We need to eliminate taxes specified for a certain cause, all revenue should go to a general fund and be doled out from there. Otherwise we have cases like the gasoline tax funding public roads and going downhill because revenue declines with inflation and there are no funds left. Or gambling taxes are specified to go to education, but instead of adding to the funding, the government reallocated earlier funds to leave the schools no better off. It’s a needless waste of time in legislation and collection and only increased the work burden. If funds are high and can be reallocated for something else, then it requires more legislation. If it’s too low, more has to be allocated.
We should decide how much a program should get independent of the moral argument that lottery taxes are making people smarter and less likely to gamble. We started it because people like to gamble and illegality wouldn’t stop them, so to root out the under market and eliminate cartels funded by illegal gambling and gain tax money in the process.
There are two reasons to have taxes, to raise money to run the government and to reduce unwanted behavior. They often intertwine, because sometimes revenue needs to be raised, then an increase in taxes could negatively hurt some industry accidentally. We can place taxes on cigarettes to try to reduce their use, the same for alcohol. Carbon taxes.
We also can have taxes on things that have an endless demand and, as long as the tax burden is not too high, the tax won’t slow down purchasing, and thus consistent revenue. We have a gasoline tax, and it doesn’t reduce how much people drive that much. It’s currently around $0.184 (and $0.224 for diesel). There are also state and local taxes added on, and the combined averages $0.3014 for gas and $0.3101 for diesel. Added together that’s $0.4944 and $0.5541 on average nationwide. Though in places like Pennsylvania it’s $0.75 and $1.00.
Though it’s true that when gas prices are lower, people drive more, inflation has driven down the revenue. Moreover, our roads across the country are aging, and cars get better gas mileage so the tax is even less representative of its worth. In 2009, almost a decade ago, the National Surface Transportation Infrastructure Financing Commission issued a report saying that since the last time the national gasoline tax was raised it has lost 33% of its purchasing power. That same report recommended an increase of $0.10 & $0.15 in the gasoline and diesel taxes, respectively, and tying them to inflation.(1) In 2017 dollars that would come out to $0.117 and $0.175, rising the total to $0.311 and $0.399.(2)
Doing so would also encourage people to buy cars that use less gas and companies to increase fuel efficiency, all leading to less health hazardous pollution. In the same effort to reduce fuel use we should build high speed railroads across the country and in big cities, that would cut down on plain travel and on car travel. It would likewise cut down on drunk driving travel.
“more than one-quarter of the nation’s bridges are structurally deficient or functionally obsolete, and roughly one-quarter of the nation’s bus and rail assets are in marginal or poor condition. Traffic congestion in many of the nation’s metropolitan areas is endemic, with the cost of congestion—including lost time, wasted fuel, and vehicle wear and tear—topping $78 billion per year for the nation’s 437 urban areas.”(1) We also need to promote bicycling routes and cities.
Raising the rates
The effective tax rates on the top .001% (floor is $56mil+), .01% ($11mil+), and .1% ($2mil+) are 24.0%, 25.9%, and 27.7%, respectively.* (The reverse descending order isn’t wrong.)
If we raised the effective tax rates on the top .001 percent to 42%, the top .01 percent to 39.2%**, and the top .1 percent to 35.5%***, we could increase government revenue by $350 billion.
People may say but that will restrict growth because rich people won’t invest as much. I don’t buy the argument that rich people are going to stop trying to make money. They may hold out if they think it will be lowered again in the future, but if we’re certain to ensure people know there will be stability in the tax code, then that argument is irrelevant.
*Using 2014 numbers from http://www.usgovernmentrevenue.com/income_tax_history
**with the bracket being 37% for those between .01 and .001
***with the bracket being 32% for those between .1 and .01
With some increases to the 1% and 5%, we could easily increase revenues to end the deficit and start paying off the debt.
We should also increase the gasoline tax in order to raise money for an infrastructure renovation, and tie it to inflation. Raising it by $0.10 would raise an extra $20 billion a year. Moreover, the American Society of Civil engineers said the roads cost us $160 billion a year in time and gas.˚ We’d also reduce unemployment and spur economic growth due to people spending money which would increase economic productivity.
Simply removing loopholes would probably raise a couple hundred billion a year, but that may be done in tandem with raising the effective rate.
We need to eliminate the capital gains loopholes.