[r72] A Clere view of the Statehouse: Something to Celebrate? (4/26/2010)

Monday, April 26, 2010

Start Date: 4/26/2010 All Day
End Date: 4/26/2010

Taxes are due next week, but it's not too early to start celebrating.

Huh?

What, you're probably wondering, do we possibly have to celebrate about tax time? Well, not tax time itself, but Tax Freedom Day.

Today is Tax Freedom Day in Indiana, and national Tax Freedom Day is Friday. I don't think Hallmark has a card for this one.

Tax Freedom Day is calculated annually by the Tax Foundation, a nonpartisan tax research group based in Washington, D.C. It's "the day on which Americans have earned enough money to pay all federal, state and local taxes for the year."

This year, it comes on the 99th day of the year, a number that might just cause revelers to break out in a rendition of that old standby, "99 Write-offs I Cheer to Recall."

But don't start singing for joy yet. The Tax Foundation's Web site puts a damper on the party:

"This date is one day later than last year's Tax Freedom Day but more than two weeks earlier than 2007's date. However, the earlier date is not necessarily cause for celebration. That's because Tax Freedom Day does not count the deficit even though deficits must eventually be financed. Since 1948, when Tax Freedom Day was first calculated, the difference between what governments are spending and what they're collecting has never been as great as during 2009 and 2010.

"If Americans were required to pay for all government spending this year, including the $1.3 trillion federal budget deficit, they would be working until May 17 before they had earned enough to pay their taxes - an additional 38 days of work."

What killjoys, those Tax Foundation folks.

Tax Freedom Day is two weeks earlier this year than in 2007 for several reasons: "In 2010, the slow economy combines with the 10th and final year of the Bush tax cuts and some one-year tax cuts signed by President Obama to keep this year's tax burden low, though not quite as low as in 2009," the Tax Foundation explained.

Each state has its own Tax Freedom Day, which takes into account the effect of state and local taxes, in addition to federal taxes.

The Tax Foundation explains the methodology: "An official government figure for total tax collections is divided by the nation's total income. The answer this year is that taxes will amount to 26.89 percent of our income, and the stretch of 99 days from January 1 to April 9 is 26.89 percent of the year. Income and tax data are then parsed out to the states, yielding 50 state-specific Tax Freedom Days."

Twenty-one states celebrate earlier than Indiana, and the other 28 later. We're slightly behind Kentucky (April 3) but a little ahead of other surrounding states: Ohio and Michigan (April 8) and Illinois (April 11).

Alaska and Louisiana celebrated earliest, on March 26. Residents of Connecticut - the last to celebrate, on April 27 - will work most of the rest of this month to pay their taxes. The Tax Foundation explains Connecticut is the latest "because income per capita is higher than in any other state. High-income states pay much more in federal taxes, and they often have higher state-local taxes as well."

Other late states include New Jersey (April 25) and New York (April 23).

I'm glad we're not one of the late ones. It will take discipline to maintain or improve our position relative to other states. There's likely to be a lot of pressure to raise taxes. In fact, there's pressure in both directions.

Another Washington, D.C.-based organization, Americans for Tax Reform, asks lawmakers to pledge they won't increase taxes - ever, for any reason. In Indiana, seven senators and 16 representatives - mostly Republicans but also a few Democrats - have signed the "Taxpayer Protection Pledge."

I won't sign it, not because I have any desire or plan to support a tax increase, but because I can't predict the future and I won't limit my options by signing an absolute pledge on something that involves as many unforeseen variables as tax policy. I'm always open-minded to doing what is best for my constituents. 

It's very difficult for me to imagine a scenario in which I would support a tax increase. I'll let my voting record speak for itself. Tax increases are too easy; I'll always look first for a way to get by on the taxes government already collects. That's my pledge. Ninety-nine days is long enough to work to support government. We need to find a way to live within our means.

I was trying to think about what games we might play at a Tax Freedom Day party. A piñata would be a must. When you're trying to break a piñata, you wear a blindfold and swing wildly - often not even in the right direction - until goodies shower to the ground, at which time the partiers pile on, attempting to load up on treats and trinkets. Sounds a bit like Congress, doesn't it?

Happy Tax Freedom Day! Don't celebrate too much.