From 1990 to 2008, the percentage of filers (red line) with no liability has increased from just over 20% to almost 40%. (Another article) lists the percentage at 47% for 2009. Not only do most of these filers have no tax liability, they usually are recipients of refundable tax credits worth thousands of dollars from EIC, additional child tax credit, and now, the First Time Home Buyer Credit.
This is disturbing on many fronts. The more people that are dependent on payouts from Uncle Sam, the more difficult it becomes to wean the populace from the government teats. Aside from the tax system being used as a means of wealth distribution, other Americans receive unemployment benefits often lasting well over a year, food stamps, subsidized housing vouchers, and other federal goodies.
Probably the most sobering thing about the graph is the realization that without federal subsidies, probably about 30-40% of the population couldn't make it on their income. As a matter of fact, an article was penned recently (link here) that breaks down the median household income of $50,300 in terms of median housing, food, and other costs. Alarmingly, the conclusion is that the median income can no longer support median expenditures. Wow!
We tend to hear about statistics like those of the above graph and think of the recipients of government largess as moochers. While this is true in many cases, I think the greater truth is that many of these people are willing to work hard, but their skill set simply doesn't demand the same kind of wages as it did a generation ago.
As the trend for businesses and industries to outsource quality jobs overseas in exchange for favorable labor costs and less burdensome tax rates continues, America will see a declining standard of living. Quite simply, the wages in America have been and will continue decline as the global competition for wages forces salaries downward. Politicians will be expected to make up for the declining standard of living by increasing taxes on those individuals who have greater incomes. As the bottom half of the income pyramid becomes the bottom two-thirds, the public will ask for increasing taxes as long as it's the rich guy that gets hit.
Of course, as taxes rise, the economy will continue to suffer and the national debt will grow larger. Small businesses get squeezed out, and the large businesses will for the most part produce their products overseas and import them back here to market them; in essence the Walmart model as it applies to IBM, DELL, US Steel, GE, and any global player. How many years can the system hold up? At some point, the citizens will either passively become debt slaves or actively revolt against the government. Even if decent, intelligent men like Paul Ryan eventually assume a leadership position, is it too late to reverse the trends? How do you bring back high paying jobs to America? What happens if entitlements are cut, now that tens of millions of Americans are now dependent on government for survival?
This is disturbing on many fronts. The more people that are dependent on payouts from Uncle Sam, the more difficult it becomes to wean the populace from the government teats. Aside from the tax system being used as a means of wealth distribution, other Americans receive unemployment benefits often lasting well over a year, food stamps, subsidized housing vouchers, and other federal goodies.
Probably the most sobering thing about the graph is the realization that without federal subsidies, probably about 30-40% of the population couldn't make it on their income. As a matter of fact, an article was penned recently (link here) that breaks down the median household income of $50,300 in terms of median housing, food, and other costs. Alarmingly, the conclusion is that the median income can no longer support median expenditures. Wow!
We tend to hear about statistics like those of the above graph and think of the recipients of government largess as moochers. While this is true in many cases, I think the greater truth is that many of these people are willing to work hard, but their skill set simply doesn't demand the same kind of wages as it did a generation ago.
As the trend for businesses and industries to outsource quality jobs overseas in exchange for favorable labor costs and less burdensome tax rates continues, America will see a declining standard of living. Quite simply, the wages in America have been and will continue decline as the global competition for wages forces salaries downward. Politicians will be expected to make up for the declining standard of living by increasing taxes on those individuals who have greater incomes. As the bottom half of the income pyramid becomes the bottom two-thirds, the public will ask for increasing taxes as long as it's the rich guy that gets hit.
Of course, as taxes rise, the economy will continue to suffer and the national debt will grow larger. Small businesses get squeezed out, and the large businesses will for the most part produce their products overseas and import them back here to market them; in essence the Walmart model as it applies to IBM, DELL, US Steel, GE, and any global player. How many years can the system hold up? At some point, the citizens will either passively become debt slaves or actively revolt against the government. Even if decent, intelligent men like Paul Ryan eventually assume a leadership position, is it too late to reverse the trends? How do you bring back high paying jobs to America? What happens if entitlements are cut, now that tens of millions of Americans are now dependent on government for survival?
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