Imagine if America had kept the tax rates for the wealthy in 1980, including higher income, capital gains, and estate taxes. How would that affect our current federal debt? TL;DR $7–8 trillion
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Over the past 40 years, keeping those wealthy tax levels the same could have brought in an extra $5 trillion in revenue.
• Income Taxes: +$3T
• Capital Gains: +$1.5T
• Estate Taxes: +$0.5T
Imagine if that extra money had been used to pay down the federal debt, which is now a whopping $34 trillion. It would’ve saved about 15% of the principal.
If we add up the direct debt reduction and the savings from compounding interest, we could potentially save a whopping $7–8 trillion, which is about 20–25% of our current debt.
These are rough estimates, but they show how much higher taxes could have changed our financial situation. They’re based on some assumptions about how people behave, interest rates, and government spending.
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• Income Taxes: +$3T
• Capital Gains: +$1.5T
• Estate Taxes: +$0.5T