Saturday, May 07, 2011

Lower taxes keeps raising the bar

According to a recent article in USA Today, US federal, state and local taxes are about the lowest they've been since 1958 as a percent of income.

Whenever the tax burden drops, or the government pumps money into the economy by spending, it raises the bar of what's needed to sustain the economy and things are still anemic.

It's like we've become addicted to stimulus, either through tax cuts or things like the Obama Stimulus package to just get by. What's normally considered an emergency is now commonplace.

It just seems to be always costing more and more to just maintain. The housing bubble pushed up the cost of housing. Health care keeps getting more expensive. Education and energy are rising also. Quite a few things that are considered essentials are going up while unemployment remains high. Business keeps saying it needs low taxes just to create enough new jobs to keep up with population growth.

Whenever the bar of stimulus, and/or tax cuts goes up, we can't ratchet it back down. It becomes the new "normal" just to maintain what people consider survival.

Something is wrong for sure. Seems like the only way to keep up this level of tax cuts and spending is to keep going into debt. It's a serious problem when we have to do this just to stay afloat.

On the other hand, some products are amazingly cheap. I just bought a tiny chip of flash memory with 16 gigabytes in it for less than $50. That's enough storage space for a whole bookcase full of LP records in the old days of vinyl. I never fail to be amazed at what's available for low cost in the world of electronic technology. Too bad so many other sectors of life that are needed for basic survival, like housing and health care, have to be so expensive.

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