Would you rather pay now or later?
Say you need to upgrade your car but don’t have enough set aside to pay cash. So you must take out a loan. But the lender offers you an intriguing choice: You can start paying immediately or defer the start of payments for five years. Taking the latter choice, however, will cost you more in interest in the long run.
Which way do you choose? You can liken the above scenario to our government. The feds keep borrowing money that ultimately must be paid back. As a story in today’s Gazette explains, back in the George W. Bush administration, the federal government started giving us income tax breaks that have rolled over and continued from year to year. It’s not that our government is awash in money—it borrows most of every dollar it now spends—and it’s spending a vast amount just in the time it’s taking you to read this. Sometime in the future, all this red ink must be paid back.
So are you ready to take a hit starting Jan. 1 that would see income taxes rise by $2,000 annually for the typical middle-income family making between $40,000 and $64,000? That tax bill would be even higher for families making more, of course. Is your household income flush enough to handle it? Would you rather pay the government this amount now or more later as interest costs pile up and we dig a deeper deficit?
To borrow a familiar phrase from the makers of Fram oil filters, “You can pay me now or pay me later.”