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Taxes Will Rise

In light of the recently announced Federal budget—complete with $1.7 trillion deficit—we found David Leonhardt’s article this week interesting.  “Your taxes are going up,” he tells us in no uncertain terms.  And not for the reasons you think.
 

“Like Having Medicare? Then Taxes Must Rise”Your taxes are going up.  They will probably go up in the coming decade, and the increase will be permanent. For a half-century, federal taxes have remained fairly constant relative to the size of the American economy — equal to about 18 percent of gross domestic product. But the 18 percent era has to end soon. It won’t end because President Obama is some radical tax and spender, either. It will end because of a basic economic reality.

 
And what might that economic reality be?   The hard demographic reality of Medicare and other federal programs.
 
Republicans are (rightly) quick to complain of excessive government spending.  But when they fall back on their tried-and-true anti-tax rhetoric, they are simply being unrealistic.  High ranking members of Senator McCain’s presidential campaign staff admitted candidly that taxes would be rising in the years to come regardless of who held the White House.  In our own writings on Baby Boomer pension and health issues, we reached the same conclusion. 
 
At all layers of government, we see a common trend: taxes will rise and services will be reduced.  More on this to come.