Long time readers of RTE are quite familiar with the annual event known as Tax Freedom Day - the day when the nation as a whole has earned enough money to pay its total tax bill for the year.
Tax Freedom Day is a significant representation because it uses the days of the year as a scale – 365 days equals the nation's income - & then pinpoints the date on the calendar commensurate with the fraction of the nation's income devoted to taxes.
This year the national Deficit-Inclusive Tax Freedom Day occurs on May 7 or 127 days into the year. By this measure Americans will work 46 days to pay federal, state, & local individual income taxes, 26 days to pay payroll taxes, 15 days to pay sales & excise taxes, 10 days to pay corporate income taxes, 10 days to pay property taxes, 6 days to pay estate & inheritance taxes, & custom duties, & 14 days to pay for the annual federal deficit borrowing which represents future taxes owed.
May 7 equates to a percentage tax burden of 34.8%.
Connecticut, New Jersey, & New York (in that order) are once again the worse Tax Freedom Day states to live in. Tennessee is the second best which explains why people, like Arthur Laffer, are moving there.
Americans will spend more on taxes in 2017 than they will on food, clothing, & housing combined.
Tax Freedom Day in 1900 was January 22 when the tax burden was 5.9%.
Thanks to Laura Saunders for providing the following graphic that shows where our federal tax money went in 2016 as well as the percentage change over the past five years.
click on graphic to enlargePlease note that seven of the above categories are transfer/welfare payments that make up way more than half of federal spending. Accordingly, these claims on earned income pose a tremendous hurdle that must be overcome in order to generate wealth creation, prosperity, & substantial economic growth.
If America is ever going to return to the type of vibrant growing economy that was commonplace in the second half of the 20th century we need to go back to all the principles of supply side economics (none of which has been followed for years) that fueled economic growth from 1983 until the turn of the twenty- first century: 4.8% average annual growth from 1983 to 1988 with growth effects continuing into the 1990s when a reduction in the capital gains tax rate under Gingrich occurred.
Not only did we not have anything like substantial economic growth under BO the last eight years but forecasts of more years of lackluster 2% growth abound.
The missing point from supply side principles, highlighted by the above graphic, is that the reduction of the size of government & its claims on earned income is what fuels economic growth when coupled with sound money policies & lower marginal tax rates for the highest income earners.
Referenced post: Tax Freedom Day
Trump needs to succinctly explain why keeping more of your $ grows the economy much faster than taxing it and giving it to the wasteful Government. An then he needs to repeat this in simple terms over and over to combat the barrage of very fake news about tax breaks for the wealthy
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