It’s the time of year when we think more about taxes. Our completed returns show just how much we paid last year to the government. Collectively, it’s a big number. According to the non-partisan Tax Foundation, Americans paid a total of $4.2 trillion in 2013 in federal, state and local taxes.
That number will be a little bigger this year. The Tax Foundation’s annual report says our total tax bill for 2014 will be $4.5 trillion or 30.2 percent of our income. The Foundation says our Tax Freedom Day—the day when the nation as a whole has earned enough to pay the entire tax bill–is April 21st, or 111 days into the year.
In other words, the average taxpaying American works almost four months out of the year just to pay for government.
April 21st is the average date for the nation. The state’s tax freedom day varies depending on a variety of factors. Connecticut and New Jersey have the largest tax burdens. Residents there have to work until May 9th to cover this year’s tax liability. West Virginia’s tax freedom day is tomorrow, April 10th.
The Foundation says our national tax freedom day is three days later than last year because of the continued slow economic recovery. A sluggish economy means less activity that generates tax collections.
Despite the fact that the average American works nearly one third of the year to pay all the taxes due, it’s still not enough to pay all the bills. The Foundation reports that “Since 2002, federal expenses have exceeded federal revenues, with the budget deficit exceeding $1 trillion annually from 2009 to 2012 and over $800 billion in 2013. In 2014, the deficit will continue to decline to $636 billion.”
Our total debt stands at $17.6 trillion and growing.
Here’s another way to look at our total tax liability: The Foundation says in 2014 Americans will spend more on taxes than on food, clothing and housing combined. That’s stunning. No wonder many people recoil at the possibility of paying more taxes, even if it means building a new road or a school to fulfill a community need.
We understand the necessity of paying for the services we expect government to provide, but that’s not what fuels an individual’s desire to work, strive and achieve. As the late economist Milton Friedman said, the government is not a patron. “That is at odds with the free man’s belief in his own responsibility for his own destiny.”
As the tax freedom day stretches ever later in the year, the less likely individuals will be to apply the work ethic and take the risk that generates wealth.