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Congratulations … You Have Now Worked Enough to Pay for Your Government
Anita Campbell of Small Business Trends | July 28th, 2008 - 11:48 AM
(20) found this useful. Do you? 
Former President Ronald Reagan once said that government’s view of the economy is … “If it moves, tax it. If it keeps moving, regulate it.”
Sometimes his humorous observation feels painfully serious.
One example is the Cost of Government Day. The Cost of Government Day is that day of the year (woo-hoo!) “on which the average American worker has earned enough gross income to pay off his or her share of spending and regulatory burdens imposed by government.”
As of about a week ago (July 16, 2008) those of you in the United States have earned enough to pay for your government.
That means you had to work 197 days just to pay for government (state, Federal and local). The Cost of Government Day took 4 days longer than last year to get here. What this chart shows is that the regulatory burden and government spending have been ratcheting up since 2001, pushing the Cost of Government Day later and later:
Cost of Government Day is not to be confused with Tax Freedom Day. Tax Freedom Day occurred this year on April 23, 2008 and is the day on which Americans are finished paying their tax burden for the year. They are two different calculations — Cost of Government Day calculates the cost of regulations and government spending whereas Tax Freedom Day measures payment of taxes.
Although taxes and government regulations/spending are separate issues, they are also related, of course. More regulations and more government spending require more taxes to pay for them.
So maybe it isn’t surprising that in the NFIB’s survey last month of the top priorities and problems affecting small business owners, that 5 of the top 10 priorities involved taxes or regulatory burden. The 10 top issues of concern to small businesses currently included:
- Federal Taxes on Business Income
- Property Taxes (Real, Inventory, or Personal Property)
- Tax Complexity
- Unreasonable Government Regulations
- State Taxes on Business Income
Rounding out the NFIB’s survey of the top 10 problems and concerns were: cost of health insurance (the number 1 issue — no surprise); cost of fuel; cost of supplies/inventories; electricity rates; and workers compensation.
By comparison, the least critical problems included exporting; access to high-speed Internet; obtaining long-term and short-term business loans; government contracting; competition from Internet businesses; competition from imported products; and illegal aliens. In all, the survey covered 75 issues and is quite detailed (a 132-page report).
Notice a trend? The key issues of concern for small businesses are all matters of cost — and government-related costs constitute half of the top 10.
You might have thought that your small business owner peers would be more concerned by lack of opportunities, or perhaps the existence of competition they consider unfair, or even the access to credit and loans. However, those don’t rise to the same level of concern as anything that requires opening the checkbook.
Margins in many small businesses can be thin to begin with. In times when taxes and regulatory burden get high, you can feel like a tuna caught in a tankful of piranha, being gnawed and noshed to death.
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Discussion Boards
Martin Lindeskog | July 29th, 2008 at 1:59 am
Anita,
Interesting article. I will write a blog post on this topic. Here is an old post on Tax Free Day and Gold Standard: http://egoist.blogspot.com/2004/04/tax-free-day-and-gold-standard.html
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Amanda | July 29th, 2008 at 7:50 am
It doesn’t surprise me at all that taxes make up half of small businesses top 10 concerns. It seems like every time you turn around someone has their hand out waiting for their share.
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Martin Lindeskog | July 29th, 2008 at 6:30 pm
Thanks again for the informative article. It is good that you do the distinction between the Tax Freedom Day and Cost of Government Day. Sometime people are focusing too much on only lowering the tax level. It is crucial that the budget for the government is limited to what it should work with, i.e., protecting individuals rights. If you have a limited “night watchman” state that is responsible for the police, military and the court system (e.g., protecting the issue of legal binding contracts), the Cost of Government Day will occur much earlier than today.
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Small Businesses: Stop With the Taxes and Regulations | Small Business Trends | July 29th, 2008 at 11:42 pm
[…] Read also my other article about the size of government and the impact on small businesses in: Congratulations … You Have Now Worked Enough to Pay for Your Government. […]
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Chris | July 30th, 2008 at 12:28 pm
I’d have to agree with Amanda in that, this isn’t surprising - taxes are half the concern. And it’s true, everytime something develops someone wants to tax it. Look at the Net, look at eBay. Someone always wants and feels entitled to a share. It’s sad.
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Anita Campbell | August 1st, 2008 at 4:59 pm
Martin, thank you for your interest — all the way from Sweden! That’s awesome!
Yes, I just don’t like to see government keep getting bigger, and along with it our tax bite and other costs of running our businesses. The rule of law is necessary or we would not be able to build our businesses — we need protections for property so that others can’t swoop in and grab the fruits of our hard work from us. But even a good thing can be taken too far.
Anita
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Anita Campbell | August 1st, 2008 at 5:06 pm
Amanda and Chris, Very true.
Thanks for commenting.
Anita
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Brent Leary | August 2nd, 2008 at 10:40 pm
I guess I better hurry up and retire before I have to work the rest of my life…for nothing!
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