch the first spears by addressing number 1. Social Security. You are correct that the program definitely needs fixing and you might not be old enough to remember Al Gore and his desire to use a "lock box" for social security reciepts. I point this out because that's how far back this debate goes - the 1980s. And yet, our leaders have not had the moral courage to fix it.

So how do we fix it? It's clear that there is a need for more money. And the only way you get that is through a higher tax be in an across the board increase or a continued tax through all earnings, or tax after a donut hole type carve out...but no matter, some increase in SS tax will be be needed. The other side of the equation is the SS payout. Do we increase age eligibility, or reduce the payout % to recipients? Based on another thread we discussed, it will be difficult to decrease payouts, because more and more people are going to be dependent on SS to survive.

I admit my bias and say that I am 100% against any kind of decrease in payouts to those with high retirement earnings be they through defined benefit or defined contribution retirement plans, earnings off investments, or even survivor RMDs, annuities or whatever. There are people who have prepared for retirement, invested in IRAs or 401ks, bought annuities, invested a portion of their earnings etc because they knew what was coming and sacrificed in the short term to have money for their futures. They have contributed to social security with the promise that funds would be there for them when they retired. There were caveats about reductions or elimination of benefits if you have too much money coming from other sources. \

So, that's my opinion on that

 

[FLaw47]

Boy Flaw, this should make for a great thread, seriously. I can already see those on the left leaning toward a lot of ideas that tilt toward taxing high earners and those on the right pointing out that you didn't present the idea of reducing spending.

But, you put out a lot to unpack. Let me catch the first spears by addressing number 1. Social Security. You are correct that the program definitely needs fixing and you might not be old enough to remember Al Gore and his desire to use a "lock box" for social security reciepts. I point this out because that's how far back this debate goes - the 1980s. And yet, our leaders have not had the moral courage to fix it.

So how do we fix it? It's clear that there is a need for more money. And the only way you get that is through a higher tax be in an across the board increase or a continued tax through all earnings, or tax after a donut hole type carve out...but no matter, some increase in SS tax will be be needed. The other side of the equation is the SS payout. Do we increase age eligibility, or reduce the payout % to recipients? Based on another thread we discussed, it will be difficult to decrease payouts, because more and more people are going to be dependent on SS to survive.

I admit my bias and say that I am 100% against any kind of decrease in payouts to those with high retirement earnings be they through defined benefit or defined contribution retirement plans, earnings off investments, or even survivor RMDs, annuities or whatever. There are people who have prepared for retirement, invested in IRAs or 401ks, bought annuities, invested a portion of their earnings etc because they knew what was coming and sacrificed in the short term to have money for their futures. They have contributed to social security with the promise that funds would be there for them when they retired. There were caveats about reductions or elimination of benefits if you have too much money coming from other sources. \

So, that's my opinion on that

To be honest, I think talking about spending reductions wouldn't be very productive. Everyone has some stuff they're willing to cut spending on but there's very little overlap. I think we can have a productive conversation about overall tax policy because it can be viewed either as:

• A way to increase revenues
• A way to keep revenues similar but have better policy

For people who don't think we need to raise revenue, they could choose to view this as the second of those.

(Food for thought and it's certainly not apples to apples as our country doesn't provide the same services that plenty of other countries do, but we're 75th on the list of countries ranked total taxes as a percentage of GDP and way lower by tax revenue as a percentage of GDP. Our peer countries have a tax base between 50-300% higher than ours depending one how you slice it).

To your last paragraph, is anyone proposing reductions in any of the things you've talked about? I'd absolutely never support (for example) charging income tax on ROTH accounts. Even I would say that's robbery.

 

[ANEW]

Re: social security . i'm with ned. If you'r going to take my $$ with me paying more into the system the more i earn, at least give me back whatever everyone else gets based upon what they paid in over the years. The way to increase money going in without radical changes elsewhere or congress collectively growing spines and cutting stuff, would be increaging the payroll tax limit. I think 'doughnut hole' soluton would be an easy sell and not generate too much pushback. It woud be an incremental tax on top earners now, but wouldn't punish them for good decisions and success throughout their lives.

I was kinda hoping when there was all the talk of Doge cuts and Tariff revenue that some $$ could be set aside and earmarked for helping SS solvency,.

 

[baltimorened]

To be honest, I think talking about spending reductions wouldn't be very productive. Everyone has some stuff they're willing to cut spending on but there's very little overlap. I think we can have a productive conversation about overall tax policy because it can be viewed either as:

• A way to increase revenues
• A way to keep revenues similar but have better policy

For people who don't think we need to raise revenue, they could choose to view this as the second of those.

(Food for thought and it's certainly not apples to apples as our country doesn't provide the same services that plenty of other countries do, but we're 75th on the list of countries ranked total taxes as a percentage of GDP and way lower by tax revenue as a percentage of GDP. Our peer countries have a tax base between 50-300% higher than ours depending one how you slice it).

To your last paragraph, is anyone proposing reductions in any of the things you've talked about? I'd absolutely never support (for example) charging income tax on ROTH accounts. Even I would say that's robbery.

Ok, I'm older than most of you, so taxing me a few % more won't impact me, but aggravate my heirs. It seems to me that our government needs to set some goals and then mark strategies to attain those goals. I'd have no problem with a small tax increase on EVERYBODY, and maybe even a tax surcharge on incomes over a certain level - people like to use $1million - we've done it before. But we need to use that money to pay off the debt, not create programs that increase the debt.

But, to get to any kind of a goal would require long term buy in from both parties, and that's not likely

 

[fatpiggy]

People would feel better about funding necessary programs if they were honest and efficient.

root out the waste fraud and abuse so we can see where we really stand.

same thing you would do with your home finances. You would cut out all the unnecessary subscriptions all the unnecessary going out to dinners and you would really slim down your budget. And then you would say yeah this is really necessary and that is really necessary, this can’t be cut. But until we have an honest assessment of where we are, talking about it is kind of blowing hot air in my opinion.

 

[FLaw47]

People would feel better about funding necessary programs if they were honest and efficient.

root out the waste fraud and abuse so we can see where we really stand.

same thing you would do with your home finances. You would cut out all the unnecessary subscriptions all the unnecessary going out to dinners and you would really slim down your budget. And then you would say yeah this is really necessary and that is really necessary this can’t be cut. But until we have an honest assessment of where we are, talking about it is kind of blowing hot air in my opinion.

I'd like to keep this conversation focused on different ways to reform taxes. Thinking we should cut spending is valid, but I think it's ultimately a distraction from this conversation.

 

[fatpiggy]

I'd like to keep this conversation focused on different ways to reform taxes. Thinking we should cut spending is valid, but I think it's ultimately a distraction from this conversation.

I don’t think the majority of people think it’s a distraction. Why don’t you post a poll?

 

[fatpiggy]

Imagine that. A democrat doesn’t want to discuss cutting spending.

I’ll stay out of your thread, but it’s hilarious you don’t want to talk about the spending part.

 

[fatpiggy]

We have states where people are taxed at 50%. But let’s don’t talk about cutting spending.

what a joke. What a lame thread. Goodbye

 

[baltimorened]

I don’t think the majority of people think it’s a distraction. Why don’t you post a poll?

the thing is, how much you spend leads to how much you need to tax

 

[fatpiggy]

the thing is, how much you spend leads to how much you need to tax

Of course there is a direct correlation. That’s why it’s disingenuous to have a thread talking about policy without talking about half the problem.

Just say you only want to talk about the revenue part or something. But to say spending is not really a part of the problem and there is no room to cut spending when people are already paying half their income in taxes.

Taking more than 50% of someone’s work is immoral and I will never change my mind on that.

It’s an entitled mindset that allows people to tax others at that high of a rate.

The income tax started off at 3% when it was first implemented.

But spending is not the problem. Carry on

 

[FLaw47]

Of course there is a direct correlation. That’s why it’s disingenuous to have a thread talking about policy without talking about half the problem.

Just say you only want to talk about the revenue part or something. But to say spending is not really a part of the problem and there is no room to cut spending when people are already paying half their income in taxes.

Taking more than 50% of someone’s work is immoral and I will never change my mind on that.

It’s an entitled mindset that allows people to tax others at that high of a rate.

The income tax started off at 3% when it was first implemented.

But spending is not the problem. Carry on

It's not disingenuous, I just want to talk about a specific thing. I've updated the thread title per your recommendation and added this to the start of my post:

For the sake of keeping this thread on topic, please assume that the goal of the tax changes is to keep tax revenues the same or increase them to pay down the debt. If we talk about tax theory itself we can remain non-partisan. Discussing spending cuts will inevitably lead us down a partisan wormhole. Please feel free to make your own thread if that is what you'd like to discuss.

And for clarity, I never said that spending wasn't part of the problem. You're doing that thing where you make up stuff again. A less charitable person than I would call you a bold faced liar for that behavior.

I only said talking about spending cuts turns this thread into something different, and it does. We've had like 15 posts and we've only slightly discussed social security taxes and have had several posts whining that I don't want to talk about spending cuts. I don't think my theory of the case is wrong here.

 

[FLaw47]

the thing is, how much you spend leads to how much you need to tax

I added this to my post:
For the sake of keeping this thread on topic, please assume that the goal of the tax changes is to keep tax revenues the same or increase them to pay down the debt. If we talk about tax theory itself we can remain non-partisan. Discussing spending cuts will inevitably lead us down a partisan wormhole. Please feel free to make your own thread if that is what you'd like to discuss.

I think we can have the conversation about how we generate tax revenue without getting into the spending just fine. If we say that we should be spending 80% of what we do right now, then we can just take 80% of the every tax listed, it's fine. I don't think that assumption really starts to break down until we're trying to generate like 25% of the revenue we are right now and if we were doing that we'd be a fundamentally different country, horrifically out of step with the rest of the developed world (and that would merit a separate conversation).

 

[fatpiggy]

It's not disingenuous, I just want to talk about a specific thing. I've updated the thread title per your recommendation and added this to the start of my post:



And for clarity, I never said that spending wasn't part of the problem. You're doing that thing where you make up stuff again. A less charitable person than I would call you a bold faced liar for that behavior.

I only said talking about spending cuts turns this thread into something different, and it does. We've had like 15 posts and we've only slightly discussed social security taxes and have had several posts whining that I don't want to talk about spending cuts. I don't think my theory of the case is wrong here.

Fair enough. I'll leave your thread be.

 

[Dadar]

There was a reddit post sort of on this that I commented on. I then fed my comments back through ChatGPT to tighten things up but what are people's thoughts on the below? Please feel free to suggest your own ideas (but if you bring up a flat tax or "Fair Tax" be prepared to be attacked).

For the sake of keeping this thread on topic, please assume that the goal of the tax changes is to keep tax revenues the same or increase them to pay down the debt. If we talk about tax theory itself we can remain non-partisan. Discussing spending cuts will inevitably lead us down a partisan wormhole. Please feel free to make your own thread if that is what you'd like to discuss.

If we were serious about reducing the federal deficit and making the tax code more efficient, I think the conversation would have to include some fairly unglamorous changes. A few thoughts:

1. Social Security
Lifting or removing the Social Security payroll tax cap seems like the most straightforward way to address most of the program’s funding gap.

2. Broader tax base
If the U.S. wants the kind of fiscal capacity that many European countries have, it probably means taxes go up somewhat across the board—not just on high earners. Those countries fund their systems with broader tax bases than we do.

3. Introduce a VAT
Sales taxes have issues, but a value-added tax is the backbone of revenue systems in most developed countries. It’s relatively efficient, hard to evade, and raises a lot of revenue with a broad base.

4. Reform capital taxation
A few changes that seem worth discussing:

• Tax capital gains closer to ordinary income, at least for higher earners
• Eliminate stepped-up basis at death
• Consider increasing the estate tax

Much of high-end income comes from capital, and the current system creates a lot of avoidance opportunities.

5. Corporate tax reform
There’s a strong argument that corporate taxes are inefficient and mostly passed on to workers, consumers, or shareholders anyway. It might make more sense to tax those parties directly rather than the corporation itself.

6. Reduce distortionary subsidies
Some parts of the tax code mostly just inflate prices in the markets they target. For example:

• The mortgage interest deduction likely raises housing prices
• Similar targeted subsidies often distort markets more than they help

7. Consider alternative tax bases
Land value taxes are interesting because they’re difficult to avoid and don’t distort economic behavior the way many other taxes do.

8. Simplify retirement taxation
One idea I’ve wondered about: moving entirely to Roth-style retirement accounts. Tax the money when it goes in rather than when it comes out. That would simplify decision-making for savers and eliminate a lot of tax-planning games.

Lot of food for thought there. I rarely have long term capital gains since selling XOM that grew from Standard Oil into Esso before the merger into XOM.

 

[FLaw47]

Fair enough. I'll leave your thread be.

Please don't misconstrue, I'd love your participation! I just want to talk about how we generate revenue (regardless of the total amount) and not what we spend it on.

 

[FLaw47]

Lot of food for thought there. I rarely have long term capital gains since selling XOM that grew from Standard Oil into Esso before the merger into XOM.

Wild. I almost never pay short term gains but I'm a super boring index fund investor.

 

[fatpiggy]

Please don't misconstrue, I'd love your participation! I just want to talk about how we generate revenue (regardless of the total amount) and not what we spend it on.

There is a great chart from the bls.gov that i will try to find in a bit. A bit busy right now. Breaks down the sources of income visually etc.

 

[baltimorened]

Of course there is a direct correlation. That’s why it’s disingenuous to have a thread talking about policy without talking about half the problem.

Just say you only want to talk about the revenue part or something. But to say spending is not really a part of the problem and there is no room to cut spending when people are already paying half their income in taxes.

Taking more than 50% of someone’s work is immoral and I will never change my mind on that.

It’s an entitled mindset that allows people to tax others at that high of a rate.

The income tax started off at 3% when it was first implemented.

But spending is not the problem. Carry on

so here's something you young guys might not realize....there was a time when we didn't have these entitlements..only social security. I grew up in the '50s/'60s. Back then life was based on personal responsibility/ family support. It wasn't until 1964 when we passed the "great society" to end poverty in the US. Back then the poverty rate was about 18/19%, in 2025 the official poverty rate was just over 10%. So, in 60 years we've spent $trillions on entitlements and have only reduced the overall rate by 10%.

There wasn't welfare, child care credits, SNAP, and all the other programs there are today. If your aging parents needed help, you helped them. Some with your younger/older brother or sister. If you needed money you worked two jobs....things are definitely different now.

 

[PawPride]

so here's something you young guys might not realize....there was a time when we didn't have these entitlements..only social security. I grew up in the '50s/'60s. Back then life was based on personal responsibility/ family support. It wasn't until 1964 when we passed the "great society" to end poverty in the US. Back then the poverty rate was about 18/19%, in 2025 the official poverty rate was just over 10%. So, in 60 years we've spent $trillions on entitlements and have only reduced the overall rate by 10%.

There wasn't welfare, child care credits, SNAP, and all the other programs there are today. If your aging parents needed help, you helped them. Some with your younger/older brother or sister. If you needed money you worked two jobs....things are definitely different now.

To be fair, the cost of living back then was also tremendously lower than it is now, with taxes on the highest earners being about 10%+ higher, the CEO to Assistant pay scale being 100x lower than it is today, corporate income tax rate being much higher, as well as companies being more inclined to reinvest in their company with additional profits instead of issuing stock buybacks that don't really benefit the lower/middle class workers.

 

[scotchtiger]

There was a reddit post sort of on this that I commented on. I then fed my comments back through ChatGPT to tighten things up but what are people's thoughts on the below? Please feel free to suggest your own ideas (but if you bring up a flat tax or "Fair Tax" be prepared to be attacked).

For the sake of keeping this thread on topic, please assume that the goal of the tax changes is to keep tax revenues the same or increase them to pay down the debt. If we talk about tax theory itself we can remain non-partisan. Discussing spending cuts will inevitably lead us down a partisan wormhole. Please feel free to make your own thread if that is what you'd like to discuss.

If we were serious about reducing the federal deficit and making the tax code more efficient, I think the conversation would have to include some fairly unglamorous changes. A few thoughts:

1. Social Security
Lifting or removing the Social Security payroll tax cap seems like the most straightforward way to address most of the program’s funding gap.

2. Broader tax base
If the U.S. wants the kind of fiscal capacity that many European countries have, it probably means taxes go up somewhat across the board—not just on high earners. Those countries fund their systems with broader tax bases than we do.

3. Introduce a VAT
Sales taxes have issues, but a value-added tax is the backbone of revenue systems in most developed countries. It’s relatively efficient, hard to evade, and raises a lot of revenue with a broad base.

4. Reform capital taxation
A few changes that seem worth discussing:

• Tax capital gains closer to ordinary income, at least for higher earners
• Eliminate stepped-up basis at death
• Consider increasing the estate tax

Much of high-end income comes from capital, and the current system creates a lot of avoidance opportunities.

5. Corporate tax reform
There’s a strong argument that corporate taxes are inefficient and mostly passed on to workers, consumers, or shareholders anyway. It might make more sense to tax those parties directly rather than the corporation itself.

6. Reduce distortionary subsidies
Some parts of the tax code mostly just inflate prices in the markets they target. For example:

• The mortgage interest deduction likely raises housing prices
• Similar targeted subsidies often distort markets more than they help

7. Consider alternative tax bases
Land value taxes are interesting because they’re difficult to avoid and don’t distort economic behavior the way many other taxes do.

8. Simplify retirement taxation
One idea I’ve wondered about: moving entirely to Roth-style retirement accounts. Tax the money when it goes in rather than when it comes out. That would simplify decision-making for savers and eliminate a lot of tax-planning games.

A few questions:

• If you raise or eliminate the cap on SS contributions, will you also raise or remove cap on SS income in retirement? For example, I'm projected to get the "max" SS payout. Does that "max" remain the same or increase proportionally with my increased contributions?
• Agree with the broader tax base. I've noted it extensively, but it's hard for me to think my 30% federal effective tax rate is the problem. The vast majority of the country paying zero or single digits is a problem.
• With cap gains, how do you define higher earners?

At first read, I would be open to exploring 2, 3 and 8.

 

[baltimorened]

To be fair, the cost of living back then was also tremendously lower than it is now, with taxes on the highest earners being about 10%+ higher, the CEO to Assistant pay scale being 100x lower than it is today, corporate income tax rate being much higher, as well as companies being more inclined to reinvest in their company with additional profits instead of issuing stock buybacks that don't really benefit the lower/middle class workers.

of course the cost of living was cheaper, $1million in 1960 equals about $10million today.

That doesn't negate the fact that without all these handouts people wouldn't do things, by necessity, differently.

a median income of $80,000 today would have been about $7,200 in 1960.

 

[kidmike41]

There was a reddit post sort of on this that I commented on. I then fed my comments back through ChatGPT to tighten things up but what are people's thoughts on the below? Please feel free to suggest your own ideas (but if you bring up a flat tax or "Fair Tax" be prepared to be attacked).

For the sake of keeping this thread on topic, please assume that the goal of the tax changes is to keep tax revenues the same or increase them to pay down the debt. If we talk about tax theory itself we can remain non-partisan. Discussing spending cuts will inevitably lead us down a partisan wormhole. Please feel free to make your own thread if that is what you'd like to discuss.

If we were serious about reducing the federal deficit and making the tax code more efficient, I think the conversation would have to include some fairly unglamorous changes. A few thoughts:

1. Social Security
Lifting or removing the Social Security payroll tax cap seems like the most straightforward way to address most of the program’s funding gap.

2. Broader tax base
If the U.S. wants the kind of fiscal capacity that many European countries have, it probably means taxes go up somewhat across the board—not just on high earners. Those countries fund their systems with broader tax bases than we do.

3. Introduce a VAT
Sales taxes have issues, but a value-added tax is the backbone of revenue systems in most developed countries. It’s relatively efficient, hard to evade, and raises a lot of revenue with a broad base.

4. Reform capital taxation
A few changes that seem worth discussing:

• Tax capital gains closer to ordinary income, at least for higher earners
• Eliminate stepped-up basis at death
• Consider increasing the estate tax

Much of high-end income comes from capital, and the current system creates a lot of avoidance opportunities.

5. Corporate tax reform
There’s a strong argument that corporate taxes are inefficient and mostly passed on to workers, consumers, or shareholders anyway. It might make more sense to tax those parties directly rather than the corporation itself.

6. Reduce distortionary subsidies
Some parts of the tax code mostly just inflate prices in the markets they target. For example:

• The mortgage interest deduction likely raises housing prices
• Similar targeted subsidies often distort markets more than they help

7. Consider alternative tax bases
Land value taxes are interesting because they’re difficult to avoid and don’t distort economic behavior the way many other taxes do.

8. Simplify retirement taxation
One idea I’ve wondered about: moving entirely to Roth-style retirement accounts. Tax the money when it goes in rather than when it comes out. That would simplify decision-making for savers and eliminate a lot of tax-planning games.

I went down a rabbit hole the other day looking at the federal government spending in 1969. Did you know that they spent 50% of the budget on vietnam that year and about 5% on the apollo mission. I couldn't believe it until I realized that the Great Society Social programs had not ramped up at that time. Now was life drastically worse in 1969 than it is now? Maybe these entitlement programs are not actually providing much public good.

 

[baltimorened]

A few questions:

• If you raise or eliminate the cap on SS contributions, will you also raise or remove cap on SS income in retirement? For example, I'm projected to get the "max" SS payout. Does that "max" remain the same or increase proportionally with my increased contributions?
• Agree with the broader tax base. I've noted it extensively, but it's hard for me to think my 30% federal effective tax rate is the problem. The vast majority of the country paying zero or single digits is a problem.
• With cap gains, how do you define higher earners?

At first read, I would be open to exploring 2, 3 and 8.

in response to your first question. . Remember the SS trust goes "belly up" in 2023. The reason to increase SS taxes is to build up the cash in the account. While there might be some increases in recipient payouts, I doubt it would be much, and I definitely doubt it would be proportional. JMO

 

[scotchtiger]

Maybe these entitlement programs are not actually providing much public good.

Bingo

 

[scotchtiger]

in response to your first question. . Remember the SS trust goes "belly up" in 2023. The reason to increase SS taxes is to build up the cash in the account. While there might be some increases in recipient payouts, I doubt it would be much, and I definitely doubt it would be proportional. JMO

Then I would be vehemently opposed to the change. I already contribute too much to this retirement program with terrible ROI. Zero interest in giving more.

I would rather see age increases and/or proportional reductions in payouts. People should be responsible for their own retirement - not rely on the government. We don't need to confiscate more money from people for this.

 

[FLaw47]

A few questions:

• If you raise or eliminate the cap on SS contributions, will you also raise or remove cap on SS income in retirement? For example, I'm projected to get the "max" SS payout. Does that "max" remain the same or increase proportionally with my increased contributions?
• Agree with the broader tax base. I've noted it extensively, but it's hard for me to think my 30% federal effective tax rate is the problem. The vast majority of the country paying zero or single digits is a problem.
• With cap gains, how do you define higher earners?

At first read, I would be open to exploring 2, 3 and 8.

I'm glad you showed up!

• I would personally support some increase the payout limit for people like you but I wouldn't keep it fully proportional
• This is an area where I can't fathom you and I will get much agreement but, out of curiosity, how much revenue do you think we'd raise by increasing the taxes on the people paying very little taxes? I think there's some benefit to "skin in the game" but it absolutely isn't going to move the needle on tax receipts. I asked ChatGPT and here's the summary with a link:
  • Short answer: it probably wouldn’t increase federal income tax revenue much at all — on the order of ~1–3%. (I asked what would happen if we made sure everyone paid a minimum of 12% federal income tax).
• I'm flexible on this but I'll note that, based on everything you've ever told me, I'd consider you a high earner. Perhaps we could have the 15% $100k of capital gains per year be at the current levels and everything over be at a higher level. Or anyone with a total income (realized capital gains + income) >$400k per year as a household. I'm making numbers up here but we could potentially pay for lower income taxes or corporate taxes by doing this

You wouldn't be open to getting rid of stepped up basis?

 

[kudzuking]

It wasn't until 1964 when we passed the "great society" to end poverty in the US. Back then the poverty rate was about 18/19%, in 2025 the official poverty rate was just over 10%. So, in 60 years we've spent $trillions on entitlements and have only reduced the overall rate by 10%.

Assuming your numbers are correct, that's actually almost a 50% reduction in poverty rate over that time period, not 10%. In terms of US population, that translates into an additional 30-35MM people who would be below the poverty line....roughly the same as the entire population of Texas.

 

[PawPride]

of course the cost of living was cheaper, $1million in 1960 equals about $10million today.

That doesn't negate the fact that without all these handouts people wouldn't do things, by necessity, differently.

a median income of $80,000 today would have been about $7,200 in 1960.

There is a good bit of recent evidence that proves the contrary. Now, before the usual suspects come in and accuse me of supporting just giving people money and them not working, i'm not saying that. I'm just saying that there is evidence through multi-year studies showing that providing assistance to our most needy ends up paying dividends in the long run.

Guaranteed income study finds meaningful results for people experiencing homelessness in ‘cash plus’ approach | News

Participants in “Miracle Money: California” find stability in first study to test the role of basic income and social support among unhoused people.Monthly income plus a “phone buddy” program improved key areas in the lives of people experiencing homelessness, according to a new USC study.

dworakpeck.usc.edu

Study: Giving people money returned 2.5x the value without causing inflation | GiveDirectly

One of the world’s largest cash studies found that a GiveDirectly program giving $1,000 cash to Kenyan families led to 2.5x economic growth.

www.givedirectly.org

Here’s What Happens When You Give People Free Money

OpenResearch released the first results of the most comprehensive study on giving unrestricted cash grants to impoverished Americans. Researchers say it will flame both sides of the debate over welfare.

www.wired.com

 

[baltimorened]

I'm glad you showed up!

• I would personally support some increase the payout limit for people like you but I wouldn't keep it fully proportional
• This is an area where I can't fathom you and I will get much agreement but, out of curiosity, how much revenue do you think we'd raise by increasing the taxes on the people paying very little taxes? I think there's some benefit to "skin in the game" but it absolutely isn't going to move the needle on tax receipts. I asked ChatGPT and here's the summary with a link:
  • Short answer: it probably wouldn’t increase federal income tax revenue much at all — on the order of ~1–3%. (I asked what would happen if we made sure everyone paid a minimum of 12% federal income tax).
• I'm flexible on this but I'll note that, based on everything you've ever told me, I'd consider you a high earner. Perhaps we could have the 15% $100k of capital gains per year be at the current levels and everything over be at a higher level. Or anyone with a total income (realized capital gains + income) >$400k per year as a household. I'm making numbers up here but we could potentially pay for lower income taxes or corporate taxes by doing this

You wouldn't be open to getting rid of stepped up basis?

I'd wager (figuratively) that anyone under 50 or so would be for ending stepped up basis, and everyone like me..over 65 or so..would be against it.

I will admit that allowing capital gains to build up over 40 years or so of investing and then allowing a step up in basis is a godsend for heirs. But, my heirs need it more than the government, and they'd probably spend it more wisely

 

[baltimorened]

There is a good bit of recent evidence that proves the contrary. Now, before the usual suspects come in and accuse me of supporting just giving people money and them not working, i'm not saying that. I'm just saying that there is evidence through multi-year studies showing that providing assistance to our most needy ends up paying dividends in the long run.

Guaranteed income study finds meaningful results for people experiencing homelessness in ‘cash plus’ approach | News

Participants in “Miracle Money: California” find stability in first study to test the role of basic income and social support among unhoused people.Monthly income plus a “phone buddy” program improved key areas in the lives of people experiencing homelessness, according to a new USC study.

dworakpeck.usc.edu

Study: Giving people money returned 2.5x the value without causing inflation | GiveDirectly

One of the world’s largest cash studies found that a GiveDirectly program giving $1,000 cash to Kenyan families led to 2.5x economic growth.

www.givedirectly.org

Here’s What Happens When You Give People Free Money

OpenResearch released the first results of the most comprehensive study on giving unrestricted cash grants to impoverished Americans. Researchers say it will flame both sides of the debate over welfare.

www.wired.com

I don't doubt that you are right about that. The question then becomes why are so many people - estimated at about 30% - our most needy? Are we that weak a people or are some simply playing those who are footing the bills as suckers. I see people more fit than I using their SNAP cards at the food stores.

I have seen estimates, and no I don't have a link, that if a person took advantage of all the government assistance programs it would be the equivalent of somewhere in the range of an $80-90,000 annual salary...and I realize that not everyone on assistance takes advantage of every government program.

And, for those who might think I want to starve or throw grandma off a cliff, I'm all in favor of a safety net. But I'm not in favor of funding generational benefits

 

[FLaw47]

I'd wager (figuratively) that anyone under 50 or so would be for ending stepped up basis, and everyone like me..over 65 or so..would be against it.

I will admit that allowing capital gains to build up over 40 years or so of investing and then allowing a step up in basis is a godsend for heirs. But, my heirs need it more than the government, and they'd probably spend it more wisely

My mom is 68 and agrees the practice is insane (and she hasn't voting for a Democrat in my lifetime, that I'm aware of).

Would you go for it if it could pay for a reduction in income taxes?

 

[kidmike41]

My mom is 68 and agrees the practice is insane (and she hasn't voting for a Democrat in my lifetime, that I'm aware of).

Would you go for it if it could pay for a reduction in income taxes?

Stepped up basis is what makes 1031 exchange so beneficial. I personal want to keep it.

 

[PawPride]

I don't doubt that you are right about that. The question then becomes why are so many people - estimated at about 30% - our most needy? Are we that weak a people or are some simply playing those who are footing the bills as suckers. I see people more fit than I using their SNAP cards at the food stores.

I have seen estimates, and no I don't have a link, that if a person took advantage of all the government assistance programs it would be the equivalent of somewhere in the range of an $80-90,000 annual salary...and I realize that not everyone on assistance takes advantage of every government program.

And, for those who might think I want to starve or throw grandma off a cliff, I'm all in favor of a safety net. But I'm not in favor of funding generational benefits

This is a good question, and I wish I had an answer for it. You can point to the Cost of Living increase dramatically outpacing wages*, the fact a home price is up to 5x higher than your income vs what it was 70 years ago, inflation, yada yada yada. I think a lot of it is driven by the fact that nearly 3 quarters of the US lives paycheck to paycheck, vs like 20% of the US in the 80s/90s. I can't help but also feel like companies shifting their focus towards quarterly earnings over long-term health of the business has something to do with it as well. This is purely anecdotal, but it seems I don't see any more small business owners trying to build a company up longterm to possibly pass down to their kids. Every SBO that I talk with cares more about building up something over 10 years and then selling it to PE or some big company that will buy them out and then do whatever with it. Good for the principals, but not so good for the ordinary worker that is employed there.

Ultimately, idk, and it's why a large portion of the country - myself included, voted for Trump. I was hoping he'd buck the trend and prioritize on strengthening the country from the bottom-up, but here we are a year into term 2 and it seems like he's doing the same **** as every other President (R or D.)

*https://www.pewresearch.org/wp-content/uploads/2018/08/FT_18.07.26_hourlyWage_adjusted.png

The Price of Progress: How Living Costs Have Outpaced Wages Over 100 Years | Captives Insure

The story of America’s cost of living is, at its core, a reflection of how society has evolved-economically, culturally, and technologically-over the past century. To truly appreciate the magnitude of this transformation, it’s worth stepping back into the 1920s, an era marked by exuberance and...

captives.insure

 

[baltimorened]

My mom is 68 and agrees the practice is insane (and she hasn't voting for a Democrat in my lifetime, that I'm aware of).

Would you go for it if it could pay for a reduction in income taxes?

I don't know. I'd have to see the details

 

[scotchtiger]

I'm glad you showed up!

• I would personally support some increase the payout limit for people like you but I wouldn't keep it fully proportional
• This is an area where I can't fathom you and I will get much agreement but, out of curiosity, how much revenue do you think we'd raise by increasing the taxes on the people paying very little taxes? I think there's some benefit to "skin in the game" but it absolutely isn't going to move the needle on tax receipts. I asked ChatGPT and here's the summary with a link:
  • Short answer: it probably wouldn’t increase federal income tax revenue much at all — on the order of ~1–3%. (I asked what would happen if we made sure everyone paid a minimum of 12% federal income tax).
• I'm flexible on this but I'll note that, based on everything you've ever told me, I'd consider you a high earner. Perhaps we could have the 15% $100k of capital gains per year be at the current levels and everything over be at a higher level. Or anyone with a total income (realized capital gains + income) >$400k per year as a household. I'm making numbers up here but we could potentially pay for lower income taxes or corporate taxes by doing this

You wouldn't be open to getting rid of stepped up basis?

Glad you directionally agree that increased SS taxes should result in an increased payout. I can’t imagine how anyone would think it fair to double or triple someone’s SS tax and not provide any additional benefit.

As you know, I fundamentally believe that people shouldn’t be dependent on the government for the things they should provide. I don’t support higher SS cap, even with the increased payout, because I think we should be shifting people away from dependence on SS to independence with personal savings. I would prefer to see minor age increases and benefit reductions than pump more money into a system with horrible ROI for participants.

Fair enough on how much it actually contributes. Agree on skin in the game. And I also think it’s wildly fascinating that there are people paying single digit rates who think it’s fair to just raise taxes on people paying rates 5 times higher than them.

I’m already paying 27%+ on long term capital gains between 20% federal, 3.8% Obama NIIT and 3-4% state. That’s plenty imo and there’s already an income-based step up from 15% to 20% plus the 3.8% tax phase in based on income. So that’s a 60% increase in federal tax rate for higher earners. I can’t imagine thinking it should be even more severe.

Now if you want to talk about mega wealth, perhaps there are some opportunities there. But I absolutely wouldn’t touch capital gains for “normal” high earners or even the normal rich.

Haven’t given much thought to step up in basis. Perhaps again, adjustments can be focused on the extreme examples.

 

[MTTiger19]

Please don't misconstrue, I'd love your participation! I just want to talk about how we generate revenue (regardless of the total amount) and not what we spend it on.

Why would the government be responsible for “generating revenue”. They’re not a business. They should be serving and facilitating their constituents wishes. Not trying to tax the already overtaxed working class. Cut entitlements to zero and watch what happens. You don’t need to increase tax “revenue” when you’re not giving away $10 billion a day in freebies and handouts. This isn’t hard.

 

[MTTiger19]

so here's something you young guys might not realize....there was a time when we didn't have these entitlements..only social security. I grew up in the '50s/'60s. Back then life was based on personal responsibility/ family support. It wasn't until 1964 when we passed the "great society" to end poverty in the US. Back then the poverty rate was about 18/19%, in 2025 the official poverty rate was just over 10%. So, in 60 years we've spent $trillions on entitlements and have only reduced the overall rate by 10%.

There wasn't welfare, child care credits, SNAP, and all the other programs there are today. If your aging parents needed help, you helped them. Some with your younger/older brother or sister. If you needed money you worked two jobs....things are definitely different now.

Exactly the way it should be.

 

[MTTiger19]

To be fair, the cost of living back then was also tremendously lower than it is now, with taxes on the highest earners being about 10%+ higher, the CEO to Assistant pay scale being 100x lower than it is today, corporate income tax rate being much higher, as well as companies being more inclined to reinvest in their company with additional profits instead of issuing stock buybacks that don't really benefit the lower/middle class workers.

Do you not understood the correlation between expansion of tax payer subsidies and the impact of that on inflation and cost of living. The government prints money to pay these things. This is basic stuff guys.