In the wake of bad government policies, it can be fairly easy to focus on the “big picture” effects of arbitrary regulations, high taxes, reckless spending, and runaway inflation. When the cost of such proposals is billions and even trillions of dollars, the impact on the individual common man can get lost in the noise.
It is critical to recognize the macro-effects of these bad policies, but just how much is being taken from Americans’ wallets and shopping carts?
Perhaps there is nothing more economically significant to working Americans than the cost of the goods they need to purchase for themselves and their families. The rising cost of consumer goods is a direct result of shortsighted government policies with effects that are ultimately felt by Americans at the grocery store, in the hardware store, and on the internet. While the issues are complex and impact a variety of sectors, some basic building blocks contribute to the rising cost of consumer goods that hurts hard-working Americans.
Rising taxes are one of the key elements that cut into the affordability of consumer goods. While income taxes are a direct form of taxation that the government uses as a means to take from Americans’ incomes, other rising taxes ultimately increase the cost of what Americans are able to buy at the grocery store.
One of the key taxes that raises the cost of consumer goods is the increase in corporate tax rates. As President Biden has introduced tax reforms to raise taxes, he has insisted that the tax increases would only affect those who make over $400,000 a year. But the tax reforms also include measures to raise the corporate tax rate from 21 percent to 28 percent.
According to a study conducted by the Cato Institute, increases in the corporate tax rate directly lead to an increase in retail prices as businesses attempt to offset their losses by passing it on to consumers.
As if higher taxes are not enough, runaway government spending ultimately leads to inflation. Inflation causes the value of the dollar to go down and causes the price of consumer goods to go up. Thus, as the dollar has less purchasing power, the buying power of an individual is compromised. In fact, in the wake of unprecedented government spending, inflation has directly contributed to an increase in the consumer price index of more than 5 percent.
Finally, expanded government regulations contribute to an increased cost in the price of consumer goods. As regulations increase, so too does the cost of production for businesses.
In turn, the cost of goods goes up as businesses pass on the cost of these regulatory burdens to consumers. The cost of regulations on consumer goods disproportionately impacts lower-income families. This occurs because many of the consumer goods that have the highest price increases from regulations (such as electricity and health care) make up a higher percentage of lower-income family incomes than other goods that are not burdened as much by excessive regulation.
Rising corporate taxes, inflation, and increased regulation; all of these elements increase the cost of consumer goods for Americans. The nation is already reeling from the effects of a global pandemic, expanded income taxes, and a government in Washington that is all but disconnected from the interests of its people.
While the politicians and bureaucrats of big government pour billions and trillions into the government machine, the citizens who make up this great nation’s very fiber are working to provide for themselves and their families. A return to sound public policies of fiscal responsibility, limited government, and the success of the free market is critical for the cost of consumer goods to not be manipulated by further blunders.