Below is my response to another on this question.  Lower taxes will increase revenues, not diminish them. And it taxes were abolished, the nation would be far wealthier than it is with taxation.  ### The government or taxing authority does not generate any of its own revenue.  Governments do not pay taxes. They never have and they never will. When the bill for public expenditures arrives, the various levels of government simply pass it along to the taxpayer.  What I am saying is that the whole of public expenditures is deficit financed. If the government spends $200 billion on various public investments, then the deficit is actually $200 billion. It does not really matter if the tax financed portion of this deficit were $180 billion and the borrowing financed portion were $20 billion. Its all deficit.  The only thing to really decide is would the nation have been better off if those who earned the funds taken by government had kept them and put them to more productive use. If the government had a more productive use, then the nation would have benefited. If otherwise, then the nation loses. Generally, the nation loses as you yourself note.  So if you wish to assess the government’s finances, you must turn to the taxpayers’ finances to do so. Can the government pay a note? Only the taxpayers can furnish an answer.  I hope that answers your query concerning how the government will pay back the funds borrowed for investment. In short, it won’t. It never has and it never will.  The only reason a nation will tax is to avoid interest charges. In government borrowing, the nation, its taxpayers, must pay interest on the principal borrowed whilst the government delays taxing the principal and repaying the loan.  The following is a short proof which nullifies those supposed interest savings garnered from the use of Taxation.  The costs of borrowing for a nation to fund public expenditures, if it borrows solely from its resident citizens and in the nation’s currency, is nil.  Why? Because if, in adding a financial debt to a community, one adds an equivalent financial asset, the aggregate finances of the community will not in any way be altered. This is simple reasoning confirmed by simple arithmetic.  The community is the source of the government’s funds. The government taxes the community to pay for public services provided by the government. Cost of public services is $10 million.  Scenario1: The government taxes $10 million. Community finances: minus $10 million from community bank accounts for government expenditures. No community government debt, no community government IOU.  Scenario 2: The government borrows $10 million from solely community lenders at a certain interest rate. Community finances: minus $10 million from community bank accounts for government expenditures. Community government debt: $10 million; Community government bond: $10 million.  At x years in the future: the asset held by the community (lenders) will be $10 million + y interest. The deferred liability claimed against the community (taxpayers) will be $10 million + y interest.  The value of all community government debts when combined with all community government IOUs or bonds is zero for the community.  It is the same $0 combined worth whether the community pays its taxes immediately or never pays them at all.  So if a community borrows from its own citizens to fund worthy public expenditures rather than taxes those citizens, it will not alter the aggregate finances of the community or the wealth of the community any more than taxation would have. Adding a financial debt and an equivalent financial asset to a community will cause the elimination of both when summed.  Whatever financial benefit taxation possesses is nullified by the fact that borrowing instead of taxation places no greater financial burden on the community. However, the costs of Taxation are immense. By ridding the nation of Taxation and instituting borrowing to fund public expenditures, the nation will shed all those costs of Taxation in deterrence and government excess for the negligible fee of borrowing in the financial markets and the administration of public debt.
Texas Gov. Rick Perry says he wants to cut taxes for everyone and balance the budget. It’s probably impossible to do both. Sadly, Perry’s new fiscal plan may fail at each. But just how far short he falls depends on what you’re measuring his plan against. I was a pretty decent basketball [...]