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Special Report
Tax Freedom Day – Not
Nominally it falls tomorrow. But to cover just this year’s federal spending, taxpayers would have to turn all their earnings over through May 23.
Americans finally finish working for the federal government on April 12 this year. That’s three days later than last year, but still a couple weeks earlier than Tax Freedom Day in 2006 and 2007, April 24. The record in both peace and war was May 1 in 2000. Had Al Gore defeated George W. Bush in that year, TFD probably would have continued rising, as it had since Bill Clinton’s election in 1992.
Unfortunately, April 12 still isn’t much to be happy about. TFD rose to April 12 in 1962, but quickly fell back. In 1967 TFD again hit April 12, eventually oscillating between April 16 and 24. TFD fell to April 19 in 1992 before beginning another sharp rise. As a percentage of income taxes hit 30 percent in 1969 and hovered around the level for years. The tax burden did not fall below 29.1 percent until 2003. This year that percentage will be 27.7, a welcome but only marginal improvement.
Total taxes this year will cost Americans more than what they’ll spend on food, shelter, and clothing combined. Not all of these purchases will prove worthwhile for all people, obviously. But compare their value to what the government does with their money.
Taxpayers are bailing out virtually every interest known to man — plus a few not previously recognized. Banks get money. Auto companies get aid. Labor unions get benefits. Homeowners get help. Insurance companies get cash. Investment funds get guarantees. Property sellers get subsidies. Taxpayers get the bill.
But all this pales in comparison with the cost of last year’s health care legislation. Everyone knows that the administration and Congress, like the famed Isuzu salesman, were lying. Taxpayers soon will be paying off insurance companies, doctors, and pharmaceutical companies — just coincidentally all among the bill’s most avid supporters — as well as people forced to buy high-priced health insurance.
Americans also get the pleasure of subsidizing a gaggle of rich allies around the world, such as the Europeans, who are too busy supporting welfare states to maintain effective militaries. South Korea and Japan also are on the U.S. military dole, leaving the heavy lifting to Americans. Even corrupt Third World politicians, like Hamid Karzai, are on Washington’s military payroll. America’s ungrateful dependents now include the Libyan rebels, who blame the U.S. for the failure of their untrained, uncoordinated, and divided forces.
Taxpayers pay for domestic “welfare” too, which has done so much to destroy families and communities. Welfare reform in 1996 reduced the damage, but the so-called “stimulus” bill reversed course. The latter also wasted money without promoting long-term growth. In fact, the Congressional Budget Office figured that this legislation, after providing a short-term boost, will permanently reduce economic activity starting around 2015. Which means working families will earn less while paying higher federal interest payments on the borrowed funds.
There’s so much more. A crowd favorite is pork barrel projects, used by big spending politicians to generate political support. Yes, I’m a thief, the lawmaker admits, and I stole from you, but I’ll share a bit of the ill-gotten loot. Vote for me! Such is the appeal of democracy.
No wonder two-thirds of Americans believe they are overtaxed. Eight of ten mainstream voters believe that they pay too much. But not the political class. According to Rasmussen Reports, 87 percent of America’s governing elite, who decide how to spend everyone else’s earnings, disagree. They see a penny not taxed as a penny not spent, defeating their role in life.
More significantly, TFD doesn’t mean much anymore. Taxes provided a relatively accurate measure of the burden of government when the budget was balanced — most recently in 2001. (Guess which president was most responsible for that budget: It wasn’t a Republican.) When you finished paying taxes, you were actually done paying for government.
No longer.
The federal budget this year will run about $3.8 trillion, give or take a few dozen billion dollars, which hardly counts anymore. Borrowing will account for between $1.5 trillion and $1.65 trillion, depending on who is doing the estimating. That is roughly 40 percent of total federal outlays. Unless Uncle Sam defaults on his obligations — a tempting thought, since it would cut taxpayers’ present obligations while making future borrowing much more difficult — that money will eventually have to be paid.
Although the borrowing binge is occurring during Barack Obama’s presidency, the Republicans also are responsible. George Bush and the GOP Congress turned a surplus into a big deficit.
They increased federal spending across-the-board. They created the Medicare drug benefit, with an unfunded liability of around $15 trillion. The president launched and Congress funded two unnecessary nation-building expeditions in distant Third World lands. And President Bush was the driving force behind TARP and assorted other bail-outs. Indeed, his officials admitted that they had no “metric” for the $700 billion TARP proposal; they just wanted a “big number.” And they got it.
In short, the GOP created a solid foundation for President Obama’s Big Government empire.
About the Author
Doug Bandow is a senior fellow at the Cato Institute. A former Special Assistant to President Ronald Reagan, he is the author and editor of several books, including The Politics of Plunder: Misgovernment in Washington (Transaction).
Letter to the Editor View all comments (14) | Leave a comment
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Intelligent Design| 4.11.11 @ 7:10AM
Actually, to pay for all of Congress's reckless and subversive spending, the average taxpayer would have to borrow the money, since his share of the national debt is currently more than $125,000. From January 2007, when Democrats gained control of Congress, until January 2011, the national debt increased from about $8.6 trillion to $14.1 trillion, or about 64%. This is undermining our free economy. The recent announcement of $39 billion in spending cuts represents about 0.28% of the national debt, and about 1% of annual federal spending. It's as if a guy who is $15,000 in debt announced that he is cutting his spending by $42 a year.
Obama, showing is ignorance of economics, is about to announce that the solution is higher taxes. He and his fellow Demo-Socialists still don't get it: that higher taxes lead to lower tax revenues and slower economic growth. Repeat: they still don't get it. They have learned absolutely nothing from the collapse of the Union of Soviet Socialist Republics.
Rev Trask| 4.11.11 @ 7:54AM
Hey, did you feel that way when GWB obliterated the surplus that Clinton handed him in 2001? Or when VP Dick Cheney said: "Deficits don`matter--Ronald Reagan proved that" in 2002?
The Duke| 4.11.11 @ 8:15AM
Gotta love the CEO-like arrogance of Romney. While he struts regally, Michele Bachmann has quietly laid the ground work for a quick win in Iowa. That could happen if Palin and Huckabee sit out, which now appears likely, and give her enough of a lift to get the GOP nomination. I will die laughing if Mittens is stuck with the "silver" medal again, while Bachmann gets the nod.
Spoonman| 4.11.11 @ 8:53AM
ID, great points! And then focus on this, even if the Ryan budget were enacted, it increases the deficit by about $6 TRILLION over the next decade. If interets rates spike, which they surely must given the need to control accelerating inflation, the annual interest on the federal debt climbs higher . Then ask how do we begin to pay down the federal debt? I am not sure of the answer but this problem is not going to go away easily. We need tough mined elected officials who will return the focus of government to its very basic and constitutionaly mandated role!
Occam's Tool| 4.11.11 @ 1:19PM
Michelle's my Belle.
Occam's Tool| 4.11.11 @ 3:48PM
Doctors did not support Obama by a majority. The AMA may have, but it represents a minority of MDs (and growing smaller each year).
Gordon W.| 4.11.11 @ 4:58PM
This article is absolutely hilarious. The first few paragraphs present a premise which is later retracted. It editorializes statements from the Tax freedom foundation to the point where they no longer resemble the actual report. Here is the original article: http://www.taxfoundation.org/taxfreedomday/
A little note about the author. He resigned from the cato institute for writing articles in favor of Jack Abramoff's clients. Basically he made money on the side by making stuff up in support of who ever handed him money.
A note to The Duke on the Iowa primary: To win in Iowa republicans have to march so far to the right alienating almost the entire base of the party. The rest of their campaign is essentially trying to rationalize what they said during those few moments. If I were Romney, I wouldn't follow Michelle any where.
To Intelligent Design: Obama's plan is straight Keynesian economic. The thought was that the economy was starting to shrivel up and banks would no longer lend, just like in 30's. In reaction he injected cash in to the system, just like the 30's. To say Obama knows nothing about economics might be true, but his actions are straight out of the Keynesian play book.
Instead of attacking what he has done, a better set of questions to ask would be: Is whether Keynesian economics accurately describes our economy, whether the size of such infusion was proper (bigger or smaller) and whether the lending institutions should have been prodded to lend the money this time around (they clearly didn't and has been the main reason of the delayed growth)
axbucxdu| 4.17.11 @ 3:33PM
We got into this mess because of Keynesian ideas. The government responded by increasing the dosage to the crack addict. Yeah, that should do it. The Austrians get such a giggle from Keynesian "logic" such as it is.
That banks clearly didn't lend the injected reserves is sufficient cause to reject Keynes once and for all, but it seems the progs on both the left and right never tire of wishful thinking.
Well Gordo, you can finish the thought experiment yourself.
Leveut| 4.11.11 @ 9:42PM
"Maybe taxpayers will face the ultimate simplified tax form of just two lines: "1) How much did you earn? 2) Send it in.""
That would be Form 1040-BS, first proposed during the Clinton Administration.
Fed Up| 4.11.11 @ 11:40PM
Any idiot could walk into a US government agency or sub-agency (anything with at least 750 government employees) and cut 15-20% of what that agency is doing (the annual operating budget) AND staff.
There would be no adverse impact to the nation. None.
This should be done in every government agency. ALL OF THEM.
This is just a tiny start. But a 'start' that could occur tomorrow.
In fact, it might just rattle the cages enough of the remaining govt. employees that they start taking their stewardship/mission roles a bit more seriously.
Cut agency budgets and staffing rolls. Do it now.
"It is amazing how much government you never miss when it is not there."
Occam's Tool| 4.12.11 @ 1:10AM
Debbie Schlussel notes that we are spending $20 million of our oh so well spent $1.5 billion to create a "Sesame Street" for Pakistan.
What's next, Dora the Exploder? (Thanks to The Shadow)
Joe D.| 4.12.11 @ 12:54PM
Doug Bandow, I think you are being a little too simplitic with blaming Bush and the Republicans for the budget short falls. Although, I agree they share the blame and have been less than helpful with the most recent budget. That being said, the drug program was suppose to be privatised. However, thanks to the democrats it was not and has cost much more. We did not need it I would agree. As for the wars, I think they were right and justified. But we should have held the new governments to a higher standard and been able to leave by now. Also, they should have paid at least half of the costs for our blood, sweat and tears. Finally, the bail outs only happen when we had a more democrats running things and Bush being the moderate I knew he was agree to these stupid proposals by the dems.
So while I agree with you there is blame to go around, the bulk of it still falls at the dems feet.
Dee See| 4.13.11 @ 5:08AM
WHOEVER you are, wherever you are,
whatever your background ---one and all,
MARCH on the New York offices of the Federal
Reserve and the capstone, TAX FREE 'benny
violent' EUGENICS-driven foundations this July 4th.
REALLY-------------------------!!!!!!
Creative Recreation | 8.10.11 @ 10:31PM
is good