The US is going to have to raise taxes

The US government is borrowing a lot of money at high interest rates. In the 2023 fiscal year, the deficit rose to $1.7 trillion—a number the US only exceeded during the burst of pandemic spending.

But the reason for so much borrowing isn’t spending—federal outlays were actually down 2% in 2023. The bulk of the difference came from falling revenue compared to 2022, when the US taxman made out like a bandit as investors closed their positions at the top of the bull market in equities and paid their capital gains bills. The stock market hasn’t been so kind to investors or the Internal Revenue Service this year.