Among the earliest uses of the written language was the assessment and collection of taxes.
Though we’ve gone from king taking grain straight from your field to the IRS, Tax Day remains a reminder of this old and favorite government pastime.
However, focusing on when or how taxes are collected misses the point. The government doesn’t wait for you to pay your taxes to start committing your money.
Basically, while you’re working hard to make money, the government is ordering rounds at the bar since friends of the bureaucracy.
Tax Day – which falls on Monday April 18 this year – is only when the bar tab is paid, not when drinks are ordered.
Government expenses is the first tax on American workers. The ongoing process of the government ordering beverages on your behalf is what requires the tax and other government burdens to eventually take their toll.
The power of government to commit your money is the power from which all the burdens of government flow.
Although governments and politicians have developed a myriad of ways to finance expenses, all of these methods eventually take money out of your wallet One way or another.
As onerous as federal taxes are for most American families, that’s just the beginning.
Entrepreneurs are taxed, forcing lower wages and higher consumer price levels. Then, investors are taxed, which reduces the number of startups competing with large companies and leads to slower job growth.
After depriving families of part of their purchasing power and growth retardation economic growth through countless overlapping taxes, the government still does not collect enough to foot the bill. Taxation should only cover approximately 80% federal spending over the next decade.
To pay for the other 2 out of 10 drinks at the bar, the government is turning to good old-fashioned deficit spending, the same guy that drove the national debt to $30.4 trillion (over $230,000 per household).
When you or I borrow money, we expect us to work to provide value to someone so that they earn enough money to pay off the debt. Unfortunately, this is not the case with the government. When the government borrows money, it does so by promising to forcibly take that money from someone else through future taxes.
This promise of future taxes – like a rapidly approaching storm on the horizon – has serious negative effects on the economy today. The government cannot borrow an infinite amount of money indefinitely.
As economist Herbert Stein wrote, “If something can’t go on forever, it will stop.
To get around this problem, the government is increasingly asking the Federal Reserve to print the money. Where does new money come from? Like a thief siphoning gas from your car, it takes out the purchasing power of existing dollars, what your money will buy.
And so, again, while you or I need to make money doing real work and providing value to others, the government just takes it.
Dumped into the economy, this new money quietly devalues your savings and paychecks. Ultimately, it devalues your hard work and planning for the future.
Since the start of the COVID-19 pandemic, approximately half of new federal debt incurred was actually printed by the Federal Reserve in this manner. This boosted Fed assets by 890% over the past 14 years, pouring $8 trillion of new cash into circulation, like pouring water into the wine of your savings.
Perhaps the most important aspect of this alarming trend is how new it is and why.
Looking for ways to finance its deficit spending, the government, backed by the unchecked power to raise taxes in the future, is gobbling up investment dollars throughout the economy. This crowding out starves the private sector and wage and job growth.
The volume of these deficits is expected to be so immense that in little more than a generation the interest on the federal debt alone could consume 46% of all federal taxes.
The unprecedented pressure created by this staggering level of federal budget deficit caused the Fed to print these trillions of new dollars to avoid part of the crowding out.
Of course, that doesn’t remove the cost to American families. It just transfers the cost to this other tax imposed by the government; namely inflation.
The Fed recently released a study concluding that most inflation is a direct result of federal overspending, not COVID-19, or Russian President Vladimir Putin, or any other excuse they’re selling this week.
It’s a sobering reminder that all government funding ultimately comes at the expense of hard-working Americans.
Although the cost of government can be felt in a million places and every day of the year, it does not start there. It started when the government took you as cattle, committing your life’s labor and savings to its vote-buying spending programs.
So on this tax day, as you walk away from the bar after covering the government drinks, remember to listen to the government shout “another round”, as the bills pile up a new.
This piece originally appeared in The daily signal