Thursday, September 27, 2007

Another Reason WHY Higher Income Taxes Will Lower the American Standard of Living

The above chart (FROM Captain Capitalism, SEE: shows household debt as a percentage of GDP.

Back in 1953 it stood at about 25% of GDP, TODAY it stands at 97% because so many people insist on spending more than they earn (net or take-home).

Experience shows that higher income taxes don’t impact (1) the truly wealthy as the "truly wealthy" are those who DON’T depend upon income as the primary source of their wealth, (2) the higher income earners (those earning over $200K/year) can and DO defer MORE of their income as tax rates rise and (3) those who work in the underground (“off-the-books”) economy, but it’s even worse than that!

The debt burden of the average, working American (including home mortgage and property taxes) are so high that any rise in the rate of taxes will significantly raise the level of foreclosures and personal bankruptcies.

As Newt Gingrich has observed, “While critics both Democrat and Republican have assailed the current Republican administration for both over-spending and expanding government, and yet the Democrat’s antidote is even higher taxes and larger, more intrusive government.

What we have right now is a Party of “Big Government” against a Party of “Even Bigger Government!”

Yeah, that’s the problem alright, neither Party represents the will of the majority of working people who want lower taxes and SMALLER, more limited government.

H/T Captain Capitalism


PoorGrrl said...

It's sad that so many Americans point their finger at government overspending but see nothing wrong with their own financial disorder, AND demand more goodies from the government they accuse of spending too much. Confusing, isn't it? And I think you're wrong, JMK. Most Americans DON'T believe in lower taxes and smaller government. If they did they wouldn't have put the Democrats in control of Congress last year and they wouldn't be supporting universal health care now. Most Americans have been thouroughly socialized and believe they're entitled to everything and responsible for nothing. Terribly sad, but terribly true.

JMK said...

I think that's largely a matter of education and outreach Poorgrrl.

Newt Gingrich captured America's attention and won back the House after nearly fifty ruinous, yet uninterupted decades of Democratic rule.

Since Gingrich left the House, the GOP has turned away from those principles and has been embodied in politicians, like Tom DeLay, who felt, so long as they play to a "Conservative social agenda" they could join their Democratic brethren as "pigs at the trough" and still be elected.

Americans, like all people, tend to choose the path of least resistance - "whatever's easier."

Universal healthcare has gained momentum since corporate America joined the call, looking to get out from under the ponderous burden of insuring most Americans (over 85%, and over half the rest simply forego the corporate plans to pocket their share of the premiums).

You can't blame DUMB people for believing in "free healthcare," or even DUMBER people claiming a commodity (healthcare) as a "right," but it's also hard to argue that Corporations SHOULD pay for our healthcare "just because."

What we're going to wind up with, I fear, is a very expensive Universal plan that offers bear-bones coverage at a very high cost in taxes, along with rationed care and restrictions on both visits and procedures, ALONG WITH a system of private insurance (for those who can afford it) that will offer better quality care, with no rationing or procedure restrictions.

I have no problem with people being able to pay for better quality care, and NONE with rationing and procedure and visit restrictions, what I have trouble with is government's typical inefficiencies - a bear-bones healthcare system costing 10 or 12 times what it would, if offered by a private concern.

juandos said...

I think Poorrrl points out what is painfully obvious or should be and so it should continue to be pointed out again and again: "Most Americans DON'T believe in lower taxes and smaller government. If they did they wouldn't have put the Democrats in control of Congress last year and they wouldn't be supporting universal health care now"

jmk is absolutely right that education has a lot to do with it...

When was the last time a high schooler was mandated to have two semeseter of economics in order to graduate?

I graduated Catholic high school in south Texas back in '69 and it was mandatory due to state rules in both private and public schools...

When I graduated from college in '72 economics had all but disappeared...

Obviously if the following situations are going to continue, raising income taxes is all a small minded politico (of either party) can think of in order to continue to buy votes: For seven hours a day, five days a week, hundreds of Department of Education employees - who've been accused of wrongdoing ranging from buying a plant for a school against the principal's wishes to inappropriately touching a student - do absolutely no work.

In an investigation inside the nine reassignment centers called "rubber rooms" where these employees are sent, The Post has learned that the number of salaried teachers sitting idly waiting for their cases to be heard has exploded to 757 this year - more than twice the number just two years ago - at a cost of about $40 million a year, based on the median teacher salary

JMK said...

That kind of bureaurocratic waste is a huge part of it Juandos.

A part of the problem is that most people are just "too busy making a living" to stay up on politics and economics is made to appear shrouded in mystery, when it's anything but.

Another problem is that ALL government programs tend to take on lives of their own. The momentum is always in favor of expansion.

Increasingly government has taken on far more than its original Constitutional role - protecting life and property via police and military powers, a court/criminal justice and Civil (tort) system and various localized emergency services, by expanding into the realm of social and educational services.

Add to that a tax system that allows ALL those earning less than $33,000/year to skate on income taxes, as well as all those who're involved in the underground or "off-the-books" economy and all those who are truly wealthy (those who don't depend upon income for wealth) and you have the reason why so many Americans support increased expenditures that they perceive benefit themselves, more than they'll be required to pay.

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