Furthest Right

Through the Looking Glass of Taxation

People across the first world are trying to figure out how life got so expensive. We had this huge technological boom that made everything cheap, and then something snuck in and ate up all the extra wealth.

We can tote up the many additions to our society that the voters slept through like entitlements spending, legal protection for unions, affirmative action, excessive regulations, and red tape.

In the long calculus, however, it was the taxation that drove up the cost of living and killed the American Dream, creating a situation where people can never really fully live because they cannot afford it:

ALICEs — or Asset Limited, Income Constrained, Employed — is a term coined by United Way’s United For ALICE program to describe Americans who work and make more than the Federal Poverty Level for a family of four of $31,200, or $15,060 for an individual, but who struggle to pay for basic needs.

Many ALICEs are workers whose wages typically aren’t enough to cover their bills, meaning they live paycheck to paycheck. Some are forced to sacrifice rent payments for food or childcare for medical appointments.

If you wonder why people in the first world are not reproducing, this should offer an insight: many of them cannot afford to, and those who can, are doing so less because the overall burden is so massive.

This is not striking “the poor,” but the lower half of the middle class who are the people working everyday jobs and getting caught in them without enough money to ever get above paycheck-to-paycheck existence.

It turns out that the taxes and other costs bled away the extra wealth and now salaries are stalled at where they were sixty years ago. Any time they go up, taxes eat up that “extra” and redistribute it to the poor, women, and minorities.

This has created the typical socialist state of permanent malaise where you can get ahead, but unless you really win big, you will always be on the treadmill, a condition that in its worst form is known as ALICE:

The most recent estimate by United for ALICE indicates that in 2021, 41% of U.S. households could not afford the cost of basics—housing, child care, food, transportation, health care and technology—where they live. The percentage of households below the ALICE threshold in 2021 was similar to where it was pre-pandemic.

90s kids will be familiar with this one from your first job: after payday, you deposit the check, then write out other checks to take care of rent, utilities, insurance, and tax. What is left over is what you have for food and fun (“disposable income”) and it turns out to be a rather small number.

You can do what the Republican Boomers tell you to do — pull yourself up by the bootstraps! stop wasting money! — by spending as little of this as possible, but even so, you are still accumulating only a tiny amount of money, and it gets obliterated the next time the car has a repair or the hard drive gets zapped by a surge.

Boomers of course grew up before the great socialist experiment really kicked in, so to them, they are talking about the equivalent of thousands of extra dollars you could sock away. They have no idea what reality is like in America post-1965 for people entering the workforce.

Many of these ALICE folks are normal lower-half-of-middle-class people who are simply caught in the paycheck-to-paycheck lifestyle. Housing costs went up, currency lost another 40% of its value just like it did under Obama, and now their paycheck (which has the same numbers, but those numbers buy less) is not enough to survive.

Thanks to disastrous socialist economic policy, almost half of American households are eking out an existence paycheck to paycheck:

We all know people who are ALICE — Asset Limited, Income Constrained, Employed — earning more than the Federal Poverty Level, but not enough to afford the basics where they live.

Of the 126,903,920 households in the U.S. in 2021…

  • 13% earned below the Federal Poverty Level (FPL)
  • 29% were ALICE, in households that earned above the FPL but not enough to afford the basics in the communities where they live
  • Together, 42% of households in the U.S. were below the ALICE Threshold (poverty + ALICE divided by total households)

To earn below the federal poverty level, you have to either be just starting out or lack skills or organization. Many of these are what we call the underclass, or people who are mentally addled and low-IQ therefore in a permanent state of economic distress.

We knew a guy like that when we were kids. His name was Brad and he lived on the edge of the neighborhood. If he had a job, he lost it within a few months, precipitating a crisis. If he had money, his transmission blew out. If he finally got solvent, he blew it at a bar or on a new stereo cabinet for his dually pickup.

Brad was not a bad guy at all, nor incompetent, but he was mentally disorganized to the point where his life was a string of crises and panicked scrambling to fix the disaster, without any rudder or hope. He eventually gave in and accepted this as normal. This is where most of the perma-poor are in terms of mental state.

All of America has become Brad now because socialist demand-side economics produce slow decay of economies into “cash cows,” or formerly great companies that are now milked for every dime that can be extracted at auction:

Compounding the issue is the federal government’s relentless expenditure. A bid to stimulate economic activity through government expansion creates an opposing force against the Federal Reserve’s attempt to stabilize prices. However, this fiscal largesse, particularly in an election year, is double-edged. Promises of increased social welfare and economic support measures, while politically popular, exacerbate inflationary pressures by injecting more spending.

In the labor market, the inflationary cycle perpetuates as employees demand higher wages to offset the rising cost of living. States like California have responded by mandating wage increases, further contributing to the cost-push inflation dynamic. This wage-price spiral is manifestly evident in sectors such as auto insurance, which has seen premiums surge by 22%, and in housing, where rents and related expenses have climbed by nearly 6%. The most palpable impact for the average citizen, however, is the escalating cost of essentials like food and fuel.

When costs go up, either demand has gone up or currency value has gone down. The constant balancing of interest rates by the Federal Bank reflects this cycle: when interest rates go up, currency is harder to acquire through usury, therefore demand is unmet and therefore demand goes up.

On the other hand, when interest rates go down, money is easier to acquire and therefore loses some of its value. Similarly, when money is spewed recklessly into the economy by government welfare, entitlements, stimulus, and subsidy programs, it operates as a low-interest loan and reduces the value of the currency.

If you want America to be fiscally safe, do this: first, stop worrying about The Poor.™ They are always with you because some people are always going to be IQ anchormen and mentally addled, alcoholic, wife-beating, and so on. The poor are what Darwin’s natural selection wants to usher on into eternity.

Natural selection is more complex than most think. In any trailer park or urban ghetto, you are going to find a bell curve. Most of the people are doing about what everyone else is doing, but a small percentage are getting their act together. When two of those breed, you have a kid ready to lift out of poverty into the lower middle class.

Genetics then tests that kid, or rather his next three generations, to make sure that they belong in the lower middle class. Lots of people make it out of the trailer park and into the suburbs only to have their kids go back to drugs, gambling, alcohol, promiscuity, and other mentally-addled low IQ behaviors.

This process of testing the poor, promoting the good, and slowly killing off the far gone is part of nature. We impede it at our peril.

Once we give up on the symbol of victimhood and virtue that is The Poor,™ we can start focusing on how to make America healthy: reward productive behavior. Giving up on the poor lets us drop three-quarters of the tax burden. A low-tax America is one where whatever people have, no matter how small, it is higher quality and worth more.

For example, a low-income person in our current situation can buy nothing and depends on federal aid. Without the taxes, the aid goes away, but salaries go up and consumer prices go down. As a result, the poor person can buy more than he can with the free stuff from government.

It might as well be an IQ test. Dumb people cannot figure out that free stuff from government means higher costs that are passed on down to the consumer, making higher prices, so even if their salary goes up, they will be able to buy less with it. Smarter people favor cutting government out of the equation.

Since the 1920s, America has gone the opposite way. In 1913, we adopted the federal income tax; it was applied seriously beginning in 1919, setting off the Great Depression as people turned to speculation to try to keep their money safe from the ever-rising devaluation/inflation.

You can view it this way. If you have $100 in the bank, it can buy a certain amount of goods and services, for example a hundred apples. When interest rates drop or government gives out free money, the demand for money drops, so your $100 buys only (say) ninety apples.

For kicks sometime go back and look at the prices from the 1960s before the Great Society kicked in, or from the 1930s before the New Deal kicked in. You will notice that $100 bought a lot more apples back then that it does now. The difference is our welfare state and its anti-poverty/anti-“racism” subsidies.

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