I am a big proponent for lower taxes for a variety of reasons, but one of the main reasons I don’t like them is because taxes are inflationary. All of the current political candidates answer to our current problems is to raise taxes. The economy is going south, we have massive deficits and we have a large under funded social security program — and the proposed solution that we keep on getting from our current candidates is that they want to take out even more money out of our hands through taxes.
If this does not sound ludicrous to you, think of this analogy. If a parent gave his teenage child 100$ to last him for a week but came back with a credit card bill for 1,000$ one week later, would you be inclined to give that child more or less money? Pretty obvious answer isn’t it? So how is it any different from what we face with our government today?
If the government were run as a business: people would get fired, costs would get reduced, debts would get paid and fiscal sanity would become the norm but not so with these current candidates.Through higher taxes- the cost of producing things goes up. These year-to-year increase in taxes come in the form of excise duties and sales taxes, both of which add to the price of goods. On top of the federal taxes, states and cities also charge taxes. The main ones cities charge are property taxes which have been getting out of control even though real estate prices have been falling. In addition we are hit with hidden taxes everywhere we go for example we pay taxes on the following: airline travel, car rentals, housing, hotels, parking, water, etc, the list is endless.
These taxes feed inflation through government spending which than adds to deficit spending. Taxes are always passed on to the end user, so as we are taxed we also are getting higher inflation. So taxes are like double whammy: the individual is now paying more money out of pocket and on top of that the money that the taxpayer has left in his pocket buys less things.
The best advice I can give is to always vote with your wallet-it tends to keep the politicians more honest. They can’t get spend or steal what they don’t have. If you don’t believe me look at this latest stat: “The full tax burden of the American citizen including state, local, and sales tax as a percent of income, hit an all-time high of 32.69% in 2007.”
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