Taps Coogan – March 3rd, 2021

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The following chart, from Otavio Costa of Crescat Capital, shows where taxes are headed.

The chart above shows the top US marginal income tax rate compared to the national debt. By the look of it, the top rate is headed for about 120%…

Other tax brackets always end up following the same trends, as the following (slightly dated) chart highlights. As we have discussed many times, there is simply not as much tax revenue to be had from the Top 1% as most think.

Willful ignorance and political lying has led many to the believe that raising taxes on just the top 1% will be sufficient to halt the meteoric rise in the national debt and the interest expense. It won’t. It’s not even close. It’s not even in the right galaxy.

Forget about income taxes, confiscating the top 1%’s entire net worth wouldn’t fund today’s deficits through the next presidential term, let alone on any sustainable basis, and that’s assuming you could force the liquidation of most of the nation’s illiquid assets (real-estate, small and medium businesses, etc…) and public equity without destroying it’s value. It’s also ignoring the fact that you would lose the bulk of the income tax base on day one. It’s also ignoring the fact that long term Treasury rates have already gotten back to pre-Covid levels while inflation expectations are at 10 year highs. So much for MMT…

The public has simply lost the context to understand the ridiculous scale of the deficit spending coming out of Washington. We are on pace to spend more in 12 months on Covid than on all four years of World War II. That’s before we get to all the other pie-in-the-sky spending plans in the pipeline.

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