If anyone believed President Biden when he said that no one making less than $400,000 would pay any extra taxes, this morning they should check their wallet. What the President does not want you to know is that his policies and taxes will add a hidden tax on all Americans. That hidden tax is inflation, a genie that, until we elected Biden, had been kept tightly bottled up.
And we all know, to respond to the far Left, he has let her out of her bottle.
Yesterday it was announced that year over year inflation for the month had increased by over 5%. We must all be aware that inflation affects our after-tax buying power, so the effects of inflation are amplified in our pocket books. But we do not need fancy economists to tell us that, all we have to do is go to the gas station and we feel the invisible hand of President Biden at play.
Now, some of this increase is attributable to post COVID economic recovery. But going forward, as the impact of Biden’s politically-driven taxes, borrowing, regulations, and energy policies kick in, we will see the economy sink, reversing the pressures on inflation that had been caused by robust economic activity. Taking its place will be the politically driven-inflation induced by the President’s policies. And as history is prologue, we must expect the impacts of this politically driven inflation to be substantial.
Just to demonstrate, let us take the example of a middle-class person making $50,000 per year before taxes. To make it simple, let’s assume a total tax take of 20%, leaving that person $40,000 to live on. If inflation had remained at the level seen for some time it would have been about 1.5% annually and that person’s net buying power would have been $39,400. Under the Biden regime if average inflation ends up being 5% per year that same person’s spending power would be $38,000 (equivalent to a total tax rate of 24%). But as is more likely, if inflation goes to 10% the equivalent tax rate jumps to 28%. Now that middle class worker is paying far more than they were told by the President.
It’s far worse for an elderly person who may have an average total tax rate of 10%. With an added 10% inflation, that hidden tax will result in lowering the elderly person’s buying power by the equivalent of 19%. To a person on fixed income that is a serious blow.
Unsaid in all this is another insidious outcome resulting from Biden’s policies and taxes. That outcome is the retreat from what had been the most prolific economy in modern history under President Trump. For a time, the US economy will be robust as we recover from COVID, but over the longer term the COVID recovery will dissipate and its effects will be supplanted by the malaise that we knew under President Obama, except due to the Biden policies that malaise will be on steroids. So even if you can get by on less buying power, your opportunity for a higher salary, more benefits, a promotion, and so on will disappear into the open maw of Biden’s Federal bureaucracy.
Politicians are very good at telling half-truths, that is telling us the things they want us to hear and leaving out the ugly parts. But as the famous line of media giant Paul Harvey went, there is “the rest of the story.” In the case of President Biden “the rest of the story” that what he does not want you to know, is that the impact of his hidden tax will multiply the effect of his direct taxes and policies onto all taxpayers, not just those with high incomes. He does not want you to know, if he even understands it himself, that his policies and taxes will cost you the taxpayer, you the voter, the economic freedom that low taxes have been the catalyst for.
We are all the victims of a broad experiment. For a century or more we have been told that Progressive policies would be good for America. And for that time, we have been spoon-fed those policies in bite-sized pieces. With the elevation of Biden, and with his dalliance with the far Left, we are seeing Progressive policies morph into something entirely different, entirely new. No one knows the result of this experiment, the only examples have been in countries that are dominated by autocratic rule, countries in which personal freedom was seized by an avaricious government.
Is that scenario “the rest of the story’ that Biden and his minions have in mind for our people? Based on what we are seeing emerge from Washington I am left to wonder.