Today is Cost of Government Day

“On July 16, Americans mark the national Cost of Government Day, the date on the calendar year when the average American finishes paying off his or her share of federal, state and local spending, and the regulatory burden. Cost of Government Day falling on July 16 means that you had to work 197 days out of the year just to meet all the costs imposed by government. In other words, the total cost of government — far more than taxation alone — consumes 53.9 percent of national income.”
Source: Americans for Tax Reform

Oregonians are lucky. Partially because the average Oregonian’s income is below that of the average American, our Cost of Government Day fell on July 9th. Just think; if our elected state leaders succeed in passing even more wealth destroying laws, our Cost of Government Day may fall even earlier in future years. Truly, a double edged sword.


Founder and Senior Policy Analyst at Cascade Policy Institute, Steve Buckstein is Director of Cascade’s Government Transparency Project and the Oregon Economic Opportunity Project. Based in Portland, Cascade Policy Institute is Oregon’s free market research center.

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Posted by at 11:05 | Posted in Measure 37 | 18 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Bob Clark

    This is shocking that tax day occurs over 50% through the year. There should constitutional amendment saying all government taxes and fees shall not move beyond 50% of the economy except in times of national emergency. This would help keep a balance between the vibrancy of capitalism and the protectionism of government. Didn’t tax day used to be in May not too long ago? or is that a different tax day?

  • Matt Evans

    Hi Bob. You’re thinking of “Tax Freedom Day,” which in Oregon does typically fall in April of May. The cost of government measure takes into account other factors we all pay for – such as compliance with laws and regulations – and which take away productive capacity from the economy. Either way, paying for government is the most costly thing in any family’s budget.

  • Jerry

    Funny how the rich pay most of the taxes yet use fewer services than their pooer, non-tax paying buddies.

  • Deborah Frisch

    one good thing about being unemployed – wait, i mean temporarily retired – is having less income stolen by uncle sam and the bozos in salem!

  • Britt Storkson

    The fact is that the rich do not pay taxes – RELATIVE TO THEIR INCOME. The working class pays the most in taxes RELATIVE TO THEIR INCOME.

    Rush Limbaugh almost certainly pays less in taxes – as a percentage of total income – not total dollars – than the maid who cleans his toilets. The maid pays close to 15% of what she makes in Social Security Taxes alone. If that were not the case why aren’t the rich pushing for a flat tax where everybody pays the same rate? It’s because the rich don’t pay taxes! (Again relative to total income. That’s important to note).

    A 17% flat tax is much less than the 28% top marginal rate we’re led to believe is paid by the rich. That being the case why aren’t the rich pushing for a flat tax? It’s because they pay even 17%!

    Which would you rather have? To earn $1 Million dollars and pay $100,000 in taxes or to earn $20,000 and pay $6,000 in taxes? What? you would rather pay $100,000 in taxes? Why? $6,000 is a much smaller sum!

    How about if we have a tax everybody pays the same rate. And no redefining income.

    • Rupert in Springfield

      >The maid pays close to 15% of what she makes in Social Security Taxes alone.

      That’s not true. First of all, you are counting both sides of SS taxes here, employee and employer. Second, to get to anything close to 15% you have to include Medicare. SS and Medicare combined is at 12.4% or thereabouts. Third, SS taxes are taken right off the top, no deductions, so how you get to the idea that the maid pays them and Rush Limbaugh doesn’t is a little hard to reckon. It is true that SS taxes are capped above a certain income level, but benefits are capped at that level as well so there is hardly any disparity there. A maid, with any dependants whatsoever probably pays close to zero or negative federal taxes (i.e. welfare, through the EITC ). The maid would pay SS, but even if you count both sides, as you have done, if you think the average rich person is paying less than that as a percentage, you are very much mistaken.

      >A 17% flat tax is much less than the 28% top marginal rate we’re led to believe is paid by the rich. That being the case why aren’t the rich pushing for a flat tax? It’s because they pay even 17%!

      And this would be why Steve Forbes, not exactly known as a pauper, was the person who brought up the flat tax concept in the first place in his presidential campaign ?

      >To earn $1 Million dollars and pay $100,000 in taxes or to earn $20,000 and pay $6,000 in taxes? What? you would rather pay $100,000 in taxes? Why? $6,000 is a much smaller sum!

      Where did you get these figures from? The only way someone earning $20,000 is paying $6,000 in taxes would be if they had no dependants and all of that income was derived from self employment and thus they saw both sides of SS and Medicare.

      Look, It sounds like you are on a tear about the rich, but you don’t really have anything concrete to back it up. The sole basis seems to be a supposition that the rich don’t support a flat tax, so therefore they must be paying less than the proposed flat tax. That’s a tenuous conclusion drawn from a very shaky assumption. Frankly the only people I ever see supporting a flat tax are rich people. Rush Limbaugh being one of them.

      • dean

        I….gulp….agree with Rupert. Rich people would benefit most from a flat tax, and in the proposals I have seen the poor would make out well IF the starting gate were high enough. It would be the middle class that would get screwed under a flat tax, which is why it ain’t going anywhere. Too many actual voters. To see how this works, look at the data:

        Using 2001 data from the IRS (prior to the Bush tax cuts that were skewed to higher income brackets):

        Top 1% income made 14.8% of all income and paid 22.7% of all federal taxes
        Next 4% down earned 12.7% and paid 15.8%
        Next 5% earned 10.1% and paid 11.5%
        Next 10% earned 14.8% and paid 15.3%

        That takes care of the highest 20% of all earners. Going down the line:

        Next lower quintile earned 20.7% of all income and paid 18.5%
        Third quintile (true middle income) earned 14.2% and paid 10%
        Second quintile (from bottom) earned 9.2% and paid 4.9%.
        The reeks and wrecks (lowest quintile) earned 4.2% and paid 1%

        Statistically we have a progressive federal tax structure, even factoring in the SSI cap. But its not all that progressive compared with other wealthy nations. I don’t have figures for after the bush tax cuts, but we do know he cut the rate at teh top, and we also know that the top 1% has had virtually ALL the income gains since 2001. This probbly means they are making more AND paying more in taxes, while the rest of us tread water.

        This is federal taxes only. State and local taxes, which depend highly on sales, property, and user fees (i.e. everyone pays the same sewer rate, rich and poor alike) are much less progressive.

        So 2 myths can be punctured. One that we do not have a progressive federal tax system. And two that we are taxing the rich so much they have no incentive to earn more because it is all taxed away.

        • Britt Storkson

          I’m not talking about % of all taxes paid. I’m talking about the % of what is taken from the taxpayer. Big difference.
          Also everybody does not pay the same sewer, water and power (utility) rates. In almost every case the rich pay less than the working class.
          Tell me: What is wrong with everybody paying the same tax rate on the same income? (And don’t redefine income).

      • Britt Storkson

        I don’t have a problem with the rich. I have a problem with inequitable taxation. First of all one should count both sides of the SS tax. Rush Limbaugh is correct on this point. The employee pays both sides of the tax even though only 1/2 is noted on the paycheck.
        The supreme court has ruled twice that SS benefits have no relation what is paid in. If you paid, say, $10,000 in SS taxes you cannot expect to get $10,000 back. You cannot expect to get anything back.
        Why do you think all of these foundations and offshore bank accounts (still legal) and other tax shelters exist? Certainly not for the working class
        I’ve never heard Rush Limbaugh support a flat tax. The reason we don’t have a flat tax is because the very poor and the very rich don’t pay taxes. Yet they get to vote on imposing taxes on everybody else.

        • Rupert in Springfield

          >The reason we don’t have a flat tax is because the very poor and the very rich don’t pay taxes. Yet they get to vote on imposing taxes on everybody else.

          I really would strongly advise you to research your point as you are under some very major misconceptions. You are completely wrong with regard to the rich not paying taxes. The vast majority of income taxes are paid by the top 25% of earners. The share of taxes paid by the top 25% has increased steadily over the past 20 years up from 76% in 1986 to 86% in 2005. Americans below the median (so that is half of all households ) paid a total of 3% of all taxes. The top 5% of tax payers have continually paid more and more. Even after the Bush tax cut, the share of taxes paid by this group grew more rapidly than did their share of the total income pie. The fact is, the reason we don’t have a flat tax is because the middle class and poor pay virtually nothing in taxes. Their numbers are simply greater than the rich.

          You are also seriously wrong about the rich not supporting a flat tax. Rush Limbaugh has said several times he supports it, but sees no point in going on about it since congress would never give up the power they have in writing the tax code. Steve Forbes, notable rich guy, is the one who put the term “flat tax” into common parlance. I personally have never met a rich person who hasn’t supported a flat tax. Why wouldn’t they? A flat tax would result in everyone paying something. Currently half of all households pay essentially nothing. If a flat tax was revenue neutral, then with those below the median having their rates go up, then the rates for the rich would go down.

        • dean

          Britt…you are entitled to your own opinion, but not your own facts. If the top 1% of earners took in 14.8% of all the income in the US, and they paid out 22.7% of all the federal taxes, and the bottom 10% took in only 4% of total income, and paid 1% of federal taxes, that must mean that upper income folks paid a higher percent of their income than did lower income folks (as a group, not necessarily true for all individuals in that group). Also true of higher income weighed against the middle classes.

          Based on the data, any flat tax, at any rate you set it would force those in the middle and lower incomes to pay more to make up for what you would not be taxing the higher incomes, or they would have to accept fewer serices from a reduced total tax pie. And since the rich arguably depend less on government services than the poor and middle, they would not miss these much.

          A more progressive tax structure, by raising the top and/or raising the SSI pay-in cap, would increase progressivity. A flat tax would not. Deductions and tax shelters only go just so far. Steve Forbes was not a populist.

          I would bet that Rush, the greedy bag of hot air that he is, would go for a flat tax in a New York minute. He could use 3 or 4 more 50 room palaces or 10 or 12 more cars no?

        • Rupert in Springfield

          >Why do you think all of these foundations and offshore bank accounts (still legal) and other tax shelters exist? Certainly not for the working class

          Actually with regard to the poor and SS, I think you are on to something. Most of the poor could retire in fairly lavish comfort if their SS funds were put into virtually any investment. An offshore account to hide income would be a good thing for them. For the poor, SS is a particularly cruel tax as it is generally greater than all their other taxes and robs them of their retirement to pay for the greed of current retirees.

          • dean

            Rupert…”if pigs had wings….”

            People pay SSI to support current retirees. Its not an investment account, and given what the stock market is currently doing, I would not necessarily agree that a poor person could retire “in fairly lavish comfort” if it were an investment system, particularly if one factors in the high load they would likely pay to stock brokers. And if we look at data in IRAs, it is pretty discouraging. Most people have very little stashed, and tend to use it up in emergencies long before they retire.

            It is very misleading to focus on income taxes only. SSI and Medicare taxes are essentially regressive, and the Feds clearly mingle these funds with income taxes, so the only accurate picture comes by including all funds.

            The lowest 60% income earners in America make about 27% of all the income there is, and they pay about 16% of total federal expenditures. This is not a free ride. The top 20% of income earners make about 43% of all there is, and pay 65% of all federal taxes. Clearly they pay in more than their “share” as a percentage.

            But a dollar to a poor or middle income person is a lot more important than a dollar to a wealthy person, simply because necessities are more important than luxuries. That is the reason we have a mildly progressive federal tax system.

          • Rupert in Springfield

            >Rupert…”if pigs had wings….”

            God knows what you mean by this since you seem to agree with most of what I said.

            >People pay SSI to support current retirees. Its not an investment account

            Right, so it would sure be nice if the government would stop sending you that statement every year listing your SS contribution and clearly intended to make it look like a retirement account.

            >I would not necessarily agree that a poor person could retire “in fairly lavish comfort” if it were an investment system, particularly if one factors in the high load they would likely pay to stock brokers.

            If you want to get into SS and the dollars that takes from poor people. Big whoop. I already stated that. What’s your complaint?

            It’s a horrible program for the poor and really screws them over, since unless they are over 40, they probably will see a negative return at best for their money. Any idiot could invest in a no load index fund and do better than that. With what SS takes from their pay checks invested in such a fund, they would most likely retire to a better lifestyle than their current one.

            >And if we look at data in IRAs, it is pretty discouraging. Most people have very little stashed, and tend to use it up in emergencies long before they retire.

            Great, lets look at that data. Oh wait, there is no data.

            Dean – Where is the data on this showing most use up their IRA’s before retirement? I would find this quite surprising since their are substantial penalties involved in doing that sort of thing. Please site your source on this. Please do not go into some sort of history of the stock market, fried chicken or merchant marine shipping.

            >The top 20% of income earners make about 43% of all there is, and pay 65% of all federal taxes.

            Wrong

            The top 10% pay 70.3%, the top 25% pay 85.99% and the top 50% pay 96.93% of all federal taxes.

            http://www.irs.gov/pub/irs-soi/05in05tr.xls

            This means that the bottom 50% is paying virtually nothing. The poor pay negative taxes in many cases with the EITC, a welfare program.

          • dean

            Most….the pigs had wings was about SSI as an investment account instead of inter-gnerational social insurance that it is.

            SSI is a “retirement account.” Its just not an individual retirement account. One pays in X and is promised a check for Y amount upon reaching a certain age. That is all the statements are telling us. I wish we would also get annual statements on: all taxes paid, what the government is spending my share on (national parks versus wars for example,) the monthly cost of the Iraq war, and how much my share of the national debt is. That might shake people up.

            The data on the paucity of IRAs was from a radio interview with a Yale economist who has a book out on this. What I recall is that the average American has less than $40K in an IRA by the time they hit 60. Hardly enough for retirement. She was focused on the shift away from defined benefits pensions to defined contributions, and one of the interesting points she made is that many employers only contribute their share periodically, that the fine print allows them to not put anything at all in if profits are down.

            She also pointed out that most people don’t know squat about low versus high load accounts, that employers cut sweeheart deals with brokers to the disadvantage of employees, and that there is not rule that says the load has to be revealed, so it often is hidden. In other words, like a lot else we appear to have a racket.

            Individuals can raid their IRA for a number of purposes: health emergency, kid’s college expenses, and some other things. They also often cash out early and pay the penalties when they are between jobs. I did this myself (partly) when I left the Forest Service and know of what I speak.

            Your IRA figures may be more up to date than the ones I used (2001). Question, what did the top 20% earn? Knowing how much they paid is half a loaf. How much of the national income did they have in the year you used? And are you sure you have ALL federal taxes…not just income?

          • dean

            Oh…and the Earned Income Tax Credit is not “welfare.” If anything it is “workfare,” in that if one is not working and earning one does not get any. I think of it as a subsidy for MacDonalds and WallMart, since it alows them to pay their employees less without starving them to death.

  • Crawdude

    Wow, I can remember back when it was in April 🙁

  • Britt Storkson

    Thanks to everybody who contributed to this debate. We may not agree but we can learn from each other and that’s certainly worth our time.

    Britt Storkson

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