The nationwide average for paying off your total tax bill comes April 23. (and in NY which is among the 3 worst states in the Country, you are still economically enslaved until May 11th!)
So how about some serious tax reform?
Michael Swartz · Apr. 21, 2017
For many years the Tax Foundation has performed a fairly complex set of calculations to find a simple and sobering result: the calendar date that American taxpayers finally pay off their total annual toll to the government — that is, their individual local, state and federal tax bills as an aggregate. The lone spot of good news is that we’re close. On average, Americans will pay off that onerous debt on Sunday, April 23 — one day earlier than last year. Still, it’s hardly cause for celebration.
The results are even more telling when the data are distilled to a state level. Taxpayers fortunate enough to live in Mississippi were freed from their overall tax burden back on April 5 — a full 47 days sooner than those who live in the lowest-ranked state, Connecticut. Those of us in our humble shop in Tennessee could celebrate back on April 7, as we have the nation’s second-lightest burden. And if you happen to be reading this in Utah today, allow us to wish you a happy Tax Freedom Day.
All of this is a relatively light-hearted way of comparing the burdens we all pay. Given the government spends an average of $31,154 per household, it’s more sobering to realize just where that money will go. By far the largest individual portion ($12,141) goes to the combination of Social Security and Medicare. The second-largest amount goes to programs lumped together under the “anti-poverty” banner ($6,143), with defense coming in third ($4,696). Per-household defense spending, however, barely outstrips the $4,393 deficit added to the national debt on each household’s behalf.
Over the last three decades, the Tax Freedom date has fluctuated with the general mood of the government in power at the time. Tax cuts under Ronald Reagan and George W. Bush have moved the date forward on the calendar, with George H.W. Bush, Bill Clinton and Barack Obama increasing rates, thus lengthening the time needed to get to Tax Freedom Day.
Like some of his GOP predecessors, revising and simplifying the individual tax code was a point on Donald Trump’s agenda as well, but his main thrust was a desire to cut the highest corporate tax rate in the industrialized world. It’s a point that scores well with four supply-side economics gurus. Writing in The New York Times, Steve Forbes, Larry Kudlow, Art Laffer and Stephen Moore argue that Trump needs to score a tax victory this summer, and the best place to begin is to cut corporate tax rates and allow for immediate, full deduction of the cost of their capital purchases. Add to that a modest repatriation fee on bringing foreign profits back to the United States, and the quartet believes these changes will help the economy. “The additional increase in real wages could be nearly 10 percent over the next decade, which would reverse 15 years of income stagnation for the working class in America,” they write. “And, if we are right that tax cuts will spur the economy, then the faster economic growth as a result of the bill will bring down the deficit.”
Somewhat more controversial about the approach that Forbes and his colleagues take is the idea that, as a sweetener to attract Democrat votes, a dedicated infrastructure fund should be created from the repatriated foreign profits. Regarded as a “good move politically,” if nothing else, it would kill two of Trump’s birds with one stone: corporate tax reform would be combined with investment in infrastructure.
In the short term, this free-market quartet concedes that tax cuts would enlarge the deficit, which was the case initially under both Reagan and Bush (43) when they reduced tax rates. But that would create a boon to the economy and lead to an increase in federal revenue, thus shrinking the deficit in years to come. This, of course, assumes that adults take charge of the purse strings and refrain from spending the new revenue before it comes in.
To bring this full circle, it’s worth going beyond the Tax Foundation’s report abstract to a chart that tracks Tax Freedom Day over time. A century ago, on the eve of World War I (and just after the passage of the Sixteenth Amendment) Tax Freedom Day occurred in late January. Although there’s been a little bit of relief since 2000, the year Tax Freedom Day fell on May 1 — “May Day” was perhaps appropriate, as this was during the last year of Comrade Clinton’s term of office — the fact that we spend well past a quarter of each year rendering unto Caesar should give everyone pause and make us question how we came to this point.