Don't forget impact of taxes on savings
Feb. 2, 2006 12:00 AM
Your Tuesday front-page story "Why Americans are saving less," listed a number of reasons why Americans are saving so much less than they did before the New Deal. But for some inexplicable reason, it made no mention of the growth in taxes, government and entitlements.
Including the cost of regulations, the per-person cost of government is now more than $18,000 per year. Federal spending alone is 26 percent of national income, or eight times as much as it was before the New Deal. Back then, Americans worked 1.2 months to pay their taxes, vs. 5.2 months today. In 1929, federal debt per person was nearly zero, vs. more than $26,000 today.
Then, there is the psychological effect of Social Security, Medicare and hundreds of welfare programs.
Americans have been misled to believe that the government will come to their rescue if they retire without a nest egg.
By contrast, the savings rate in China is 30 percent because the Chinese know they can't depend on the government to provide for them in old age.
Craig J. Cantoni Scottsdale, Arizona