By George Noga
The True Story of Steve and Sandy
Short Take Collection: How Much Some Items Really are Taxed
When my parents moved to Orlando in 1957 they paid $10,900 for a new median-priced home. Their monthly payment including principal, interest, taxes and insurance was under $100. The house cost 1.5 years of my father’s income and the annual cost of ownership consumed less than 15% of income. We lived quite well without my mother ever working a single day in her married life.
I graduated from high school in 1961 and went on to college. Most high school chums remained in Orlando, began work at entry-level positions, married, had children and bought homes. The wives stayed home as a second income was not necessary to own a home or to raise children.
I kept in touch with many erstwhile high school classmates and often visited them in their homes. Following is the story of two such people, Steve and Sandy.
The True Story of Steve and Sandy
Steve and Sandy (real names) were high school sweethearts who married following graduation. Steve was hired in the paint shop of the Martin Company. His starting wage of $2.00/hour eventually increased to $2.25; assuming a little overtime, their family income was $5,000 per year.
Less than a year after their marriage, they bought a new home; soon thereafter they had a daughter. Sandy did not work and stayed home to care for the baby.
I visited Steve and Sandy frequently during the summers. They bought and furnished a new median-level home in Orlando. They were able to accumulate the down payment and to furnish the home in less than one year with both working.
Once Sandy became pregnant, she quit work as they were able to afford the cost of home ownership solely on Steve’s income of $2.25 per hour. Their home cost two years of Steve’s income and their all-inclusive (PITI) monthly house payment was less than $100. They comfortably managed the costs of home and baby and never contemplated Sandy going back to work as it simply wasn’t necessary.
Let’s fast forward 50 years from 1962 to 2012 and to Steve and Sandy’s grandchild, Steve III. After high school Steve III would earn at best $12/hour, or $24,000 per year. The median home would cost 10 times his income and accumulating even a 10% down payment would be daunting and require many years of saving.
Even at today’s low interest rates, the monthly nut would be $1,500, or $18,000 annually – nearly equal to Steve III’s take home pay. What possibly could account for such a dramatic change in the space of only two generations? The answer in one word: government.
The American dream is comatose, if not dead, thanks entirely to government that sucks the blood out of its citizens, i.e. the vampire state. For the first time ever, Americans believe the next generation will be worse off. In 1962 single-income families like Steve and Sandy were the norm; it was rare indeed for a married woman, especially one with children, to work outside the home.
Within one generation (specifically by 1985) two-income families first became a majority. Now Steve and Sandy’s son, Steve Jr., was 50% likely to have his wife in the work force.
Today, during the generation of Steve III, wives and mothers must work to keep the family afloat. How and why did these changes happen? Why is it necessary today for a family to have two wage earners merely to live as well as their grandparents once lived with only one wage-earner?
“Working spouses is a Faustian bargain; the second income pays only for more government. Families have doubled the number of workers and received only fool’s gold in return.”
The causes are many but all have a nexus to government. Fiat money and the abolition of the gold standard debased the dollar and devalued thrift and savings. Payroll and income taxes mushroomed and applied to more income. Property taxes are up exponentially. Regulation chokes growth and hidden taxes proliferate (see short takes below). Housing costs skyrocketed due to government growth management diktats such as concurrency, greenbelts, zoning, bureaucracy, regulatory delay, infill and anti leap-frogging to name only some of the culprits. The vampire state sucked out ever increasing amounts of blood.
We were hoodwinked and seduced for a time as ersatz prosperity seemed to follow the transition to two-income households. Yes, at first we could have an extra TV and a few accoutrements. By the time people noticed the degradation in their quality of life from two wage earners, it was too late for a volte-face.
Having every spouse working is a Faustian bargain; the second salary pays only for more blood for the vampire. Families doubled the number of workers and received only fool’s gold in return. Are Steve and Sandy’s grandchildren really better off today and what of their children?
Short Takes – What are the Real Taxes and Much, Much More
1. Per Americans for Tax Reform, following are taxes on some popular items when including taxes for sales, excise, corporate income, payroll, property, capital gains, unemployment and worker’s comp: cable TV 46%, airfare 55%, cell phones 46%, car rentals 61%, booze 80%, soda 38% and gas 51%. Still think you are under taxed?
2. The last year the federal budget was cut, i.e. was less than the year before, was in 1954.
3. Atlas Shrugged is out on DVD. If you missed it in theatres, it is a must see. What Rand wrote over 50 years ago is happening today; you will be shocked at how utterly prescient it is.
4. The firearm death rate in Iraq is 60 per 100,000; in Washington, D.C. it is 81. You are safer in Iraq than in Washington which has the strictest gun control laws in the USA.
5. Per a leading think tank: The single most important contribution to a nation’s economic growth is the number of start-ups that grow to $1 billion in revenue within 20 years. Government is doing all it can to kill these golden geese and to demagogue entrepreneurs who create them.
6. On the Long Island RR, 90% of workers (including clerks) retire with disability. This costs NY taxpayers $300 million. Remind me again why public unions should not be banned.
7. What do the following have in common: Yassar Arafat, UN Panel on Climate Change, Mohamed El Barredi and Barack Obama? Answer: They all won the Nobel Peace Prize.
8. Another 5,000 emails from climate scientists were leaked. In what they believed to be private emails, they betrayed serious personal doubts about man-made global warming.
Ultimate Irony: Many people repose their faith in government which causes wars, is an absolute monopoly, imprisons and starves innocent citizens, takes the fruits of their labor and is the vampire state described supra. These very same people view business as the enemy – the same businesses that survive only through peaceful and voluntary exchange, eradicate diseases, alleviate hunger, produce all the products we enjoy and pay our wages.
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