Debt 101: Where Does the US Government Get Its Money?
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Debt 101: Where Does the US Government Get Its Money?

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The US Constitution can be vague at times, but when it comes to taxes, there is little question about the government’s power. “The Congress,” James Madison writes, “shall have Power to lay and collect Taxes, Duties, Imposts and Excises.” In modern language, the government can tax its citizens, and it does. But just because the government has the power to do something doesn’t mean it should. Despite the Constitution’s clear mandate that the federal government may tax its citizens, taxes are a very complicated and often problematic part of American life. The US tax code is around 2,600 pages long. And there are additional tens of thousands of pages about the tax code: IRS regulations, revenue rulings, and case law covering court proceedings around the code. But a few fundamental questions can get to the root of how American taxes relate to the US debt. 

The US Constitution can be vague at times, but when it comes to taxes, there is little question about the government’s power. “The Congress,” James Madison writes, “shall have Power to lay and collect Taxes, Duties, Imposts and Excises.” In modern language, the government can tax its citizens, and it does. But just because the government has the power to do something doesn’t mean it should. Despite the Constitution’s clear mandate that the federal government may tax its citizens, taxes are a very complicated and often problematic part of American life. The US tax code is around 2,600 pages long. And there are additional tens of thousands of pages about the tax code: IRS regulations, revenue rulings, and case law covering court proceedings around the code. But a few fundamental questions can get to the root of how American taxes relate to the US debt. 
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