Americans will continue to work until April 21, 2014 before we’ve collectively earned enough money to pay all our tax burdens, which total $4.5 trillion. Some call this “Tax Freedom Day.” But there is nothing free about our taxes or our spending. We will be a slave to this system when the bill comes due and we simply cannot pay it.
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The federal government is currently taking in a record amount of tax revenue. It took in $1.3 trillion in the first half of Fiscal Year 2014. Yet despite this record, we are still running a deficit of $492 billion. A lot of politicians would like you to see this as a success, especially compared to the $1 trillion deficits we’ve run over the last few years. But let’s wrap our brains around the fact that record revenues still leave us with a deficit and therefore growing debt.
America, we have a problem. Our problem is not found at the bottom of a bottle but on the bottom line. Spending money we do not have will result in our economic ruin, and the result will be the loss of our freedoms. The absolute worst part will be that we knew it was coming but couldn’t find the leaders to stop it before it was too late.
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We are currently experiencing is a false sense of accomplishment, in regards to the deficit. The nonpartisan Congressional Budget Office estimates that deficits will soon start to rise and will be back above the $1 trillion mark within the next decade and our debt will only continue to grow. In fact, CBO estimates that our national debt will zoom past $27 trillion by 2024.
Harvard University’s Institute of Politics recently released its annual report on debt, revenues and spending in the United States. It calculates that working Americans in the United States would have to hand over $106,000 if a “debt reduction fee” were levied on those with income.
Clearly this would be an asinine approach to sure up our debt because it doesn’t solve the problem, which is spending. Most Americans do not earn over $100,000 in a year, much less have enough saved up to fork over to the government. In fact, just 13.4 percent of taxpayers earn more than $100,000 a year.
Yet despite that small percentage – and we are talking taxpayers, not even all Americans – they paid 71.6 percent of all federal income taxes in 2011.
Not a lot of people earn a lot of money, but they are paying the vast majority of the taxes in order to fund the things people think the government should pay for. At some point, we are going to run out of their money. Then whose pockets will we plunder?
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Economist Thomas Sowell says that taxes are the price we pay for civilization. I like that because of its functional, rather than political, approach: we agree to pay taxes to a government so that it can perform certain functions that help maintain our civil society.
But somewhere along the way, the functionality of taxes got swept away by politicians who realized they can be used for personal gain. As Thomas Sowell says, “Someone once said that taxes are the price we pay for civilization. That may have been true when he said it, but today taxes are mostly the price we pay so that politicians can play Santa Claus and get reelected.”
Infrastructure, national defense, a judicial system – these basic functions morphed into a government behemoth where 50 percent of federal tax revenue is now spent on just three major entitlement programs: Medicare, Medicaid and Social Security. Other entitlements and benefits consume 20 percent more of the revenue pie. That leaves just 30 percent of revenues to cover everything else the people think the government should pay for. Clearly we spend a lot more than that 30 percent collected because we have rising debt to prove it.
We must couple serious spending and entitlement reform with tax reform, because they are two sides of the same coin. The taxes we once willingly handed over to maintain our civility may eventually be our downfall because we were too willing to give up our freedoms in the face of economic security.