To paraphrase the old saying: the only certainties in life are death and taxes. We’ll leave death for another day – and let’s be honest, probably another forum entirely – but taxes are right up our alley. Unfortunately, it looks like there are more of them on the horizon, so we wanted to give you a heads up!
Here are Five Fast Facts on the likelihood of increased taxes:
- 📈 It’s Not You, It’s…Everyone - Pretty much all advanced and wealthy nations in the world are taking in more money from their taxpayers in order to fund their spending machinery. This phenomenon isn’t particular to the US, but America seems to like doing things bigger and faster than anyone else, so this is probably going to hit us more (or harder) than most. Tax receipts were 28% of GDP last year, 3% higher than in 2019 and the highest level since the 1960s (other than a brief moment in the 90s).
- 😣 What Does It Mean? On the surface, it means tax revenues are increasing faster than economic growth. Looking a bit deeper, it means the government is taking an ever bigger role in the lives of everyone, and that role is taking a bigger bite out of our Paychecks. This slows the economy overall. Sadly, it seems like that’s just what the government does.
- 😭 In The Driver’s Seat - The funny thing is that most governments haven’t really raised tax rates that much. This increase is being driven by inflation pushing up wages, which pushes taxpayers into higher tax brackets. It’s called fiscal drag. And an emotional drag, too, if you ask us.
- 💳 That’s Interesting (Not Really) - Part of the brewing storm is the massive amount of interest that governments around the world are paying. The International Monetary Fund (IMF) estimates there will be $2 trillion spent on interest alone this year, which is a 10% increase from last year. This means wealthy countries with high debt and big deficits may have no choice but to raise taxes to keep afloat. It’s a good thing that doesn’t describe the US at all…oh wait…
- ⛈️ But Wait, There’s More - Another part of the brewing storm is the massive new costs that are coming down the road. The Baby Boomers are fully into retirement, and are incurring ever-increasing health care costs (which are out of control all by themselves.) Other huge price tags on the way are all the green initiatives and infrastructure that have been started all around the country. This alone is expected to add 3% per year in government spending.
🔥Bottom line: Much like the national debt, this is an issue that doesn’t force itself into daily life for most folks. But, also like the national debt, if it is not addressed then there will be catastrophic consequences at some point. Tax hikes are the most likely short term result, though at least here in the US that’s politically tricky to navigate. But there will come a point at which we’re out of other options, and then we’ll have major issues whether we want them or not. If you think your Paychecks aren’t stretching enough now, just wait until we get there! It would be much better to elect responsible leaders to tackle it now, while options still remain. Step one could be, you know, TO STOP SPENDING.
Can we find some real adults willing to do some real adulting, and fast?
What do you think should be done about this?
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