Our current taxes total 25% of all of the goods and services we produce in this country. Total of income tax, sales tax.... For perspective, in similar capitalist economies, the UK it's 35%. Germany, 37%. France, which provides more services to its people, is 44%.
Not including Social Security, that's what it costs Americans to keep the country running - roads, medicare, the military. But does it really cost us?
Consider this. Every penny you spend, no matter where it goes, contributes to the overall economy. Every penny you save contributes to the overall economy. And it does this many times over. Those pennies come back, eventually, to benefit you... again.
The only ways to lose money are if it goes to another country and never comes back, or through inflation, or through the stock market when individual stocks you own lose value and don't go back up. That money goes away as if it never existed.
When money goes for taxes, it doesn't erode the value of the money. You don't lose 15% every time it is spent, so that at some point money has whittled away all of its value. That's a myth. Tax money is used by the government for goods and services, which goes to people, whether directly or through companies they pay. Those people spend their money to purchase things that you provide or sell. The guy on the street fixing the road, paid by your taxes, eventually supplies money back to you. The dollar you spent keeps on going, spent over and over again.
The real focus of politicians, and should be your focus to, is what your money is spent on. Some politicians want more money to go for social programs. That money gets spent and eventually gets back to you. Some politicians want more money spent on the military industrial complex. That money gets spent and eventually gets back to you.
Taxes don't hurt the overall economy, and military spending doesn't hurt the overall economy, and government employees don't hurt the overall economy. But taxes leave less money in your pocket for what you want.v
The real questions are, how much of our money is going to be used by the government for its needs, and what are politicians going to spend it on? How much will you allow the government to use of your money, and what do you want it spent on?
When the government takes money and spends it, it leaves less for you to spend on what you want. It has little impact on the economy whether you spend it or the government does. Either way it directly or indirectly supports jobs. The question is, what do you want?
Money that is spent, regardless of who spends it, is spent over and over and over again, without losing value, except through the 2 to 4% inflation that the Federal Reserve maintains as "healthy."
In recessions, the government can increase spending to create more jobs. To do that, it has to tax more at some point in time. But it can help the economy climb out of a recession. But government spending can't support the entire population - overspending is a fools errand.
So the real question is not the things politicians argue about. History shows one will spend a lot on the military and one will spend a lot on social programs, and they will both drive up either taxes or the deficit to do it, and use smoke and mirrors to hide it. The real question is, "What do you want your money spent on, and how much of it?"
Making The Economy Work? - Part 2