Wednesday, June 24, 2009

Government Inflation

In California here, there was a 13% increase in sales tax. They raised it a penny from 7.5% to 8.5%. Doesn’t seem like much but none the less it is 13%. Vehicle registration fees rose from .65% to 1.15% of value. That’s pretty close to a double of 100%. On top of that there was a $1.50 increase in tax on a pack of smokes. Figure about a 40 percent increase there.

For simplistic purposes (for which I deserved to be shot) assume that the cost of government has remained about the same (as has a pack of smokes)(try to keep a straight face). Back in 1964 a pack of cigarettes cost 25¢ and minimum wage was $2.00. If you do the math, one could buy 8 packs of cigarettes for one hours labor. Let’s progress forward to now. Cigarettes are $5.50 a pack. Extend out the 8 packs per hour and we arrive at $44 dollars for an inflation adjusted minimum wage. This calculated wage is more than most people today are making per hour, so it seems pretty absurd.

What we are looking at, is forced inflation by government legislation. Our wages are not increasing, and at the same time, more of what we have earned being taken away from us in the name of taxes. These are just some of the visible taxes. There are a lot more that are hidden (home construction fees/taxes come to mind).

The funny thing is, I would consider it an act of decency to ban smoking all together, rather than to tax it to death, and at the same time ban any form of gambling like the state lottery. Nobody has accused any legislative person of late, as having some sort of moral fortitude let alone a backbone. They don’t want to get rid of the smoker or gambler, they just want to tax their addiction and benefit from it.

Where do we go from here? Is a pack of cigarettes worth $5.50 a pack and is the fair minimum wage $44 per hour. I seriously doubt it. Something is wrong; our wages are not fitting the tax structure in place. I get the feeling that a pack of smokes hasn’t really gone up in costs, but the consumer hasn’t caught on to the inflation aspect of it yet.

I wonder what free health care will do to the price of cigarettes? If the cigarettes don't kill you the taxes will.


Ares Vista said...

It's pretty sad that cigarettes are the currency we use as an example. Also, you say if the cigarettes don't kill you...Guess what? The cigarettes WILL KILL YOU. Physically and financially. Prioritize, people.

Anonymous said...

California has something like 5,000
retired employees who make $100,000. PER YEAR, on top of lifetime medical benefits for free.
SOMEBODY (i.e. YOU) has to pay for that.
for a list of names-Maybe one is your neighbor.

Jim in San Marcos said...

Hi Ares

Tobacco is probably one of the most addictive products known to man. People start when they are young.

I smoked for 20 years. I quit when cigarettes were 50¢ a pack. Every smoker wants to quit, most won't be able to.

My gripe is the taxing of the addicted who pay the government extra taxes. At the same time they die earlier and collect less Social Security.

The government can't afford to ban tobacco. The tax money is already spent, and the last thing they need is more healthy retirees living longer.

The tobacco example illustrates how government works both sides of the fence. Health is not the issue, maximizing tax collections is. At the same time government doesn't give a damn about inflation. The more you earn, the more you pay in taxes. It only hurts the individual's saving for retirement.

Sackerson said...

Agreed - if "health taxes" worked they'd be scrapped.

Rob inNS said...

Agreed Sack Look no further than Canada............

Jim in San Marcos said...

Hi Anon 7:38

I don't really have a grip with the people collecting. I have one with the people who made such generous contracts. A lot of them won't be able to honor their contracts to the retirees.

An airline pilot emailed me a while back. He bought a nice home for retirement and when his company went broke, his retirement check was cut in half and he lost the house as a result.

It's been my contention that over half of all retirement plans are insolvent, and the only reason it isn't obvious, is that people are still contributing to them and the baby boomers still have a year or two before they start stressing these institutions' bottom line. Just ask Bernie Madoff.

Why put your money in an IRA? Pay the tax and spend half and save the other half. You'll have more than you got doing it the government way. Plus your losses are tax deductible.

California only has about 20 days before it runs out of cash to pay the bills. The retirement funds can't be far behind. They hold a lot of state bonds. The fun is about to start.

Tyrone said...

California only has about 20 days before it runs out of cash to pay the bills. The retirement funds can't be far behind. They hold a lot of state bonds. The fun is about to start.

Yes, indeed, Jim. My popcorn is ready for this wreck to begin.

Jim in San Marcos said...

Hi Tyrone

I'm going to melt some butter. Lots of it. It makes the popcorn even yummier.

Watch out for the "Old maids," they will ruin your teeth, just like what the government does to your wallet, go figure!

Anonymous said...

The apalling thing about the sin taxes is that they are use to justify new spending sprees that will persist even when the gov't succeeds in killing off the sin tax cash cow through excess taxation. And it's just plain wrong to pick a "victim of the day" for punitive taxes. No one should be allowed to vote for a tax they don't pay.

Anonymous said...

im not shore exactly wats going on with the government but ask someone that's in there 40s or over that has ben paying attention to these things and they'll tell you somethings rong and i my self have a sneaky filling that something big is about to happen. i herd from a reliable source that several and i mean several new detainment camps are being put up to hold people in because of the large rioting thats going to happen. i cant say anything for shore but it's time to start paying attention the free ride is over for my generation no more saying who cares or i know but there's nothing i can do. we must do something or it will be to late if it's not already. there's obviously something going on behind the seen and it doesn't look i love obama and i pray he's being honest.