ANALYSIS OF A KIND:

Thinking About Taxes

by Fred Cederholm
We taxpayers worked 99 days in 2009 to pay our various taxes—not so onerous a tax burden as in some other countries, but that figure doesn't include deficit spending and off-budget items.

I’ve been thinking about taxes. Actually I’ve been thinking about “rendering onto Caesar,” Tax Freedom Day, Uncle $ugar’s manipulations, the national debt, and taxes world wide. The Ides of April, April 15 that is, hits us on Thursday this year. For individuals, the annual Federal and applicable State Income Tax returns are due to be filed. For Corporations, their day of reckoning was the Ides of March, the anniversary of the assassination of Julius Caesar—not that there is any connection between these two events. Still... it provides any interesting metaphor.

You see, I find it almost impossible to think of anything we do, buy, or sell which doesn’t involve paying something to the government. There are income taxes (on salaries, wages, and tips), Social Security taxes, unemployment taxes, Workman’s Compensation disability taxes, investment taxes, sales taxes, extraction taxes, (professional) services-provided taxes, garbage disposal tipping fees, real estate taxes, gaming taxes, energy taxes (on gas, oil, diesel, and kerosene), utility taxes (on electricity and phone services), dog taxes, tobacco and alcohol taxes, and estate taxes. President Obama got a pass on last year’s Nobel Peace Prize of a million-plus dollars because such “honoraria” are exempt. Like I said, I am hard-pressed to come up with anything we do whereby some Federal, State, County, city, village, hamlet, library, park district, etc. doesn’t have their hand out for a piece of the action.

Every year the Tax Foundation in Washington DC calculates on what day we can actually begin to keep what we earn. The date changes somewhat each year, and this “average” year’s (actually for the 2009 tax year) Tax Freedom Day came on April 9. The specific date per state is available at their website. The current Freedom Day comes a day later than 2008 and two weeks earlier than the 2007 average date. The 2009 tolling requires 99 days of income to meet the average obligations on all the taxes and levies we pay each year. This equates to roughly 27% of all our income going for taxes.

Of the 99 days for the 2009 total... 32 days is for individual Federal and State income taxes, 25 days goes for Social Insurance taxes, 15 days for sales and excise taxes, 12 days for property taxes, 8 days for corporate income taxes, and 6.5 days for other miscellaneous levies. The 27% composite for 2009 may not sound like an ungodly amount given what the rest of the world pays their respective governments, but Uncle $ugar and the States don’t make “the whole enchilada” of their finances readily available in the model used for the Tax Freedom Day.

For example, any deficit financing (as in borrowing by the various governmental entities) is not included in the 99-day figure. Off-budget items to be paid at a later date are not included. The recently passed “universal” health care costs are not reflected in he 2009 numbers. Neither are the hundred plus billion in Social Security surpluses raided to help fund current deficits this year. (Actually, the raided amounts are included in the individuals’ total, but they are going to have to be paid again by the taxpayers when the annual payouts for the pensions exceed revenues in the near future--in 2018).

The Government already owes itself for roughly $4.5 trillion of the $12+ trillion in outstanding National Debt. Next year’s deficit alone is now believed to exceed another $1.6 trillion. Such huge negative numbers are projected to continue thru 2020 (and beyond). When the outstanding future debts are tendered for payment, we may well see an elimination of virtually all government programs, a default on the debt, a massive printing of additional currency, and or a significant increase in taxes. The outstanding debt is already approaching a full year’s gross domestic product/GDP (the value of ALL goods and services produced/consumed in the entire nation for a full year). If tax revenues continue at current levels, Uncle $ugar will (within ten years) use up all its tax revenue income for outstanding interest on the debt, defense (not including any wartime expenditures), Social Security, and Medicare. There will be NO money for the recently passed universal health care program being hawked to US/ us. But... they are not presently telling us that little factoid, now are they?

In Connecticut 117 days are spent working to pay the taxes, in New Jersey it is 115 days, New York 113 days, Maryland 109 days, Washington 105 days, California 104 days, and Illinois 101 days. Remember the 2009 “average” tax burden rate for the USA is about 27%. In Sweden it is 57%, Norway is 56.7%, Israel is 53.8%, France is 53.6%, and Germany is 51.7%.

I wish you all a happy April 15 filing date—and I am so glad we are not going to get all the government we are paying for. (AHEM!!!)

I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.


Copyright 2009 Questions, Inc. All rights reserved. Fred Cederholm is a CPA/CFE, a forensic accountant, and writer. He is a graduate of the University of Illinois (B.A., M.A. and M.A.S.). He can be reached at asklet@rochelle.net.

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This story was published on April 12, 2010.