I did a little back-of-the-envelope calculation comparing the effective tax rate paid by the top .1% of income earners to what they’d be paying with various different flat tax rates (without any deductions). The results of my calculations suggest that they are presently paying an effective tax rate of something between 30% and 35% and it would require a flat tax considerably higher than that to meet present expenses, i.e. for expenses to come reasonably close to revenues.
As I’ve said before since present defense spending is around $1 trillion and the deficit is around $1.9 trillion, we can’t achieve a reasonable deficit solely by cutting defense spending. I don’t think it can be done without increasing the effective tax rate, expanding the tax base on which new taxes will fall beyond the rich, and reducing spending including but not exclusively defense spending. IMO the lowest-hanging fruit other than defense spending is healthcare spending.
Shorter: we’re living beyond our means and changing that will be painful.
If you think there’s a way to do it, please show your work.
I really don’t understand why people think paying a third of ones income to the state is insufficient, as a matter of equity. It gets to the point where your views on taxes are just “because that’s where the money is.”
I also think that the base should be expanded downward. Everyone should have skin in the game. Otherwise its 4 wolves and a sheep discussing what’s for dinner.
We have a spending problem, not a taxing problem. During the recent kerfuffle over DOGE we learned that government workers were just this side of saints, and that every last dollar spent was so vital as to create an existential threat to humanity if cut. Of course, the same people making those claims want to cut, cut, cut defense. I guess all the lazy dolts and their inefficient spending signed up for the Pentagon.
I agree that the change will be painful. Our first goal should be to get to a primary surplus (excludes interest). With a projected $1.9 trillion deficit and a trillion in interest, we need to cut $900 billion of the deficit. I see several steps.
1) I agree that we can cut defense spending. This includes funding foreign wars. We should be able to cut $100-$200 billion and still maintain our readiness. Part of this is spending less on other people’s wars.
2) Broader taxes. People want to tax someone else to pay for their benefits. They think they can get free stuff. I just had an article published on RealClearMarkets on how much government at all levels cost. If sales taxes were the only source of revenue for our spending, it would require a sales tax rate of 78%.
https://www.realclearmarkets.com/articles/2025/07/24/a_case_for_the_sales_tax_as_the_most_honest_form_of_taxation_1124549.html
In fairness to Trump, the tariffs do broaden the tax base as everyone pays. We are on pace to bring in about $250 billion this year compared to $80 billion in 2023. There should not be a rebate given as Trump is proposing.
3) Medical care. State and Federal governments spend about $1.8 trillion on healthcare. Rather than our current fight over who pays, our real question should be, “Why is it so expensive?” A large [part of that is the government interventions. One example is drug costs. We hear that the same drugs are cheaper overseas. If I have an expensive medicine, why can’t I buy it overseas and ship it to the US? The federal government prohibits this. Abolish that law. HIPPA creates bureaucracy and raises costs. All kinds of government regulations require bureaucrats, not only in government roles, but people complying with the Byzantine rules.
As a comparison point, Switzerland spends 11.8% of GDP on Healthcare (mostly private market). The US spends 17.6%. This 5.8% difference represents $1.7 trillion/yr. That difference represents almost all of the government spending on healthcare in the US.
Again incentives matter. I have a friend who works in an ER. He says it is very common for people on TennCare (Medicaid) to come into the ER (most expensive medical care) when the walk-in clinic across the street is open. Why? People on TennCare can’t be charged a co-pay per federal rules.
The problem with DOGE was that we had 20 year ld coders deciding what to cut. I never heard anyone claim federal workers were saints but I did hear a lot fo people not happy about the way the firings were carried out, pretty much the way you would expect a bunch of 20 year olds with no experience would carry it out, based upon movies they had watched.
I remain puzzled about the optimism over tariffs. First, it will take a while to see the full effects. AFAICT we dont really have an agreement with anyone just guidelines. Next, I expect companies to eat some of the costs initially but eventually costs get passed down.
Query- Assume I am wrong and costs dont go up as a result of tariffs. It doesnt affect growth. Total corporate income tax now is about $500 billion. If tariffs add another $300 billion, an increase in corporate taxes of about 60%, but have no bad effects have we really been undertaxing corporations all along? We need the revenue and its free money since there are no negative effects.
Steve
Something else I have never heard: a career bureaucrat proposing where cuts in spending could be made. I don’t hear Democrats making those proposals, either. Except cuts in defense spending which I’ve already talked about.
The reasonable conclusion to draw from that is that they do not believe any cuts should be made.