Today, April 9, is Tax Freedom Day.
If you add up all the income earned by Americans and divide by the total tax burden—income taxes, sales taxes, property taxes, those annoying taxes on your phone and utility bills—Americans spend everything they earned until today just to pay taxes. That's right. Everything we earned this year in January, February, March and the first 8 days of April is taken by force by federal, state and local governments.
In theory, everything we earn for the rest of the year is ours to keep.
But that is not quite true. There are at least three hidden costs of government not captured in the measure of Tax Freedom Day. Tax eaters, government regulations and spending that exceeds taxation: the deficit or debt.
Tax Freedom Day measures the average American’s percentage of the year’s income that he or she has to fork over in taxes. There are some Americans who pay little or no tax or bureaucrats who actually get paid by our tax dollars. You, taxpaying American, are shouldering their load as well as your own, so you are not off the hook today.
Government regulations that force us to buy tiny cars or toilets that don’t completely flush cost consumers money that does not show up on your tax bill. The government forces us to buy more expensive light bulbs than we might want; more expensive gasoline and regulations add as much as a 25% to the cost of a new House. Government puts mandates on our health insurance that raises the cost of health insurance for all Americans whether they wanted to insure for hair transplants, chiropractors, or drug rehab or not.
Last year Americans worked 42 days to pay for the cost of federal regulations. Federal regulations cost us more than 10 percent of our incomes. Those costs are embedded by law in products and services and the wily politicians hope that we will direct our anger at the companies forced by regulations to include features we as consumers didn’t ask for, couldn’t say no to and might not want at all.
The true total cost of government = government spending + the regulatory burden. And government spending is, in Obamaworld, a much larger number than total taxation. Obama, Reid and Pelosi have spent trillions of dollars that they had the courage to take in tax revenue. The deficit spending in 2009 was $1.4 trillion and in 2010 is scheduled to be $1.5 trillion. The expected deficits for the next ten years (leave out for a moment the higher taxes and spending of government health care) are calculated—by a government trying to minimize the number—at $9.8 trillion.
There are two ways to limit the cost of government. The first is to change the Congress and the White House and elect a government that will actually focus on the size of government. The second is to move from a high spending state to a low spending state. Connecticut citizens work 250 days to pay for government—total government spending plus the regulatory burden. New Yorkers, 243. New Jerseyans, 249. These taxpayers can save a month of one’s income each year by moving. South Dakotans work 201 days a year. Texans, 213. Nevadan’s, 216.
The tax burden is too high. Americans should not (on average) work 3 plus months a year to pay taxes. But the true cost of government—government spending plus regulations takes that cost to more than half the year.
The goal of the left in America is to trick Americans to focus on the deficit. Here the left has a solution: higher taxes, specifically a Value Added Tax. We must keep our focus on total government spending and the solution to the problem is then clear. Spend less.
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Grover Norquist is president of Americans for Tax Reform. Follow him on Twitter @GroverNorquist.