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75% of US debt is held domestically. So most of that money will go back into the country.
It's highly unlikely a lucrative revenue stream like this would ever go to paying off the debt. But theoretically the money exists.
Interestingly, it was also promised to be only 1% or so on the richest households, and it has become, er, different.
But more important to the point, as the government already taxes about 20% of income, that is equivalent to holding about 20% of the wealth, as the wealth is just an income generating device and the value of the wealth is the flow of income it generates, of which 20% is already taxed.
What I'd like to know is why people are obsessed about stocks and flows in completely different ways. For example, not caring about the deficit but worrying about the debt, or vice versa, or focusing on taxing wealth but not really caring about taxing income.
I think the idea of taxing income makes a lot of sense, and don't want the government to try to value assets, particularly illiquid assets. And if it was up to me, I would dramatically simplify the tax code to eliminate all deductions and tax all income at the same rate, regardless of source. No reason to have one tax rate for carried interest, another tax rate for dividend payments, a third tax rate for wage income. Treat all income the same, and apply a progressive rate to the total income. Your tax form should not be more than a page long.
From Section 8: The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States...
A future Congress could interpret this to mean paying off the debt is in the general welfare of the country. And if SCOTUS wants to beef, Congress could craft "exceptions" and "regulations" to their appellate power which is power explicitly granted to Congress.
"3 equal branches" is modern propaganda. Congress is the more powerful branch given its explicit power to control Executive function through budgets and strip SCOTUS justices of all but a few ceremonial powers to do with ambassadors and other foreign states. Then we might actually have a Judiciary again instead of Executive, Legislative, and SCOTUS.
But Congress is full of rich people who intentionally avoid flexing the full power against the other two branches.
"The Congress shall have Power To lay and collect Taxes...to pay the Debts... of the United States"
and says it doesn't allow a wealth tax. I guess that's why I'm not a lawyer.
Because wealth grows faster than income.
r > g
It's easy, especially for rich people with lots of wealth, to have low taxable income.
https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...
> not caring about the deficit but worrying about the debt
Are there people like that? The debt is the sum of all deficits.
More importantly, it does not matter at all whether r > g, because both capital income and wage income are taxed. If you don't believe that, try not reporting your capital income and see how that works out.
However, you will say, long term dividend income is taxed at a lower rate, whereas wage income is taxed at a higher rate. Correct! That is why I said that the solution to that is not to impose a wealth tax, but to tax them at the same rate. All market income should be taxed at the same rate, and that solves your r > g non-problem.
If we're treating that as income too, then this is a different conversation.
In terms of borrowing against assets to "escape" paying taxes, I wonder if you have a problem with someone who borrows to pay their taxes. It's the same thing. At the end of the day, they will need to pay interest on the loan, and that rate will be more than the risk free rate.
What is strange is that you never hear the opposite argument:
If you want taxation to be based on spending rather than income, then you want consumption taxes. Now a lot of economists hate income taxes as a group and think only consumption should be taxed, in which case you make a billion but only pay taxes on what you spend.
Overall, do you think billionaires would fare better with consumption only taxes or with income only taxes? How many assets pay no interest ever? It's a weird argument to be making, that billionaires escape consumption taxes when they spend down their savings.
But even here, people are making a mistake, because eventually you need to sell assets to dispose of the loan, and that's when you pay taxes on the realized gains, with interest. And the interest rate charged to the billionare will be more than the risk free rate which the government can use to borrow, so if the government just borrows the expected amount of taxes and rolls over the loan, the government will outlive the billionare and when the estate is settled, all that spending, plus interest, will be realized gains (100% gains, remember) and the tax bill will be paid in full.
This is really no different than borrowing to pay your taxes. Sure, in a sense you "avoid" paying taxes, but not really.
So what you really want is to close the income tax loopholes. Treat inheritance income as income. Ban non-profits. Ban "foundations" that don't pay tax, etc. All you need to do is treat all income equally for tax purposes and you are fine. No one can escape taxes, even if they borrow to pay their taxes.
For rich individuals it could be the risk free rate. Banks can curry favor with rich individuals and gain other business if they do this.
> are making a mistake, because eventually you need to sell assets to dispose of the loan, and that's when you pay taxes on the realized gains, with interest
You seem clued in to this stuff. You really haven't heard of Buy-Borrow-Die?
https://smartasset.com/investing/buy-borrow-die-how-the-rich...
> Treat inheritance income as income
That works too.
The deficit/debt exist because US tax rates (even including fed+state+local) are so low compared to every other major advanced economy in the world, even before last year's "One Big Beautiful (Ugly?) Bill". In fact, the US could have raised rates by more than 15% and still been the lowest. https://www.imf.org/en/Publications/WEO/weo-database/2025/ap...
If US tax rates were even just the average among other G7 countries, it would be trillions more than the deficit per year.
(The US also has the lowest spending (fed+state+local) among them as well, but even though our spending is the lowest among them, the tax rates are so very low they're still not enough to cover even the lower spending compared to them. https://www.imf.org/en/Publications/WEO/weo-database/2025/Ap... )
While these things are impossible to predict, my guess is that in a couple decades the government will do some sort of technical default. Force Treasury bond holders to exchange their current holdings at par for new bonds with longer maturities and artificially low interest rates. Politicians will be able to claim that no one has lost money since the nominal bond values will remain the same even though the market values will be much lower.
The other thing I expect to happen is that the government will force retirement accounts (both defined benefit pension plans and defined contribution 401k plans) to purchase Treasury bonds. Because of course they're so much "safer" for retirees than risky stocks.
In the current environment, very unlikely.
You're advocating for more taxation to cover the debt, yes?