The Continuing Saga of Tax Inflation

A new poll was released this week that proclaimed the obvious – most Americans think their federal taxes are too high.

The poll from the University of Chicago and the Associated Press states that two thirds of US taxpayers think they pay too much on federal taxes and receive far too little value in return. Their opinions are similar on state and local taxes as well, although they perceive tighter control on how local taxes are spent.

Is anyone surprised? Hardly a week goes by when news outlets don’t have a story on mis-spent government funds, or the outright theft of funds from corrupt foreign governments. What would motivate the feds to tax less or to spend more carefully? After all, they are dealing with OPM – Other People’s Money – which is in endless supply.

Unfortunately, we, the citizenry, keep electing the politicians who have demonstrated such a destructive tax-and-spend record. And there’s a sizable portion of the country who pay no federal taxes at all and would gladly impose additional taxes on the wealthy.

This pattern is not sustainable. Look no further than the critical situation facing California. The state that was recently flush with federal pandemic relief cash, is now forecasting a $68 billion budget deficit this coming year. California unemployment is on the rise at 5.1% (national average is 3.7% and Florida is 3%). Employers and citizens are fleeing the state in record numbers due to the oppressive tax policies and taking their tax dollars with them.

The state, meanwhile, has rewarded public labor unions with generous pay raises and pensions in return for their political support.

California’s largest cities face similar financial woes. The fiscal cliff is not far away.

So what’s the strategy to resolve California’s shortfall issues? Raise taxes, of course. The state and cities are examining creative ways to grab more money from businesses and the citizenry, layering new taxes upon old taxes, oftentimes targeting the wealthy (meaning homeowners and people with jobs).

Even in Massachusetts, the proposed state budget includes suggestions for cities and towns to get ‘creative’ and bolster their tax revenues by uplifting excise taxes (the portion which goes back to localities), local meals taxes, and local hotel room taxes, to name a few.

Isn’t it always the same answer? And isn’t it always the same elected officials who see new taxes as a better answer than restricting spending by identifying waste and unnecessary programs?

How long will working taxpayers put up with this?

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