by Emily Dietrich
In April, Americans celebrated Tax Freedom Day – the day of the year on which workers’ have earned enough money to pay all their annual taxes at the federal, state and local level.
Liberating, right? Not so fast.
When total government spending and costly regulations are factored into the government’s price tag, it turns out Americans have to work much longer to pay the true cost of government. In fact, we must work all the way through August.
Americans for Tax Reform, also known as ATR, has released a new report, which calculates the total cost of government, including the hefty cost of regulation. The report found that the average American works for 224 days – until Aug. 12 – before paying off the financial burden imposed by government taxes and regulations: 44 days are spent paying for local and state government, 77 days are eaten by the cost of government regulation, and a whopping 103 days paid for the federal government. All in all, the government consumed 61.42% of the national income.
But things are worse here in Illinois, where Gov. Quinn and a lame duck legislature hiked taxes by 67 percent in January. The report points out that Illinoisans must work an additional five days – until Aug. 17 – to pay for the cost of government. Faring worse than the national average, Illinois has the 42nd latest “Cost of Government Day” in the country, with its workers handing over a total of 229 days of work to the government.
Unfortunately, the bad news doesn’t stop there. ATR forecasts that the burden on American workers is poised to increase. Why? In exchange for federal stimulus funding, states agreed to expand their spending.
Here in Illinois, warning bells also are sounding over the state’s debt and pension obligations. ATR wrote in the report that in 2010, “…The state held more than $6 billion in accumulated operating debt and over $83 billion in unfunded public employee pension liabilities.” Gov. Quinn’s solution to this fiscal mess was to raise taxes. In a down economy, he increased taxes 67 percent on personal income and 46 percent on corporate income.
Despite the enormity of the tax hike (the largest of any state as a percentage of GDP after the last recession), Illinois still finds its debt untenable. That’s because Illinois cannot tax away its problems.
Cutting spending and reducing the regulatory burden are the first steps toward growing the economy. If we get Illinois back on a sane fiscal path, we can work toward keeping an extra week of our income in 2012.