Imagine you were the Governor of a small town in an earlier age and you were running the public works of building roads, bridges, and schools and providing law enforcement, healthcare, and a safety net for the truly needy. You charge taxes to everyone for these "public welfare services" and split the tax (charge/fee/confiscation of wealth) amount charged into 5 brackets so the wealthiest pay the highest % tax and the lowest pay 0% tax (this lower bracket makes up 47% of your population). You had the people elect a dozen representatives to vote on how exactly that money would be spent and how much could be spent and borrowed.
Fast forward a few years and you are now bringing in a hundred thousand dollars ($100,000). The problem is your representatives have been voting for many new programs and there are those who abuse the system, so you are now in debt to nearby settlements and your people's kids & grandkids to a current total debt of about eight million dollars ($8,000,000). Your government budget also spends about 40% more than it brings in, at around $140,000 per year, running up an annual deficit of $40k per year that gets added to your town's debt.
Your debt and deficits are costing you your credibility to your debtors and they are now charging you more interest for borrowing from them. Those foreign debtors are also buying up real estate and businesses in your town as well, while your debt-per-citizen amount increases.
Half of your representatives say that you should charge the top two tax brackets 5% more taxes (money confiscated from their homes) in order to bring in an extra $3,500 per year "in order to solve your budget problems". The other half of your representatives say you should simply find ways to cut that $3,500 out of the current government spending on waste, abuse, and inefficiency, and not raise taxes on anyone in your current economic slump.
Which half will you side with?
(The numbers I used are real ratios relative to our actual govt budget amounts).
