On the one hand, the money is vanishing. Income, state and federal, as well as payroll, taxes here in California may soon top 60% on top incomes (10% state, 15% plus payroll on most of one’s self-employed income, 39% federal). Add in property and sales taxes and we’ve reached the point where the lemon can no longer be squeezed without either more than the current 3,500 a week leaving the state, or going the Greek route of endemic cheating.
(Indeed, as I wrote not long ago: I go to Greece every other summer, and lived in the country for over two years. I come away with one overriding observation: almost every Greek I met in some way either cheated on his tax obligation or conned a way to get some state subsidy — or both, while furiously damning “them.” [“Them” if one were poorer, meant the rich; and if richer, the state; and for both, also meant the United States.])
Bottom line: I don’t see how the state or federal government can up taxes much more and still find wealth-producing, law-abiding, motivated job creators.
On the other hand, as the money runs out, will state workers, pensioners, and entitlement recipients accept that there are too few wealth-creators to fund their pay-outs, or, as in Greece, hit the streets in protest, teenager style, each time some adjustments are necessary?
So if we can’t raise taxes and we can’t cut expenditures what is left? There is no Germany to bail us out? Cut defense? Keep borrowing from the Chinese and Japanese?
Let's hope we all take the lesson to heart.