Taxes & Spending

There should be NO INCOME TAX! Instead, there should be a consumption tax at 5%-10%. But in order to ever have a consumption tax at 5%-10%, there needs to be a BIG SPENDING cut. If there is a major reduction of taxes there will be a deficit if there is no decrease of spending.

Ideally spending should be only 10% of GDP not 17-20%.

Actually when politicians say that there would be more revenue if we tax more, that might be true up to a year from the tax hike. But the GDP would go down so it will level off to about 18% (give or take 3). This is a very historical number. So, no matter how high taxes are GDP will shrink to get to the point where taxes will only be about 20%. In 2008, the percent of receipt(mostly taxes) is 17.7% of GDP, but outlays(spending) was 21%. Last year 2009, the receipts are 15.1% that means the GDP has gone down. But the outlays of 2009 are even more striking comparing to the receipt as a percent because the outlays are 28.1%.

This is why raising taxes is generally a bad thing for the GDP. Tax hikes in the short run (with in a year) might make sense but it will quickly result in a decrease of GDP which means either the private sector will not create jobs or cut jobs.

The most pressing issues are Taxes, Spending, and Debt. It affects all Americans, young, old, in between, and future generations.

References
CBO:
http://www.cbo.gov/doc.cfm?index=3521&type=0
White House Budget:
http://www.gpo.gov/fdsys/pkg/BUDGET-2010-SUMMARY/pdf/BUDGET-2010-SUMMARY.pdf