Are We In Taxflation?


by Ed Butowsky, Managing Partner of Chapwood Investments

When you go to the store and something you bought for five bucks six months ago is suddenly going for $5.25, and you just know it’s going to cost you $5.50 in another six months, chances are you just shrug and buy it anyway. After all, it’s only 50 cents.

But it’s not only 50 cents. It’s also a 10 percent increase in one year.

Now ask yourself this: Is your kind and caring boss going to give you a 10 percent raise to help you keep up with your daily expenses?

I didn’t think so.

The fact is, as you dig into your pocket for that extra 50 cents, there should be smoke coming out of your ears. Prices are rising everywhere and on everything – for the true cost of inflation on everyday items Americans purchase, have a glance at Shadow– and it’s high time people got outraged and asked why.

And here’s why: We’re overtaxed and overregulated. We should coin a word for it – taxflation.

People tend to think prices go up because of corporate greed. They think companies want only to make huge piles of money and that they’ve been put on earth to squeeze as much of it as they can out of consumers.

But that’s just not so. The real reason the cost of everything from a tube of toothpaste to dental implants keeps going up is not corporate greed. It’s that our local, state and federal governments are constantly bombarding us with new taxes and onerous regulations. The fact is, companies have to raise the prices on their products just to keep up with the ever-increasing taxes and regulations that raise cost of making their products. And when their costs go up, they have no choice but to pass them on to consumers.

Imagine you’re the CEO of Widget Corp. You have a nice penthouse office and a very attractive salary and a few thousand people who report to you – but you’re still not the boss. You report to your company’s shareholders, and they expect you to keep selling widgets and producing dividends. So when the government raises corporate taxes and passes new regulations that affect how Widget Corp. does business, you can’t go tell your shareholders they’ll have to settle for less. You have no choice but to raise the price of your widgets to match those increasing costs. And now you’re charging $5.50 for a widget that cost $5.00 last year, and we all know who’s paying for it.

Consider, for example, what it costs to grow a navel orange in California and have it picked and sorted and carried by truck all the way to Maine. Now think about what happens when California regulates water use, and when it creates new regulations regarding the handling and packaging of that orange. Now think about what happens when the federal government and all the states between California and Maine – and that’s a lot of states – increase taxes and regulations on trucking. Toss in an increase in tolls, which are a form of tax. It’s no wonder you’re forking over up to two bucks for a single orange.

And now consider how much money corporations had to pay their consultants and attorneys to sort through all the new regulations just to provide health care to their employees after ObamaCare went into effect. Who ultimately paid for all of that? You, the consumer.

So what you can do about it? Believe it or not, you can do a lot, because you’re an American citizen, and you get to vote.

So when you step into the voting booth, ask yourself how that bond proposition or tax increase on the ballot affects you. Sure, some taxes and regulations are necessary. But we’re already way past some. Ask yourself: How will that proposal affect me? Is it necessary? Will it make my life better or worse?

And then do the same for the candidates on that ballot. Will they help you hold on to what you’ve got, or will they tax-and-spend you to the point where prices have to go up and you’re worse off? Your job is simple: Reflect on which candidate and which party will make things work for you, and then vote accordingly.

They say there are two things in this world you can count on: death and taxes. I say we need to add a third: rising prices. And it all comes together. Prices rise because taxes are killing us. It’s time that we the people stopped this once and for all.

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