What Tax Freedom Day Means to Me

March 31, 2010

Chris Bergin comments on Tax Freedom Day over at tax.com, calling our annual calculation meaningless, hilarious, awkward, and a great publicity stunt. Why such mixed feelings? He writes:

The truth of the matter is that, other than the chuckle I get from the whole thing, Tax Freedom Day doesn't mean a thing. As a society, we will never be free of taxes – that is unless we all want to be bathing down by the river, catching our own dinner, and freezing to death in the dark.

And currently as a society we don't pay enough taxes, not enough to pay for the government services we demand. A lot of Americans don't want their Medicare, Social Security or new Healthcare touched. They also don't want to pay more taxes.

I'm no anarchist but it sounds like Bergin is alluding to the opposite extreme: that every tax dollar is vital to the functioning of society. This isn't the case: the value from a well-functioning and impartial court system is different from the value from ethanol subsidies, the U.S. Institute of Peace, and the National Watermelon Promotion Board. Those may be nice programs for some people but they aren't exactly vital to keeping the lights on. We could have a smaller tax burden and not be foraging for berries and boar meat.

Bergin correctly notes a trend of Americans demanding lower taxes but being unwilling to part with government services. A big contributing factor that Bergin leaves unstated is our progressive tax system: people demand more government services because they correctly believe that someone else will pay for them. Free lunches are popular.

The next time Chris and the Tax Analysts want to grab drinks with the Tax Foundation crowd, and I offer to pay for a round, I fully expect everyone to run up my tab. Americans are running up the tab, in part because groups like the Center on Budget and Policy Priorities (CBPP) have pushed the notion that someone else can pay for all or most of government services, and that that's sustainable. (The CBPP's "rebuttal" of Tax Freedom Day, where they emphasize that most people have a lower tax burden than the average, reinforces this point.)

The solution to badly-designed social welfare programs should not be knee-jerk higher taxes, but reforms and a sustainable, broad-base/low-rate tax system that encourages economic growth and minimizes interference with individual freedom. And all this means that Bergin, us, readers, and everyone should be working to learn more about tax burdens, who pays and who benefits, and how the trends are going. Tax Freedom Day is one of those tools, and I'm pleased to be a part of the debate.

More on Tax Freedom Day here.

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