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Tax Freedom Day 2013: Thursday, April 18

Tax Freedom Day 2013: Thursday, April 18

Idaho Freedom Foundation staff
April 16, 2013
[post_thumbnail]IACI president Alex LaBeau says Tax Freedom Day focuses too much on the cost of taxes.

Tax Freedom Day, that day on the calendar when American workers will have earned enough money to pay all the federal, state and local taxes levied against them, is Thursday, April 18.

“We consider it a calendar-based measurement of the cost of government,” says Will McBride, economist at the Tax Foundation in Washington, D.C., the nonprofit group that trademarked the name Tax Freedom Day. “We calculate the costs of state and local government expenditures, and currently it takes up 29 percent of the year to pay for it. That’s 108 days out of 365. Your work for these first several weeks of the year pays for government, and then beyond that your money is yours.”

Suzanne Budge, director of the Idaho Chapter of the National Federation of Independent Business (NFIB), identifies taxation as the “leading concern” for members of her organization. “Taxation and the complexities of tax law create severe disincentives for both new business startups, and for the expansion of existing businesses,” says Budge. “For many business owners, it’s just not in their best interest to be as productive and as profitable as possible, because so much of their profits are taken in taxes. And the cost of complying with tax code is a problem as well, given that 91 percent of small business owners hire a professional tax preparer.”

Alex LaBeau, president of the Idaho Association of Commerce and Industry (IACI), sees things a bit differently. “Tax Freedom Day is a bit of a misnomer,” he tells IdahoReporter.com. “The concept of it focuses too much on how much taxes cost, and too little attention on what types of taxes are collected.” LaBeau notes that Idaho’s controversial personal business property tax is “one of the worst in Idaho,” and creates a huge disincentive for investment.

McBride, who makes it clear that he believes taxation rates are too high, notes that the precise date on the calendar for Tax Freedom Day varies from year to year. “That’s because government relies heavily on taxing corporate profits, and taxing investment income via the capital gains tax. When corporate profits and investment income decline, as they have over the recessionary years, then tax revenues to government decline as well.”

McBride also says that America suffers with a lack of transparency concerning the burden of taxation on workers. “A lot of politicians think that corporate taxes just simply get paid by some abstract entity out there. They act like corporations have no particular role in the economy, and as if corporations somehow don’t consist of people. This is absurd. Workers, consumers and shareholders pay the burden of corporate taxes, but workers are the ones that get hit the most.”

The Tax Foundation economist insists that taxation on investments and corporate profits are two types of taxes that are the most destructive nationally. “If we lose people’s willingness to invest their money in business enterprises, and if companies don’t have adequate incentive to produce profits, we put our economy at grave risk.”

With all the damaging effects of excessively high taxation, what can possibly improve things in America?
“We need a huge cultural shift,” McBride believes. “Unlike other parts of the world, the U.S. has a history of lower taxation and greater productivity. I believe we have the capacity for a coming tax revolt.”

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