Here Come the Taxes
They spent the money. Here come the taxes.
After a 5 year global orgy of government spending, we've already got the inflation to go with it. Now come the taxes.
Turns out all that free stuff wasn't actually free.
“The Era of Big Taxes is Upon Us”
A few days ago the Wall Street Journal announced "The Era of Big Taxes is Upon Us."
They note that, with debt more expensive -- both for the sheer size of the debt and the interest rates it has to pay -- governments are now "turning to voters and businesses to pay."
Lobster meet trap.
In fact, tax revenues have risen to record levels in many OECD countries, and are largely being spent on wars, on so-called industrial policy -- meaning crony handouts to business. And of course for the alleged climate emergency.
In the US the change has been lightning speed, going from just over $5 trillion to 7 and a half in just 5 years -- a 48% rise. Even in GDP terms we went from 25% of GDP to almost 28% in 5 years.
So if it feels like the dollar ain't spit and it's taxed to no end, that is correct.
Taxes vs Deficits
Of course, taxes don't even come close to covering the obscene government spending of these past couple years. In the US, spending is up to 38% of GDP -- in Europe it's over half. Meaning there's about a 10% gap between what they spend and what they take.
To illustrate, to close the deficit gap in the US they would have to literally raise taxes by a third -- you'd be looking at tax rates of 60% or more.
And that’s assuming the fresh trillion-dollar spending packages end. This won’t happen. Partly because of Washington’s growing army of hungry cronies — green handouts alone are expected to bump taxes another $600 billion of GDP.
And partly because of our new wars that are sprouting like mushrooms after rain, all lovingly lobbied by defense contractors into fresh trillion-dollar commitments.
What’s Next
America's already at the highest tax rate in 60 years, and it's about to soar. Because the Trump tax cuts expire next year, and Democrats are chomping at the bit for new taxes to feed their growing army of dependent voters.
Meanwhile, governments worldwide are already spending $2 trillion on debt interest, expected to jump to $3 trillion in just 3 years.
Those soaring borrowing costs collide with everything from wars to crony green handouts to migrants and outright vote-buying.
Indeed, the left has already opened a fresh front, pushing for a Universal Basic Income that could drive a truck through what fiscal room we have left. In the US alone, one popular form of UBI would cost some $3 trillion per year — roughly doubling the deficit.
Bottom line, hold on to your wallet. 'Cos there won't be much left when they're done.
At some point, there's no longer any incentive for entrepreneurs to build or even maintain -- may as well take it easy if it's all going to the tax man.
That is when we start going backwards.
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I’ve been hearing this and trying to spread the word since 2020. Ever read any of David McKnight’s work like the Power of Zero or David M. Walker’s work like America in 2040: Still a Superpower? Great stuff in both of those pieces.
MMT. Sovereign currency-issuers don't need taxes. "Deficit" is and always has been a bugaboo. Creating currency with debt is dumb. Paying a trillion in "interest" for manufactured money is also dumb. It'll all wash away. Digits on screens.