Contrary to popular belief, April 15 wasn’t just the day your taxes were due. It was also the exact day when, on average, you finally earned enough money to pay off all of the taxes you owe for 2014. Once that date passed, you could start to keep the money you made.
The fact that it takes more than 100 days of work to pay off the taxman shows just how economically draining our tax burden really is. According to the Tax Foundation, 30 percent of the average American’s annual income goes from workers’ paychecks to the state, local and federal tax rolls. Thus, the foundation has dubbed the day when you get to start working for yourself as “Tax Freedom Day.”
Unfortunately for hard-working families — and the economy as a whole — this day is getting later and later every year. The later the day, the less money people have to spend, save and invest in their own community. While some of the money might trickle back toward your area, you can be sure bureaucrats and their friends in Washington, D.C., will get their cut.
That’s one reason why Washington’s appetite for your money is growing. This year, the federal government will take in $3 trillion in taxes for the first time ever—a 10 percent jump from last year. State and local governments will take another $1.5 trillion. All told, Americans will fork over some $4.5 trillion to the taxman in 2014.
To put this amount into context, Americans will spend roughly $4.2 trillion this year on food, clothes and housing combined. That means the government takes in $300 billion more than the country spends on the basic necessities of life.
Even so, it’s apparently not enough to feed the government’s appetite for spending. This year, the federal government is expected to run a deficit of more than $500 billion. That money is borrowed from investors and foreign competitors such as China, and paid back with interest.
If Americans were required to pay out of pocket for everything Washington spends, we’d have to wait until May 6 to start earning money for ourselves. Even if American gave 100 percent of their earnings to the federal government for an entire year, we still wouldn’t be able to pay off the $17.5 trillion national debt.
These numbers illustrate a simple point: Washington’s spending addiction is unsustainable, and it’s hurting working Americans. The more money workers give to the government, the less they can spend on the nonessential goods and services that drive growth, create good jobs and help the middle class. The more the government spends, the more it takes and borrows. This cycle is reaching a dangerous tempo.
The problem should defy partisan divides. But politicians frequently tell us that there are “no more cuts to make.” Americans are too smart for that. The latest polls show that two-thirds of the country knows there’s plenty of pork that can be cut from Washington’s bloated budget.
If the government was serious about addressing spending and debt, it could start today. Whether it’s addressing runaway duplication identified by the government’s own watchdog, or simply stopping the $100 billion in annual federal payments to the wrong people, there are lots of places to start.
Unfortunately, political will seems lower than ever. Fear over cutting any government program mires Washington in a state of stasis. The longer politicians fail to act, the more of your money they will spend. The more money they tax, the more bogged down the economy will become. Washington grows while the middle class and the notion of upward mobility disappear. They pass the buck, and you pay the bill.
Keep this in mind as you look back on another tax season. Whether you celebrated Tax Freedom Day or grumbled through the regular tax day on April 15, Nevadans should ask a simple question: Are you getting your money’s worth?
Andy Koenig is the budget and spending project director at Freedom Partners Chamber of Commerce.