Tuesday, November 25, 2014

Real State and Local Personal Income Taxes: Third Time's the Charm!

The following chart shows the 12-month moving average of state and local government personal income taxes adjusted for inflation.

Click to enlarge.

There is one bit of good news here. The parabolic trend that's guaranteed to fail one way or another, hasn't failed yet. But before we become too euphoric over this taxation plan's long-term prospects, perhaps it would be best to think up a few alternatives now rather than later.

Plan B must be the property tax. That worked until it didn't, although one needs to give state and local governments credit for not giving up on the idea entirely.

Plan C must be the sales tax. Using "cheap" debt to entice people to consume more than they make while simultaneously cranking up the tax rate might work for a bit, but long-term? At the very least, a 100% sales tax rate does tend to slow consumption somewhat, especially in a world with stagnant wage growth. Just a thought.

Plan D must be state lotteries. If we can miraculously convince the richest among us to willingly embrace voluntary taxation, then it's a win win for everyone! How hard can that be?

Plan E could be a daily telethon. Just think of the entertainment value! Do it for the children! That's right, I'm thinking inside the TV box! Turn the government pleas for revenue into a 24/7 infomercial. On every TV channel! Until their daily goal is met! Prosperity, baby. That's what I'm talking about.

Plan F could be doing nothing. Just let the chips fall where they may. This really shouldn't be an option though. Trust me on this. An underfunded government is a dangerous government.

June 6, 2014
The Onion: New Law Enforcement Robot Can Wield Excessive Force Of 5 Human Officers

“We have done extensive testing with the AP-12 and we can say that these units are capable of carrying out everyday police work just as proficiently as any member of our force,” said police spokesman Gerald McClintock, who explained that the machine can be deployed to nearly any scene to which law enforcement officials typically respond, be it dispersing peaceful protesters by blasting a 14-nozzle pepper spray cannon or reacting to reports of suspicious behavior by immediately striking the knees, face, and throat of a potential suspect up to 10 times harder than its human counterpart.

Source Data:
St. Louis Fed: Custom Chart


Joseph Constable said...

An over funded government is a dangerous thing.

Stagflationary Mark said...

Joseph Constable,

I think George Washington might agree with both of us.

"Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master." - George Washington

Stagflationary Mark said...

Put another way, there are two types of really dangerous people in the world.

1. Those with way too much power.

2. Those with absolutely nothing left to lose.