ironist15

I.O.U.S.A.: Documentary Worth a Peek

I agree heartily with Gramps2, with one exception - both he and Jim misunderstand the Laffer curve. Laffer said that income tax receipts will be zero at two tax rates - 0% and 100%. [I hope I don't have to explain why a 100% tax rate will yield no revenue!] In between those rates, there is a convex curve, and there exists a point on this curve where tax receipts will be maximized. The only interesting question is what tax rate will yield the maximum tax receipts. Saying that Reagan "believed" in the Laffer curve is equivalent to saying that he believed in gravity. What Reagan believed was that the top tax rates, which were between 70% and 90% at the time, were counter-productive in the sense that they depressed economic activity and yielded less tax money to the government.

Finally, Milton Friedman pointed out that tax rates were not the correct measure of the burden of government - the total amount of government spending represents the burden, and it doesn't matter whether the spending is financed by taxes or debt. To keep the ship from sinking, the US has to reduce government spending as a percentage of GDP, period. That means that Social Security and Medicare/Medicaid cannot be taken as givens - we simply cannot afford these blank-check programs anymore.