Big Government is Back

Forget about a “tax cut for 95% of working families.” Now that the campaign rhetoric has faded and reality is setting in, it is becoming clear that almost all Americans will be paying more taxes, not less. That is because most Americans pay far more in consumption taxes, mostly hidden, than they do in income or payroll taxes.

On April 25th I blogged about the fact that a carbon tax (cap and trade) will be a huge new tax on the middle class, more than off-setting the small reduction some may see in their payroll tax (FICA). Manufacturers and utilities can stay in business only so long as they are able to pass their costs along to consumers.

Now the Obama Administration is floating a plan for a whole new raft of taxes on things like soda (pop for those west of the Miss.), beer and wine. This would be in addition to the substantial taxes imposed on those items by state and local governments. You also pay hidden taxes everytime you buy gas or pay a utility bill.

In fact, everytime you buy anything you are paying hidden corporate income and other taxes for the businesses that make, transport and sell everything you use and buy everyday. I always laugh when I hear some lefty advocating for higher corporate taxes. Who does he/she think is paying those taxes?

It’s not just the Federal Gov. that is going to be raising taxes. Many state and local governments are running deficits, too, and will inevitably choose to increase taxes rather than make spending cuts sufficient to balance their budgets.

It all adds up to a major transfer of income from the private sector to the public (government) sector. The Federal Gov. is actually increasing its ranks and not just because of the census. There have been some cuts at the state and local levels, but mostly by attrition.

Public employee unions are growing in numbers and political clout. Many politicians from Obama on down believe that the last election was a mandate for bigger government and are acting accordingly. Last week hundreds of teachers in the Boulder Valley School District conducted a “sickout,” essentially an undeclared strike, a week before final exams (“It’s for the children!”), to protest not salary cuts, but what they viewed as inadequate increases.

The era of big government is back. Bigtime!