“The ‘incidence’ of taxation refers to who pays the ultimate burden of a tax. The optimal theoretical resolution is government budget surpluses that reduce the debt. But that is the least probable scenario. Total government spending in the USA has reached an astonishing sixty percent of national income. Most of the American economy’s output is now allocated by government rather than the desires of individuals. Government spending is trending ever upward, with the prospect of a much greater government provision of medical services, and the introduction of pollution levies in the form of cap-and-trade, not offset by any tax reductions. The second resolution would be higher taxes, and indeed tax escalation there will be.” (09/23/09)