The share of GDP that can be taken in by the Federal government through taxes has basically been invariant since WWII, although aggregated with state and local taxes, the overall tax burden on the people had steadily grown until the Y2K crash and has oscillated since then. No change in tax policy is going to fix the debt/deficit problems. Hauser’s Law will not be repealed.
In particular, chart 3.23 on that page shows how income tax has basically been flat at 10% of GDP since 1940. Didn’t matter what the marginal rate was. That will not change. Neither will the relentless growth in social spending as the population ages.
If nothing changes when you change tax policy, let’s repeal the latest tax cuts and review the others. If the percentage in GDP stays constant with a change toward higher marginal rates at the very top ($50+million- we’re not even talking about the famed 1%), it means it’ll shift the burden from middle class to super rich with no negative consequences.
And if middle and working class, hard working kids don’t have debt to attend their public college it means they’ll not only contribute more to society but they’ll consume more. Positive feedback loop.
The share of GDP may be invariant to marginal rates, but the rate of GDP growth, and hence the amount of taxes available, may not. That is really at the core of the debate about tax rates versus growth. Federal revenues recently hit an all-time high despite the recent tax cuts.
One can certainly maintain that the structure of taxes (including marginal rate structure) has no effect on GDP growth, but the different experiences of the United States and Europe with respect to real GDP growth make that a hard argument to win.
the problem then is FUTURE borrowers. their debts will not be cancelled. so problem with your analogy is that women weren’t given the right to vote for a short time, and then have it taken away. it’s not as if 1925 rolled around and then 21+ year old women were told, “ok now, YOU can’t vote.”
so, if current debt is wiped out. then today’s 14 years olds will go off to college to college in 4 years, borrow what they THINK they need, and not have their debts wiped out. That’s the problem with debt-wipe-out.
instead slashing interest rates to 0% for 5 years and 2% thereafter remedies a whole lot AND doesn’t punish those future 18 year olds who’ll be borrowing for college.
imagine the two siblings …one in college now, borrowing full fed loans and getting all his debt wiped out. but the future 18 year old sibling goes to college in a few years, borrows full fed loans but has to pay back his debt.
Hopefully at that point a better system has been put into place that doesn’t require so much debt (various forms of financial aid might make borrowing rarer).
Perhaps make it a “pass it forward” situation like the billionaire at Morehouse.
I watched a few videos and did research on loans, and my overall takeaway is to AVOID them. The college I’m going to costs 47k a year. I have 3 merit scholarships that covers about 36k of the total. I would estimate my contribution every year to be about $1,170 per payment ( 5 payments per semester). My parents aren’t helping with school but I have money saved and have a part time job. I think that amount is too little to warrant a loan. Everything I heard really makes me want to avoid loans at all cost.
Yes, if you can pay for college you shouldn’t take a loan. That really should be fairly obvious. Most, if not all, people who take out loans don’t have money handy to pay for school and decide to go into debt instead.
The problem is both, and they perpetuate each other. A decade ago, people were financing lives they couldn’t afford because of easy access to debt. Human nature hasn’t changed, it just moved to colleges and universities. Now people are financing education they can’t afford because prestige and easy access to student loans. Very few people have $300,000 lying around to pay cash for a private university. And few, except very low income people receive generous financial aid packages. The schools would go bankrupt if they handed out free tuition. Everyone else uses debt to pay the outrageous tuition bills.
The real tragedy here is the false notion of prestige. In fact, it doesn’t provide anything, but it just robbed you of $300,000 that could have been put in retirement.
