Friday, April 14, 2006

Keep paying until April 26

That's "Tax Freedom" day this year, calculated byThe Tax Foundation. It seems like just two or three years ago that Tax Freedom day was April 16, the earliest date in the last quarter century for fulfilling our obligations to the government.

According to Bruce Bartlett, citing a different Tax Foundation study, 24% of Americans think that the appropriate aggregate tax burden should be less than 10% of person's income. 43% vote for 10% to 20%, and 22% say no more than 30%. Put another way, fully 89% of the country believes that the government claim on family income should not exceed 30%.

Which is just about where the aggregate tax burden is, at 28.5% of GDP.

Ah well, at least we're not quite at the modern record, set in 2000, of a Tax Freedom day of May 3. But if the Congress continues to dither about the Alternative Minimum Tax, that could quickly change.
Posted by Jim Gust at 10:02 PM

3 comments:

JLM said...

More data on taxes from Taxes: Who Pays, and How Much? in The Wall Street Journal:

"No one likes to pay taxes. But in comparison to other developed countries, and to the recent past in the U.S., American taxpayers have a relatively light tax burden.

"Government at all levels collected taxes equal to about 26% of the U.S. economy's total output last year. That is less than the tax take in most European countries. Sweden has a tax burden of about 50%, according to the Organization for Economic Cooperation and Development; Germany has about 36%. Japan has a tax burden roughly equal to that in the U.S.

"Moreover, federal taxes amounted to 17.5% of gross domestic product, up from a modern low of 16.3% in 2004, but well below the high of nearly 21% in 2000.

"But keeping the tax burden low will be difficult. Last year, the federal government's spending exceeded its tax take by about $318 billion. And the retirement of the baby-boom generation starting in 2011 could cause spending on big-ticket federal retirement programs to jump."

Are state and local tax takes expanding as a result of federal cuts? My state and others are currently wrestling with the question of how to replace federal funding that has been cut in areas such as Medicaid, highways and bridges.

10:25 AM
Jim Gust said...

Do you think it's fair to attribute the poor economic growth in Europe to the excessive tax rates? I do.

And when rates are so high, there's a large underground economy, with added inefficiency costs. And in some countries, the underground economy leads directly to political corruption.

10:43 AM
JLM said...

Little Denmark's economy isn't doing too bad despite wicked tax rates. The WSJ recently did a front-page story on a possible reason: Danish labor policies are far more flexible than you'll find in Germany or France.

4:20 PM

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