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Saturday, April 14, 2012

COMMENTARY: Hidden Debt Extends True Tax Freedom Day Through 2112

by FRANK KEEGAN | April 13, 2012 - State Budget Solutions

Thanks to the Tax Foundation for calculating Tax Freedom day again. That's the day the average American starts to actually keep the fruits of our labor instead of slaving for government. This year Tax Freedom Day ironically is April 17, but the numbers crunchers at the foundation should be honest about which century.
Century? That is correct, fellow citizens. All levels of government in the USA have accumulated enough debt - explicit and occult - to push Tax Freedom Day into the 22nd Century.
Even if those who govern us stop spending increases immediately and apply all tax revenue gains from economic growth and inflation to repaying the debt that already exists, it will take at least 100 years to pay off the tab.
But those we elected to office are incapable of stopping their binges, much less making real spending cuts.
Instead, they want to raise explicit taxes even more and impose a hidden tax on all through inflation and the Federal Reserve's repression policy. That imposes what economist John Maynard Keynes called "the cruelest tax of all" most heavily on those who can least afford it.
Yes, the foundation does show a "Deficit Inclusive" tax freedom day - May 14 -- that accounts for this year's official federal deficit.
But that does not include at least $18 trillion in hidden state and municipal debt. Sure, the foundation and other organizations have battled taxes for decades, but that hasn't stopped politicians from slipping in America's back door to steal from the future.
Even the optimists at Truth in Accounting, which merely accepts government lies and applies standard accounting practices, puts the real deficit at $77 trillion, more than five times the official national debt.
Don't for a second try to claim government deficits are from a shortage of revenue. Total tax revenue is up more than six times population growth in the last decade but spending beat inflation by more than 20 points.
Federal government tax revenues continue to grow, and according to Census data released Thursday, state tax revenues in 2011 were more than $6 billion higher than in 2007, when there was no revenue crisis because it was the second highest year in American history.
Meanwhile according to Bureau of Labor Statistics data, government employment and pay over the last decade outpaced the private sector employment and pay that has to pick up the tab.
According to the foundation "Americans will spend more in taxes in 2012 than they will on food, clothing, and housing combined."
But that does not tell the whole story because it does not include almost 22 million government workers - up 4.3 percent in a decade -- who pay taxes with taxes.
Private employment is flat to down over the same decade. In blighted sectors such as construction and goods producing, employment is down 17-18 percent.   
The foundation points out that only 85 million of 143 million income tax filers paid any tax at all.
Assuming the 22 million government workers are among those who do pay, that leaves only 63 million filers generating wealth to fund a nation of more than 313 million people.
This cannot continue. It is not a matter of Republican or Democrat, liberal or conservative, rich or poor. It is purely the inexorable arithmetic of survival as a nation.
Governments at all level must halt spending increases immediately, honestly account the true debts and obligations politicians have inflicted on citizens, and dedicate any revenue increases from economic growth to paying our debts.
Even if we do that, the real Tax Freedom Day will not arrive until 2112. If we don't do it, Tax Freedom Day will never arrive.

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