Editorial: The tax burden

April 15, 2004

As Americans rush today to meet the deadline for filing their federal and state income tax returns, they should take some consolation in the fact that at least their collective tax burden isn't nearly as bad as it was four years ago.

"Tax Freedom Day," as calculated by the Tax Foundation, was celebrated this year on April 11, compared to May 2 in 2000 when the tax burden peaked at 33 percent of national income.

The "Tax Freedom Day" calculation is based on the number of days each year Americans as a whole must work just to pay for government at all levels. This year that figure is 101 days, the lowest number since 1967.

The Tax Foundation's numbers include all taxes that Americans pay: federal, state and local income taxes, Social Security and Medicare taxes, property taxes and sales and excise taxes. The Foundation makes some interesting comparisons between what Americans pay in taxes and what they pay for other items.


For instance, the number of days (101) Americans work to pay their taxes exceeds the 96 days they work to pay for food, clothing and medical care combined. They work 65 days to pay federal taxes while they work just one day more, 66 days, to pay for the cost of housing.

The April 11th "Tax Freedom Day" is a national average while the tax burden varies from state to state. Kentuckians do a little better than the nation as a whole with a "Tax Freedom Day" of April 5. The per capita tax burden in Kentucky is $7,659 or 26.1 percent of income.

It looks as if Americans had better enjoy their extra days of tax freedom this year. Because a growing economy will produce more government tax revenues - even without an increase in tax rates - "Tax Freedom Day" is predicted to increase by 11 days by the year 2010 when it will fall on April 22.

What does all of this say about the current political debate over tax rates and deficits? A couple of things, perhaps.

First, no matter how you slice it or argue over who pays what, Americans as a whole pay a lot of taxes. If we're working nearly a third of the year to support government, we certainly have the right to demand that government is operated as efficiently as possible.

Secondly, raising taxes probably is not the solution to reducing the federal budget deficit, or even the state budget shortfall. In the case of the federal government, at least, massive tax increases would be required to balance the federal budget. By far the best solution - really, the only solution if we are to remain a free country - is to both cut government spending and promote economic growth, which increases tax revenues without increasing tax rates.

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