Putting in the Screws

Tax Time!

“Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.”   -Frederic Bastiat

There are no atheists in foxholes, and no free-marketers in a financial crisis. Which is unfortunate

In booming times, people are understandably chary of government interference in their lives. However, amidst a perfect storm of financial misery such as we’ve witnessed over the past year, the robust teat of government nourishment becomes irresistible.

The problem is, the idea of government help is an illusion. When we say ‘the government pays’, we project a paternal omnipotence on it as a source of unlimited resources. In truth, all government does is redistribute our own tax money.

Council housing, we all pay. ‘Free education’, we all pay. The NHS, we all pay. Unemployment benefits, we all pay. This is why, when the government moves to heroically ‘rescue’ the financial system at a cost of trillions, we should resist the urge to outstretch our hungry hands, and instead ask: but who will pay for it?

Because the truth is, we will. The IMF reports that the credit crunch has cost governments (i.e. us) $10 trillion. Of the G20 countries, the UK will suffer the largest resulting budget deficits- 99.7% of GDP by 2014. The government (i.e. we) will owe almost as much money as the entire economy generates.

This explains why the tax authorities are beginning to put in the screws– they need cash from us to settle the bailout bills. They’re also considering cracking down on private landlords who take in lodgers for a bit of spare cash. The squeeze has just begun. Pay we will.