Cost of Living Creep

“I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. As a result of the war, corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands, and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of war.” –
Abraham Lincoln - In a letter written to William Elkin

The average United States citizens continue to have less and less control over the money that they earn. I feel this is due to the following two causes: (1) Hidden Taxes from our government and (2) Capitalism raising costs on goods and services. Both of these result in an upward "creep" of costs on our daily cost of living that essentially makes living, or making ends meet, difficult or nearly impossible to achieve.

Hidden Taxes:
The term 'hidden' is not to represent that we do not know about these taxes, but they are not quantified into are tax bracket. The fact that the government collects their 20-30% in federal taxes as listed above does not include all of these other taxes that we pay that ultimately show up in our 'cost of living' column. And hence are hidden from the amount we think we are being taxed.
  1. Gasoline Tax: The average combined federal & state tax across the US is 0.46 cents per gallon (cpg). [Connecticut is the highest at 0.68 cpg, Alaska is the lowest at 0.26 cpg and Nevada is 0.51 cpg]  http://www.commonsensejunction.com/notes/gas-tax-rate.html
  2. Gas Guzzler Tax: When you purchase a car if it is categorized as a gas guzzler, you are taxed. Could be as little as $1,000 or as high as $7,700. http://www.epa.gov/fueleconomy/guzzler/index.htm
  3. Hidden Taxes on Travel: Every time you go to a popular destination in the United Stated you are assisting the government. http://www.taxfoundation.org/blog/show/27486.html
  4. "Sin" Tax (beer, liquor, cigarettes): I find this one somewhat interesting because it is essentially taxing segregation of lifestyles, or judgment of bad lifestyles and imposing penalties. Politicians love the idea of this sin tax because their options become somewhat limitless. Rather than promote healthy living, they charge you for your poor choices. Some of the following "sin" taxes may already be in force, but others are being debated on implementation: Fat tax (airplane seats; trans-fatty food purchases; soda pops) Drug tax (legalization of marijuana, brings revenue) Legalized prostitution; Gambling taxes (How many states have casinos now?)
    1. http://www.usatoday.com/news/opinion/forum/2010-09-21-column21_ST_N.htm
    2. http://www.nytimes.com/2010/04/18/weekinreview/18rampell.html
    3. http://articles.nydailynews.com/2009-09-08/news/17934410_1_sugary-drinks-soda-consumption-health-care-reform
  5. Hobby Taxes: A fishing enthusiast pays 10% of the sales price on sport-fishing equipment in taxes. That's enough to make you switch to another sport. Maybe archery? But wait, an archer pays 40 cents tax per arrow. And quivers are taxed at 11%! If you buy a shotgun or other firearm, you'll pay 11% of the sales price in federal tax on the gun as well as any ammunition. Handguns are taxed at 10% of the sales price. I'm sure there are several others here: hunting tags, national park permits, etc...
  6. State Taxes on Insurance Premiums: This little doozy brings in $15.7 BILLION in revenue (2008) a year! States charge insurance companies a tax on the insurance premiums they receive from customers in that state. And who do you think the insurance companies pass that cost along to? You got it. You and me.
  7. Excise tax: http://en.wikipedia.org/wiki/Excise_tax_in_the_United_States The sneakiest of all the hidden taxes that we pay is in the form of excise taxes on many of the products we import. The tax makes the prices of imported products artificially high to make it easier for domestic products to compete. Here are just a few of the items and the percentage that their prices are jacked up by import taxes:
    • Bicycles 11%
    • Brussel sprouts 12%
    • Cotton hammocks 15%
    • Infant formulas 18%
    • Flashlights 18%
    • Peanut butter 143%
    • Girdles and panty girdles 24%
    • Brooms 32%
    • Plastic school supplies 5%

  8. Payroll Taxes: Forget about your income tax withholding. When is the last time you looked – really looked – at all the other taxes coming out of each and every one of your paychecks? You've got your Social Security tax, your Medicare tax, your unemployment tax, your workers compensation... It all adds up to a serious percentage of your money going into someone else's pockets.
These are just 8 hidden taxes listed. There are many others that would take to long to research and state in this blog but a few are tied to utilities and government fees: water, power, sewer, city, state permits, business permits, etc.

Our politicians are scared of talking about raising taxes. Scared to make a hard decision. This stems from the inherent risk of being kicked out of office or losing votes. In addition, they are committed to corporations and the small society that controls the majority of the money (they fund their campaigns). The chart below shows the gross misrepresentation about what citizens think their tax rate is over the last 30+ years. This does not include the hidden taxes that we pay.

This creates a gross misrepresentation to the taxpayer that the tax rate is what is shown in this graph. By the time one adds in all the hidden taxes that we discussed and the ones that were not discussed. I would think the overall tax rate could be above 50% of gross income.

Congress has imprisoned American taxpayers in a cave where the tax code we see is merely a distorted image of what we truly pay in taxes. The tax code is a grossly distorted shadow that cannot, and should not, pass for truth!!!

Capitalism raising costs on goods and services:
When I refer to capitalism here, I am referring to the people that control corporations that set product prices for consumers in an effort to maximize company profits which in term increase market share.

Capitalists understand money. They understand when consumers have extra cash and when cash is a premium. They understand that governments will not increase the federal income tax as indicated above, they also understand that governments apply the "hidden" taxes that we discussed.

So in an effort to build company profit they analyze where this increase in money can come from. It is my opinion they categorize the gross money that an average family brings in into three categories:
  1. Taxes (Federal, State, and Hidden taxes)
  2. Cost of living
  3. Disposable Income
From their analysis they determine there is an excess in disposable income and they work to build profits by seeking after this cash available in household disposable incomes. This is done by creating artificial "cost of production increases" where goods and services now cost 2 to 2000 times as much as they did in the past just to push their profit line while sacrificing US citizens capability to LIVE.

Essentially, I think that a large portion of the "cost of living" term used by financial planners and industries is somewhat of a conspiracy to have an excuse to push prices higher.
Now, I do recognize that costs do inflate and fuel has become more expensive (along with the taxes added onto the fuel that we discussed) so there is some "cost of living" increases. But I think capitalists have leaned too heavily on this excuse and have spiraled costs beyond reason just to improve market share.
  1. Can someone please explain in detail the financials that made the snickers bar increase from 0.25 cents when I was a kid in 1985 to the $1.25 that I see in convenient stores today? I think this is a prime example of solely increasing revenue. The same could be said for many products: soda, bread, meat, shaving razors, pop corn.
  2. Will it really cost my son (7) $25-$30 for a big-mac meal when he is my age by the time inflation plays it course?
  3. Does it really cost $55,000 to make an F250?
  4. Here are a few examples of mark-ups at the grocery store, this is to drive home the point that capitalists are there to add the squeeze from our disposable income:
    1. http://xfinity.comcast.net/slideshow/finance-grocerystoremarkups/produce%20/
  5. Here is an example of other overpriced items:
    1. http://www.dailyfinance.com/2010/09/27/10-most-overpriced-products-you-should-avoid/
  6. Other good links:
    1. http://www.prnewswire.com/news-releases/us-food-inflation-spiraling-out-of-control-91848684.html
    2. http://inflation.us/charts.html
Below is a chart that shows how the percent of disposable income has decreased over time which is a testament that the US citizen is being squeezed from all sides to (1) to pay for big government (2) maximize profits for large corporations (3) sacrifice their own disposable income (financial health) by barely making ends meet ( or not staying afloat) and likely facing an unfortunate retirement scenario.
The average United States citizens continue to have less and less control over the money that they earn. I feel this is due to the following two causes: (1) Hidden Taxes from our government and (2) Capitalism raising costs on goods and services. Both of these result in an upward "creep" of costs on our daily cost of living that essentially makes living, or making ends meet, difficult or nearly impossible to achieve.
Now, since this is happening to us, how do we make this right/proper/fair for our children and future generations?


Adrianna said...

A lot of things I've never considered before! Thanks for the post, Ryan. Scary to think of the devious ways and means the govt and big corps use to get their money.

Jed Wheeler Family said...

You should get an award for this post. Well written and documented. And for crying out loud pb 143%!!