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The Tax and Spend Spectator
Marching Toward Taxmageddon
Tax Freedom Day is today — next year it could come a month later.
Americans effectively stop paying for government on Tax Freedom Day. Directly, that is. Regulation acts as a huge de facto tax. And many other liberties have been lost to government over the years.
However, taxes are the easiest way to measure the price of government. This year Tax Freedom Day falls on April 17. That is four days later than last year, primarily “due to higher federal income and corporate tax collections,” explains the Tax Foundation. As a result, “Americans will work 107 days into the year from January 1 to April 17, to earn enough money to pay this year’s combined 29.2 percent federal, state, and local tax bill.”
The payroll tax cut — approved for this year only in January — has helped hold back TFD. Otherwise we would be working another three days for government.
Tax collections represent a sizable amount by any measure. The total is even more in comparison with other expenditures. Americans devote less time working to buy what almost everyone considers to be necessities — clothing, food, and housing — than to pay taxes. And the value that we get for the former is far greater than most of what we get from the decisions of irresponsible and spendthrift public officials.
A bit more than a month, 32 days, goes for the income tax. Federal “social insurance” levies — that is, Social Security and Medicare taxes — account for 23 days. State and local sales and excise taxes consume 12 days. So do state and local property taxes. The federal corporate income tax fills nine days. State and local income taxes come in at eight days. Other state and local exactions consume four days. Other federal taxes hit three days. Federal sales and excise levies run two days. State and local corporate taxes consume a day. It’s an imposing list.
It is hard for most Americans to imagine, but government in America once was small. In 1900 TFD fell on January 22. Americans paid just 5.9 percent of their incomes to government at all levels.
Economic and international interventions did much to change that, as Robert Higgs documented in Crisis and Leviathan. In 1917 the U.S. foolishly entered World War I and TFD was January 24. The following year it was February 8. Government continued to grow. TFD rolled into March during the Great Depression as Washington spent wildly but unsuccessfully in an attempt to boost the economy. In 1943, with the world in flames, TFD first broke into April. It dropped back into March in 1950 before rising inexorably as the Cold War heated up.
The Depression and World War II most dramatically expanded the national government, pushing federal spending beyond that of states and localities. In 1932 Americans worked 46 days to pay their state and local taxes, but only ten days to satisfy Uncle Sam. On the eve of entering World War II in 1940 Americans labored 33 days for each. From then on the national government has taxed more.
Alas, observes the Tax Foundation, after World War II: “The federal tax burden never returned to pre-war levels. The 1950s and 1960s also saw a rise in state-local tax burdens and a boost in economic growth following the 1964 Kennedy/Johnson tax cut. Vietnam War-era tax increases and the ‘stagflation’ of the 1970s pushed personal incomes into higher tax brackets, and by 1981, Tax Freedom Day arrived on April 24.”
Although President Ronald Reagan cut taxes, economic growth increased revenues. When he left office in 1989 TFD was April 22. Notes the Tax Foundation, “That year, federal income tax revenues as a share of the economy were higher than they had been in nearly all years prior, and higher than all but one year (1952) of the 1940s, 1950s, and early 1960s, when the top rate exceeded 90 percent.”
Although TFD receded further this year, it still doesn’t look too bad compared to recent peaks. The record was May 1 in 2000, before the Bush tax cuts. Despite everything that has happened in the last few years, TFD this year is just a day later than in 2003, after the Bush tax cuts took effect.
But this could change next year. The Heritage Foundation’s Curtis S. Dubay warns of the risk that “an enormous, unprecedented tax increase will fall on American taxpayers starting on January 1, 2013.” The Bush tax cuts, which helped roll back the steadily escalating burden during the Clinton years, expire at the end of the year. So does the latest extension of the payroll tax cut and the alternative minimum tax “patch.” Include some Obama administration tax hikes and Americans face a “Taxmageddon” of nearly $500 billion.
Dubay urges the president and Congress to “start working together now to prevent this massive tax increase rather than waiting until the end of the year.” The reason for acting sooner rather than later is obvious — reduce the opportunity for political gamesmanship and “assure families, businesses, and investors that their taxes will not rise sharply as the economy is still staggering to its feet.”
Tax hikes of this magnitude obviously would dramatically push back TFD (and damage economic growth prospects). But the real TFD would be effectively unchanged.
UNCLE SAM NO LONGER pays for many of his programs. One reason that TFD came so late in 2000 is that the federal government was running a surplus. That’s almost unimaginable today, when the Congressional Budget Office projects never-ending red ink. Even the CBO’s most unrealistically optimistic estimate suggests that the deficit will only dip to about $200 billion in 2018 before starting back up without limit.
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 (20) | Leave a comment
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Appleby| 4.17.12 @ 7:48AM
I think Tax Freedom Day in Canada comes some time in late June or early July. Fortunately we have been given a gift by our Conservative(?) government in that the duty-free limit has been raised on our purchases from the States. There is a good reason why 80% of the population of Canada lives within 2 hours drive of the USA. Socialism is an expensive business; it takes a lot of other peoples' money to give "free" goodies to would-be voters.
The seven last words of Canada: "I will buy it in the States."
Alan Brooks| 4.17.12 @ 7:49PM
So America possibly electing the ex-governor of Taxachusetts will change... what? an engraving of Joseph Smith will be hung in the White House?
numbatdog| 4.17.12 @ 8:32AM
I think a good start to fiscal sanity would be the senate proposing and passing a realistic budget. The fact that they haven't done so for many years is a crime against the American people and a complete failure of the system of governance.
The fact that the American people simply accept this disastrous failure shows the muddy mindset of a nation in decline.
It is the modern day equivalent of fiddling while Rome burns.
Indy| 4.17.12 @ 9:10AM
Notice how a polling question has not been asked on that very topic (at least I'm not aware of one). We hear how unpopular Congress is, we hear how the "Tea Party" i.e. GOP Freshman are obstructionists because the media drives the Left's agenda, but never a question about the Reid led Senate not passing a budget in almost 1100 days when it only takes 51 votes....the media? zzzzzzzzz
Indy| 4.17.12 @ 9:12AM
Will increased tax rates balance the budget? Here's a good source for videos on many topics including taxes.
http://www.learnliberty.org/
Louis Jenkins| 4.17.12 @ 9:30AM
"Unless Americans take charge of federal finances, far worse is in store." It ain't because we're not trying. There is a huge disconnect between what the people desire, at least some of us, and what the District of Crimminals are doing. TFD is a nebulous bench mark that is far beyond what we control. And yes, the Republicans have a hand in it too. The Tax Revolt, assisted by the Tea Party, has remained somewhat low keyed at this time. And Obama's constituients need more and more, the working class needs less and less of what Obama wants to give away, so much so that he is borrowing to fund this clat trap. It cannot continue, and yes, Mr. Bandow, one day the TFD will never come. Sooner than we realize. It's only one election away.
Von Mises Jr| 4.17.12 @ 9:55AM
Perhaps a good way to understand socialism is that if government takes four months of your pay from your wife and you, then the two of you support one lazy slug that does not work, or has a cushy government job.
Most of government spending is redistribution of wealth. It is to pay Social Security, Medicare, Medicaid, Unemployment Benefits, SS Disability (that is rising dramatically), government employees and pensions, and interest on the debt they caused.
So Obama's plan is that instead of a working couple supporting one slug, you and your wife should support two, maybe four.
The other variable not discussed is inflation. With less being produced, and QE ad infinitum, the eight months pay you keep buys about 10% less per year and rising.
But Doug Bandow is not far from correct in that eventually you will work twelve (12) months for the government. You will live in their 700 sq/ft apartment in a "smart growth" zone and work at a government planned factory. You get pink slime, veggie burgers and a small allowance for your trouble.
Al Adab| 4.17.12 @ 12:25PM
The progressive income tax penalizes the very success of the individual which we used to believe was in the national interest. Lincoln said, "That some become rich means that others may become rich." Is that not the policy which government should follow? Why do we continue to disincentivize the very economic expansion the nation so desperately needs? Not only is such a tax system counter-productive, but in some way it violates the equal protection clause of the 14th by treating some persons property, their income, differently than another persons based solely on volume. The conversation keeps going about fairness, but what could possibly be fair about penalizing the very success we hope for one another?
Von Mises Jr| 4.17.12 @ 12:49PM
You must create a target to chastise and demonize in order to steal from them. They must be portrayed as having gotten the wealth illegitimately for the socialist to steal it; otherwise people might assume they are next or that the thieves are the evil ones. Which of course they are.
Al Adab| 4.17.12 @ 2:31PM
Jr:
In other words, once we tax the rich into oblivion then the middle class stands on top and becomes the rich. A spiral downwards until no one has anything and everyone is dependant on government for their livlihood. How sick a world view is that? Yet, it seems to be the policy of economic equality The Left is pursuing.
Von Mises Jr| 4.17.12 @ 3:30PM
It is the same as the Ancien Regime in France. The feckless, leaches that are unproductive wish to take the money from the productive bourgeoisie who earned it legitimately. Serfdom ending ruined their monopoly on power and wealth, so they have their intellectuals try to take out the capitalist.
Al Adab| 4.17.12 @ 5:41PM
Followed by the guillotine and Bonaparte. Great future n'cest pas?
WillianInWien| 4.17.12 @ 6:37PM
And those two-four lazy slugs will be "encouraged" to vote for BHO otherwise the "other guys" will cut the handouts. We are sinking, slowly, but sinking!
David W| 4.17.12 @ 10:06AM
Maybe someone can ask Obama when he wants Americans to be able to spend their own money? or does he want those who work for a living (which he apparently doesn't) to spend all year working for the government?
Melvin| 4.17.12 @ 10:22AM
I am surprised that this topic has as few comments as it has at this time of day.
Well, yesterday I had to write another check. My wife got on my case because I wrote on the line for what the check was for, "More money for you guys to waste aka GSA."
Then again on our 1040A as a profession I penned, "Economic Slave." In being that she has to sign below my name, economic slave somehow unnerves her, in thinking that the Secret Service would show up at our front door.
I told her to reassure her fears. "Not to worry dear the Secret Service is too busy chasing hookers down in South America. Then she gave me the, "You have lost your mind look."
I like millions of my fellow Americans had to write check for additional funding to feed the voracious gaping maw of the Federal government.
I was going over in my head what that $616.00 additional money I sent the government could have been spent on, by me and my wife. We could have put it into savings for utility increases such as electricity, water and sewer. Cover increases to our property taxes, vehicle taxes, personal property taxes, and vehicle, and house insurance premium increases.
Oh, and I forgot to cover addition gasoline increases for the gas to go to work.
Am I bitter? Absolutely. If I was present at the hearings in Washington D.C. when the GSA bureaucrat pleaded the fifth. I probably would have jumped over the barricade grabbed him by the nape of his neck, rammed my fist down his mouth and stuffed every last $616.00 in one dollar bills down his throat, one dollar at a time.
I'm bitter to say the least.
It is not that I am against paying income taxes, but when I entered our interest income of a measly $87.00 my tax went up $8.00. I know it is only $8 but it is the point of the matter.
Me an momma don't have legions upon legions of tax lawyers figuring out how we cheese on paying income taxes.
Please excuse me, in the sense of what I am writing is also applicable to millions of other Americans who are just trying to make it.
People, we're getting jacked from every angle. If it isn't the Federal government, it is the states. If it isn't the state it is the country and the city. Then this is followed by the electric, water and sewer. Insurance companies vehicle, house, and personal property constantly look to stick us higher premiums. I live in North Carolina and the insurance companies came up with this new way to jack us on premiums. The home owner policy doesn't cover wind, that policy is extra. For Christs sakes I live in North Carolina, with hurricanes and the policy doesn't cover wind.
We can't even die without the bastards digging in our bag of bones.
Maybe we aught to do what the Romans did. Every government bureaucrat like the GSA that wastes, or steals tax payer money. They should be crucified and their miserable carcasses should be placed on the Washington Mall with a sign below, "This is what happens to federal employees that waste $820 thousand of tax payer dollars.
buckeyeman| 4.17.12 @ 11:55AM
"Tax Free Day" is another meaningless diversion. When is TFD for those who don't pay taxes? What is the impact of massive deficit spending? What would TFD be if we actually paid for the immoral spending? What is TFD for those of us in high tax brackets? We work and plan and pay attention and risk our capital so some idiot can tell us TFD is April 17? Just stop it.
Patriot2012 | 4.17.12 @ 3:34PM
The above article provides a plethora of words but does not clarify exactly who is ‘one required’ as stipulated in the in(fer)nal revenue regulations or the Internal Revenue Code, hereinafter noted as the IRC.
The undersigned has done both an intensive and extensive research into the so-called tax laws and since the Constitution of the united States of America only states that the federal government can tax to pay the debt – See Article 1, § 8 - and does NOT mention any form of entity then it certainly ‘stands to reason’ that only those entities that are under the JURISDICTION of that federal government can have their income taxed. The Congressional Record from 1909, when the Corporation Tax Act (CTA) was enacted, to 1913, when the Sixteenth Amendment was, allegedly, enacted, always stated that the income tax was to be the extension of the CTA to individuals and copartnerships that were “doing business. The Congress published a House Report, HR 416, that was/is four (4) pages in length and stipulated the phrase “doing business” twelve (12) times. The Congress prepared a House Bill, HR 21214, that was twelve (12) pages in length and stipulated the phrase “doing business” fifty-two (52) times. (The bill, HR21214 was never enacted since it was superceded by the Sixteenth Amendment)
The Congressional Record during that period from 1909 to 1913 always used the phrases, “doing business”, the act of “doing business” or the carrying on of “doing business” a plethora of times in each and every recording in the Congressional Record.
Therefore, it certainly ‘stands to reason’ that the Congress intended, as it could ONLY intend, to tax those entities other than corporations that were “doing business”.
The Eisner court, Eisner v. Macomber, 252 U.S. 189, 1920, clearly stated that the income tax was to be derived FROM labor, FROM capital or FROM both combined, PROVIDED that it was realized from PROFIT. Therefore, it further ‘stands to reason’ that unless a profit is derived, realized, accrued or gained from an entity that is “doing business”, there can be no assessment of an income tax.
The in(fer)nal revenue regulations and the IRC have also clearly stipulated that in order for an income to be liable for an income tax it MUST be effectively-connected to a taxable event; ergo, “doing business”.
The last and most important requirement for an income to be assessed as taxable under the income tax laws is that the entity that derives, acquires, realizes or accrues said income must be an entity that IS under the JURISDICTION of the federal government.
Therefore, in summation, since the federal government has NEVER been granted any authority to exercise any control over a lawful man/woman that is a sovereign in one of the fifty (50) states of the union of States of the united states of America, and any and all contracts, adhesion or otherwise, that the federal government or any of the agencies of the federal government falsely deem to be applicable to a lawful state sovereign who has NEVER knowingly, willingly or intentionally waived or acquiesced any of his or her inalienable Rights that are antecedent to all forms of government, cannot be enforced by those aforementioned agencies due to misrepresentation or misinterpretation by those aforementioned agencies of the supreme law of the land, the Constitution of the united States of America.
Finally, in conclusion, the federal government, sans any form of JURISDICTION over the lawful state sovereign, has only the authority to tax any and all entities that have contracted with the federal government or any of its agencies, corporate or otherwise. If, in fact, any branch of the federal government or any of its agencies, corporate or otherwise, has falsely and fraudulently, through the misinterpretation and misrepresentation of any aspect of alleged government authority, that government or agency, corporate or otherwise, has initiated a libel that can, and should, be enforced!
"No legislative act ... contrary to the Constitution, can be valid." --Alexander Hamilton in Federalist No. 78 (1787)
Patriot2012 | 4.17.12 @ 3:37PM
After realizing what I have stated above, I quit submitting tax forms that do not apply to me in 1979, and only after two meetings with the irs they have not bothered me since. All that I asked them was to show me where, in Title 26, Sections 21 and 24, the only sections that pertain to an entity, where I was shown to be 'one required'!
They could not do it and wished me a good day!
POST AMERICAN| 4.19.12 @ 1:59PM
----In this, the 11th hour of the CFR--RED China
handover, occupation and FINAL EUGENICS
OP ---must say, this breakdown is even stale
by '80's Show' standards.
The criminally ANTI-Constitutional
'Federal' Reserve and its immediate spawn
--the debt serf instruments of unaccountable,
psychopathic USURY and income tax,
remain the KEY to the CORE of destruction.
"--Most people just don't want it
to get any worse than it is today.
----Like ten years ago. Look what ten
years have wrought with your inactiion.
--Are you going to live with this forever?
--as things get worse and worse ---FOREVER?"
-Informed radio online
(yesterday)
WELL, ARE YOU?
---------------HUAC/ Nuremberg 2012---------------
"let's ALL DIE ---or LET'S DO IT!"
-Thomas Carlysle
dieuhoaviethung | 4.23.12 @ 12:07PM
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