Posts Tagged tax freedom day
Millions of Americans, likely you are one of them, have sent a tax return off to the Internal Revenue Service over the past couple of weeks having been given little choice but to follow the Biblical admonition to “render under Caesar” a significant portion of your earnings. Neither religious fervor, nor patriotic sentiment prompted the paying of our taxes – financial penalties and even a jail cell await those who fail to comply.
It is interesting then that while we the taxpayers ponied up, Congress – the body that established the income tax – failed to meet its own first fiscal deadline of this year. This, of course, is nothing unusual as Congress has missed virtually every deadline in the budgetary process for well over a decade. It should be noted that not a single member of Congress has paid a penalty – financially or electorally – for their inability to execute the most basic of legislative duties.
By April 15th of each year Congress is required to establish the parameters of the federal budget. This budget blueprint allows the various committees of the House and Senate to then debate and pass spending bills. The impact of congressional failure to pass the budget blueprint by April 15th is that the committees will automatically assume a higher level of spending for the upcoming fiscal year.
That was precisely the goal of Democrats and Republican moderates. The budget blueprint did not happen because conservatives pushed for adoption of a more fiscally austere budget blueprint and could not come to agreement with their more moderate colleagues. This failure is widely viewed as a serious setback for new House Speaker Paul Ryan who has made a return to the regular order of the budget process a top priority.
What will happen over the coming months is that the various committees will debate and pass spending bills the total of which will exceed both the nation’s ability to pay and congressional will to approve. As has happened regularly over the past decade the September 31st deadline for passing a new federal budget will arrive without congressional consensus.
This is why we typically hear late summer rumblings over a pending budget crisis and threats of a government shut-down in October. To prevent such a shut-down Congress will then pass a continuing resolution. The continuing resolution – or CR in government parlance – will allow spending to continue for a set period of time at the previous year’s spending level.
All of this is bad news for fiscal conservatives in that the end result is that instead of an orderly passing of each component of the budget by category one gigantic spending bill – known as an omnibus – ends up being passed, usually sometime in December, that allows federal government spending to continue growing virtually unchecked. To make matters worse usually unrelated, must pass items are tossed into the omnibus making it politically difficult for any member to vote against the package.
The ultimate impact of this is that the tax burden on the average American continues to grow. According to the non-partisan Tax Foundation, Tax Freedom Day – the day we stop working to pay federal taxes – will fall on April 24th. That is 114 days into the year (excluding Leap Day). But, wait – it’s worse: “If you include annual federal borrowing, which represents future taxes owed, Tax Freedom Day would occur 16 days later, on May 10.”
As if that isn’t bad enough, it doesn’t include your state, county, school district and local taxes which push your personal Tax Freedom Day into June. Overall, according to the Tax Foundation, we Americans will pay $3.3 trillion in federal taxes, another $1.6 trillion in state and local taxes all adding up to about 31% of your income.
This growing tax burden is the reason why it is so important that Congress re-establish an orderly budget process. The current method of governing by crisis only leads to bigger government. Without an agreed to blueprint that establishes spending limits, hearings and debate that set clear priorities, and passage of a budget in a non-crisis atmosphere, it is next to impossible to get a grip on out-of-control government spending. Congress’ failure to do so means we will continue working deeper and deeper into the year to pay the tab.
(Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal. His e-mail address is firstname.lastname@example.org)
Permission to reprint is granted provided author and affiliation are cited.