Monday, March 12, 2012

The Phantom Tax Hike

The Monkey Cage blog recently puzzled over American's largely erroneous views of tax rate changes. I think that the real disparity between the objective facts and American's perceptions is that, because our liabilities have risen--even though the bill has not arrived--Americans will be taxed more highly in the future.

Americans are fully aware that current deficits will have to be paid--through either direct taxes or indirect taxes (the costs of inflation or default). Americans are also aware, regardless of political leanings and whether they support its goals or not, that Obamacare will be a boondoggle for which a large bill will come due.

Since the Obama administration made spending decisions that will increase the tax burden, Americans rightly perceive that taxes have risen, even though no cash has yet been required of them.


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