Maastricht Treaty revisions needed?

[kandrathe]

The idea is what, that before 1862, the government didn't collect taxes? Or that they spent them precisely in proportion to how they were collected? It's not just income taxes that fall unequally. It's every kind of tax. Richer regions do more trade, purchase more goods, have higher-value land, and conduct almost every kind of revenue-generating activity to a greater extent. Unless they get proportionally more benefit out of, say, the military, they are paying in more, and getting out less.

There were temporary levies, but they were limited to tariffs, and taxes on goods. The government didn't have the power to take income away from us until the ratification of the 16th amendment. The first implementation of the tax was deemed to be unconstitutional, since it was not proportional. We can thank Woodrow Wilson for income taxes and the IRS, our left turn into socialism, and America's legacy of "Wilsonianism" which is still evident in our foreign policy.

Ah, the old Ayn Rand fantasy scenario. Just a few steps from the strike, eh? Who is John Galt, anyway? And why does he never seem to actually leave, despite threatening to do so for more than 50 years?

Ayn didn't write a book on western wagon trains, did she? But, now that you mention her philosophies, they ring true to current events. Don't they?

(Afterthought: This is, incidentally, a work of art in the medium of mixed metaphors. Just read it over a few times, conjure the image in your head. We have a train. A gravy train.

Gravy Train: idiomatic expression that is used to refer to any lucrative endeavor. My meaning is the seemingly endless growth to GDP, based entirely on smoke and mirrors (or bubbles) which quickly evaporate when they are found to be without substance. I mean literally, our economy is the naked emperor.

The current one, I guess as distinct from past and future gravy trains. And it's reaching a cliff. So I guess it's a train where they build the rails off a cliff?

No, not actually a train. A wagon train is a historical US western event when many "green horns" headed out from St. Louis together, banding together for protection, and interdependence.

And it's pulled by people? Productive people?

When the oxen die, the people needed to pull the wagons. The people who got to ride in the wagons back then were the too old, and the too young.

Pulling the wagon towards the cliff? Shouldn't we be happy if they stop pulling? What happens when they get there, do they jump off, sacrificing themselves to kill the ungrateful bastards riding in the wagons? Maybe the productive people are pulling backwards? But you can't pull from behind if the wagon is moving forward, you'd be swept off your feet... unless maybe you had an elastic rope? It boggles the mind, it does.)

The people pulling are too focused on pulling, and cannot see the cliff. Perhaps they go over, and perhaps then just get to a dead end, and need to go back where they came from.

Yes, states that generate a larger portion of GDP per capita. Massachusetts. Texas. New York. Y'know, rich states. Where people are richer. Where the tax base is larger.

Hmmm. How about; "Gov. Paterson: New York deficit may balloon by another $1 billion if state doesn't get federal money"

Exactly backwards. The Greek problem is not that they tightened the thumbscrews on taxation to the point where the rich moved away, or quit, or refused. There's no evidence whatsoever that the Greek "last productive 10%" (...) is off gulching. They're just evading taxes, same as they always have. It's that they never had a functional tax collection system in the first place - evasion is so rampant that the effective tax rate is paltry at the top. And so, when they spend like they're Sweden, but collect taxes like they're Alaska. Thus, the whole system goes *pop*.

I wasn't trying to imply they are off gulching. I'm looking at the recent flow of cash out of greek banks to off shore accounts. Our biggest danger is that a crisis in Greece, then Ireland, Portugal, and Spain leads to a credit crisis for Germany, and France. The UK and US exposure to trouble in Germany and France is significantly higher. The risk here is an economic domino effect.

You keep making these predictions. I hope you're wrong, of course. But mostly, I just think you're not keeping things in proportion. US tax revenue is low, relative to where it could be. Economic recovery and the expiry of the various stimulus packages will bring spending back in line with revenue. The world is not ending, the US is not Greece.

I hope I am wrong. Our debt as a percentage of GDP is nearing 100%. This is bad. It will lead to at best very slow economic growth (<1%) until we get control of our deficits and debt. Of course, low growth leads to high unemployment, reduced tax revenues, and a higher need for public services (or suffering) resulting in even higher deficits.

Were you hiding under a rock in 2008? The current crisis is hardly the result of creeping budget increases. If anything, current deficits are caused by the opposite, considering the Bush tax cuts. That's all a sideshow. Remember the housing bubble? The financial crash? The worthless derivatives?

I see all the drama from 2008, and even the tech bubble before that as related to government/Fed manipulation that create the bubbles in the first place. The derivatives issue was not a problem until the economic asymptotes flipped negative. It was unfortunate result of hiding risk within a seemingly sound financial product ostensibly backed by the US government (thank you Fanny and Freddie).

Government spending didn't drive this at all - although it has likely blunted the impact of a near-total flight to safety for private capital. This is a classic private sector financial meltdown, and if the government didn't ramp up spending to compensate, the pain would be far worse.

I will repeat again; The government has no money. They take it from us, or borrow it (for us to repay later with interest) and then spend it. It is an illusion that the government can spend our way to prosperity, or contribute to the GDP in any way. They probably actually hurt the potential economic recovery, since their spending may not be on "productive" things (e.g. A bike trail).