Obscenity in Sheep’s Clothing

What’s wrong with the  economy? Why won’t the recovery continue without the hiccups we continue to see in unemployment, and why aren’t the politicians and bureaucrats anywhere in the country talking about it?

I have thought about this for a while. I read all the “smart guys”, to see what they say. When you look at whats happening in Europe the answer becomes more and more obvious. Governments everywhere have run and been elected on the promise to give everybody everything they want.  Problem is there is a finite limit on the amount of money government can confiscate from its citizens before the citizens run out of money. We have reached that limit.

In the US today the “average American” pays close to 60% taxes  to fund local, county, state and federal bureaucracies. So lets just use that number for a moment to look at what’s left.  If you are making $1000 a week you are left with $400 a week to spend on housing, food, medical and incidentals. That pretty much takes up all the money.

Our economy is based on consumer spending. How’s it gonna grow with the scenario I have just presented? There is no money left to consume with.

Todays administration talks a lot about social justice and environmental concerns, and about everybody giving their fare share. It’s just a distraction from the real issue, austerity is so unpopular when it comes to voters that government abdicates real responsibility and comically feeds the media the pabulum distributed to the voters who continue to pay the taxes and slowly starve as taxes creep ever higher and the economy ever lower. The link below does a credible job of inventorying the various ways government taxes citizens in the US. Sad part is they have probably missed some.

http://nowandfutures.com/taxes.html

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10 Responses

  1. Very interesting, pt. I did my own calculations based on my own income, and I come up with, call it, 41% (rounded up). I’m not sure about his numbers, but in some cases I took them for granted. Since we have no state or local income tax, that reduces the figure. I also used my actual sales tax rate of 7.5% rather than 9.7%. I used the actual amount of my property taxes. I used his figure for fuel tax, although it’s probably higher in FL. I used his figures for “corporate” and “other”.. I figured federal (all) and property tax as a percentage of gross (since last year, anyway, you could still deduct property tax) and for the rest, I used net. I had a little problem at first with including corporate tax, but I did grasp the fact that individuals do in fact pay that–in higher prices.
    So all in all, I think I was pretty accurate, and I found even 41% to be kind of shocking. But if you consider some of these taxes “hidden”, there are also “hidden” benefits, which people don’t think about. Especially the machete approach of “Just cut”. I now think that a discussion of taxes is a good thing. It forces us as individuals, as communties, and as a country to really consider what we value–what we can live with, and what we can’t live without.

  2. FN
    “there are also “hidden” benefits,”

    That’s the trap that leads us to the precipice. Let’s assume for the sake of discussion that all the hidden benefits are desirable. So’s the hope diamond. Desirable to many but not necessary for any, we have run out of money to spend and are too burned by the financial co;;apse to extend our credit. So we cut way back on consuming

    We have reached a point where we have to stop thinking up new ways to spend taxes because we simply don’t have the money. Just look at our national debt if you doubt it. It’s so simple it’s maddening to listen to the national jabber-wacky that Lewis Carroll foretold.

    BTW did you calculate .68c a gallon gas usage tax and $1.34 per pack on cigarettes, that;s 2 that come to mind and tax on Electricity and water in your monthly bill?

    When we were working my wife and I fell into the 55% bracket.

  3. I assumed fuel taxes were contained in fuel costs, and that cigarette taxes were contained in other. He gives a list of various things that are taxed at the end of the article and I assumed he included all those things in the categories above, but not necessarily. So assuming my taxes are higher than what I calculated, I still doubt they would be 14% more, bringing me to 55%. However, that’s splitting hairs a bit. The issue is still what you consider necessary vs. desirable.

  4. Then there’s mandated auto and home owners insurance. So if you own a home and drive a car that’s even less disposable income the citizen consumer brings to jump start the economy.

    So while the basic conservative approach to market driven solutions is a sound one, it is handicapped because the market is artificially strangled by the government.

    The average American consumer has little cash and is afraid of long term credit. The administration knows that and reacts with short term fixes by stimulus injection to both business and individuals. Clearly a longer term solution is tax reduction for the “99%”……. whatever the hell that really is.

  5. > Governments everywhere have run and been elected on the promise > to give everybody everything they want.

    But given universal suffrage, can it really be any other way? I suspect there is a linear relationship between extending the vote to more and more folks and the “chicken in every pot” phenomenon.

    > austerity is so unpopular

    Of course it is. See above as to why austerity is almost impossible.
    Looks at what’s happening in Europe with the French election and in Greece. Voters are saying “enough” to “austerity.”

    > mandated auto and home owners insurance.

    Auto insurance is mandated because you do not have a *right* to drive; it is a privilege. And so the government can require insurance.

    Government does not require home insurance, to my knowledge. Your mortgage holder does. Once you own the house, you can go without insurance and many do.

    I’ve no problem with folks who say they should not have to buy health insurance. BUT… do not require hospitals to treat folks who cannot pay; that is the ultimate free rider and I should not have to pay more because of them. (One of the Supremes, either Alioto or Scalia, suggested that was the answer to the government’s argument about free riders. I agree! Groceries are not required to give food to folks who cannot pay, but last I heard you can die from starvation.)

    FN…as for a “discussion” on taxes, I think that will go nowhere. There’ll be little consensus on what we need.

    You know there’s a lot I can live without, starting with your library. But that’s chump change.

    I’d get rid of all grants and government-backed loans for college, not to mention all state universities. That benefit accrues primarily to the individual, so taxpayers should not be subsidizing it.

    I wonder if PT would favor a true market approach (100% private) to higher education? If the market can provide it, which it can, then why should government compete?

    And if the answer is that public education makes it more “available” to more folks, then that answer is just a personal value judgement and why stop there? Why not make cars cheaply available to all; most folks need a car more than a college education. $1,000 grants to all to buy a car! Government-subsidized car loan for all! Not…

    But if the answer is that the *business* needs college grads, then let *business* pay for all college subsidization since it is business that needs these folks. I will never be convinced that I should support higher education because I benefit from the lawyers, etc. They would come about anyway.

    In fact, I suggest that college subsidization results in TOO many college grads, more than the economy can absorb even in good times. Otherwise, there’d be no college grad who is underemployed but there always are.

    Of course, 16 years of private education, without a single dollar of grant or loan support from the government, gives me a certain perspective…. I do not accept that there is something “special” about higher education that warrants government subsidization of it.

  6. First, a comment to you, pt. Now that you mention it. Insurance is sort of a tax in that you are mandated to have it–and it’s my understanding that the Affordable Health Care Act outright calls it that, a tax. And since I have to pay either rent or a mortgage, I don’t consider that “disposable income”, so when I add all that to the mix, I’m feeling exceptionally poor now.
    sc. I had 12 years of public education. Followed by 4 years of college financed by…imagine this…working. No loans. No grants. No help from my parents. I know that you have a particular peeve about this subject. But you can’t see the benefit of education, apparently. I used to work as a counselor in a methodone program. All of them were criminals. They paid about $2 a day, and the “government” paid the rest. After a year of this, or so, I decided it was worth it to keep them from breaking into my house and stealing my TV to buy Dilaudid (heroin was so last year). Yes, it was a little like paying protection to the Mafia, but…And uneducated people hanging out on street corners are likely to come to the same bad ends, so the more they learn, the more they don’t want to live that kind of life any more. How can you not see that that benefits you personally?
    Back to insurance for a moment. You can choose not to own a house or a car. But is health really the same thing as a material possession? I’ve made the argument many times that to walk into the ER here it’s $800 flat before you ever get seen or treated. And that is because there are so many people there who don’t have insurance. If I can pay a small tax, spread among a huge number of people, and walk into the ER and pay $25, then I’ll consider that a huge benefit.

  7. You can spin it anyway you want guys and shroud justification in many ways but it all boils down to Ben Franklin s prescience. “When people find they can vote themselves money it heralds the end of the Republic.”

  8. And yet, pt, it has ever been so. Here and every other nation on Earth.
    When you say that government strangles “the Market”, I ask, how is it then that American corporations are presently sitting on trillions of dollars in cash? Allegedly that’s due to “uncertainty”, or that’s what they say. But uncertainty is a hallmark of business. That doesn’t cut it as an excuse.
    When I hear “market solution”, I want to scream. The sacred Market has no interest in clean air, clean water, or safe food. You probably want to scream when you hear “government regulation” or “bailout”.
    But back to the non-disposable income issue. I thought of another thing. Medications, which I don’t consider optional. I’m spending about $130 a month on them, and without insurance it would be $500.

  9. > you can’t see the benefit of education

    I didn’t see that. I question govenrment subsidizing it.

    > You probably want to scream when you hear “government
    > regulation” or “bailout”.

    Actually, PT supported the bailout. Something which many of his fellow Republicans are now attacking even though they proposed it. Didn’t Kerry get maligned for something like that?

  10. OK let’s go with education, it is a perfect example of “progressive” engineering. The US put men on the moon before there was a separate Department of education with a 100Billion + budget. The department of education was created as a cabinet position during Carters Administration. My educated opinion about the US Department of Education is that it isn’t necessary at all, and is the perfect example of why we are where we are today.

    My point remains the same. We are heavily overtaxed and can not maintain a growth economy without disposable income to consume.

    The single most valuable thing America brought to the world was freedom.

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