Tax Freedom Day for Arizona this year was Easter Sunday. According to the Tax Foundation, that's the day by which Arizonans have earned enough money to pay their total 2010 tax burden. After 94 days or 26 percent of the year has passed, the average Arizonan finally gets to work for himself! Well, sort of.
If the statewide sales tax referendum passes on May 18, Arizonans will have to work almost another day just to pay their taxes for this year, and an additional 1½ days in 2011. With an 18 percent tax increase this year, we would rank with Florida, Montana and Texas in working 95 days to pay our taxes.
Nationwide, Tax Freedom Day will be this Friday, a date nearly two weeks earlier than in 2006 and 2007. But the change isn't because of lower taxes and less government. It's largely because incomes are down and deficit spending is way up. Under our progressive income tax system, when incomes fall, tax collections fall disproportionately.
Even though the recession has reduced what government brings in through taxes, government spending has hardly fallen at all (especially considering federal spending). The government has kept spending steady though deficit spending. If we actually paid enough in taxes to support all government spending, Tax Freedom Day would occur in the middle of May, the second latest date ever.
On top of current deficit spending, we also have unfunded commitments for social programs at the federal level that will cost more than three times our current gross domestic product. Add in unfunded government worker benefits and state and local debts, and our future tax burden almost looks insurmountable. The arguments for spending restraint being written into the law just keep adding up.
So, congratulations. As of Monday, you are now working for yourself. At least until May 18.
Dr. Byron Schlomach is an economist and the director of the Center for Economic Prosperity at the Goldwater Institute.
Learn More:
Goldwater Institute: Arizona $37 billion in Debt Despite Constitutional Debt Limits
Goldwater Institute: $50 Billion Tidal Wave: How Unfunded Pensions Could Overwhelm Arizona Taxpayers
Tax Foundation: April 9th Is Tax Freedom Day
Mercatus Center: United States' Net Position Deteriorates
If the statewide sales tax referendum passes on May 18, Arizonans will have to work almost another day just to pay their taxes for this year, and an additional 1½ days in 2011. With an 18 percent tax increase this year, we would rank with Florida, Montana and Texas in working 95 days to pay our taxes.Nationwide, Tax Freedom Day will be this Friday, a date nearly two weeks earlier than in 2006 and 2007. But the change isn't because of lower taxes and less government. It's largely because incomes are down and deficit spending is way up. Under our progressive income tax system, when incomes fall, tax collections fall disproportionately.
Even though the recession has reduced what government brings in through taxes, government spending has hardly fallen at all (especially considering federal spending). The government has kept spending steady though deficit spending. If we actually paid enough in taxes to support all government spending, Tax Freedom Day would occur in the middle of May, the second latest date ever.
On top of current deficit spending, we also have unfunded commitments for social programs at the federal level that will cost more than three times our current gross domestic product. Add in unfunded government worker benefits and state and local debts, and our future tax burden almost looks insurmountable. The arguments for spending restraint being written into the law just keep adding up.
So, congratulations. As of Monday, you are now working for yourself. At least until May 18.
Dr. Byron Schlomach is an economist and the director of the Center for Economic Prosperity at the Goldwater Institute.
Learn More:
Goldwater Institute: Arizona $37 billion in Debt Despite Constitutional Debt Limits
Goldwater Institute: $50 Billion Tidal Wave: How Unfunded Pensions Could Overwhelm Arizona Taxpayers
Tax Foundation: April 9th Is Tax Freedom Day
Mercatus Center: United States' Net Position Deteriorates
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