I was thinking about this the other day and it has been something rattling around in my brain for a few. Would there be a benefit to changing the way the federal government is budgeted for if the allocations were not based on dollar figures, but on percentages of tax revenue? For example, if the 2026 Federal Budget was based on the 2024 Federal Tax Revenue. Each department would get a percentage assigned to it and the end result would be a relatively balanced budget. You could still add additional funds through borrowing, but it would be a clear outlier. This would encourage actions within the government to maximize tax revenue through economic performance. The better the citizens are doing, the more federal income tax revenue. Loopholes in tax code would be closed in order to bring in additional revenue. Budgets could be brought more in line for the performance of the country and conversly, when the economy is sagging, the budget decreases accordingly, covering some of the issues with overspending.
Thoughts from people smarter than me?
Changing the U.S. Federal Budget to operate on percentages?
byu/shuttleguy11 inAskEconomics
Posted by shuttleguy11