Another tax day is behind us, and most Americans are probably happy to see it gone. This gives us a good opportunity to reflect on our nation’s tax policy and evaluate where we are and where we are heading. Unfortunately, this year’s assessment carries little in the way of good news.
For starters, just going through the process of preparing and filing taxes in this country requires a tremendous amount of resources. In a comprehensive study conducted in 2005, the Tax Foundation found the estimated time and money cost of complying with the federal Internal Revenue Code was 6 billion hours, which they estimate to be worth $265 billion.
That’s an incredible amount of resources that are more or less wasted on complying with a vastly overcomplicated tax structure. But that is not the worst of it. The amount we have to hand over in taxes for each year is the real crime.
For perspective on how much we actually pay in taxes, I will turn again to the Tax Foundation, which notes that “In 2009, Americans worked 103 days of the year to pay for federal, state, and local taxes. This is more than the days worked to pay for housing, food, and clothing combined. Americans worked 38 days to pay income taxes, 27 days to pay Social Insurance taxes, 15 days to pay sales and excise taxes, 12 days to pay property taxes, 6 days to pay corporate income taxes, and 4 days to pay other taxes.” This means the average American was not earning money they could keep until well into April.
Yet, as if taxes aren’t already burdensome enough, Democrats in Congress and the White House are looking at all kinds of ways to increase taxes in order to pay for their ever-expanding government programs.
On April 1, the first tax increase of the Obama Administration took effect. It was appropriate that it took effect on April Fools Day because this tax seems more like a joke than good policy. The tax on cigarettes went up by 60 cents per pack in order to pay for a huge expansion in the State Children’s Health Insurance Program (SCHIP). SCHIP was first intended to provide health coverage for poor uninsured children, but the program has expanded to serve middle-income children and young adults.
This means we will use a decreasing revenue stream (people smoke less or quit when it costs more) to fund an expanding program. Ironically, we will need 22 million people to take up smoking if we hope to actually pay for the new spending that has resulted in an expansion of the SCHIP program.
This is also a regressive tax, hitting low-income individuals harder than the wealthy. During the campaign, candidate Obama promised that he would not raise taxes on Americans who make less than $250,000 per year. Yet, according to
I am for healthcare for kids, and I am for getting people to quit smoking. But I am against healthcare run by bureaucrats and healthcare programs funded by cigarette taxes.
Unfortunately, it looks as though this will be just the first of many tax increases under the current Administration. The President’s budget, which has passed the House, calls for a number of tax increases in the midst of one of the worst economic recessions in decades.
The budget calls for an increase on all taxpayers making more than $200,000 a year. The President may think he is just increasing taxes on “rich” people, but the majority of the burden for this $637 billion tax increase will fall on small business owners (who pay taxes on this income as part of their individual returns). Small businesses create 60 to 80 percent of all new jobs in
The budget also calls for increased taxes on energy consumption through a complicated cap and trade program that could just as easily be called a cap and tax program. This will increase the cost of energy for every American.
The budget also caps the amount higher income earners can deduct from their taxes for charitable donations. It has been estimated this will reduce charitable giving by $9 billion a year at a time when we need charities the most.
The President’s budget reinstates the death tax, with a top margin of 55 percent. According to the Joint Committee on Taxation, the death tax has “broad economic effects,” and one study has found that the death tax is responsible for lowering overall employment by 1.5 million jobs over the previous ten years.
This isn’t responsible government and it isn’t good public policy.
Rep. Joe Pitts represents Pennsylvania's 16th Congressional District in Berks, Chester and Lancaster counties.
