But again this is impossible, as a 100 percent effective tax rate is impossible.1 The point here is not to show that we will reach a 100 percent effective tax rate in any particular year. Any number of assumptions could have a very large effect on this projection. Rather it is to show that the trends that have existed over the last 100 years cannot be maintained. At some point, long before a 100 percent effective tax rate is reached, the burden on the economy will become too great, and the system will collapse.
Unfortunately, no one knows where this collapse will take place. We are on a ‘stroll into the desert’ and the point of no return is approaching. But we don’t know if it is close, or if it is still some distance away. We know only that we cannot continue in this fashion forever. We certainly will not be able to maintain this rate of increase in taxes for another 100 years. And yet as we look to the future the need of the government for even more money to fund programs such as Medicare and Social Security is vastly larger than even today’s record highs; yet politicians are forever promising more.1 Note that only a 100 percent overall effective tax rate is impossible. It is entirely possible to have 100 percent tax rate, or even greater, on a narrow section of the economy, i.e., if you make over a certain amount of money, government will take it all.