|
Townhall
Finance...
Milton Friedman on
Tax Freedom Day
by Chris Edwards
The Tax Foundation reported that Tuesday was Tax Freedom Day (TFD),
which is the day that Americans stop “working for the government”
through their tax payments and start working for themselves.
TFD is calculated by taking total federal, state, and local taxes and
dividing by national income to get a ratio representing the share of
income that the average person pays in all taxes. That ratio is applied
to the 365-day calendar. This year the ratio is 29.2 percent, which
translates into April 17 for TFD. Time to party!
But maybe not quite yet…
When I worked at Tax Foundation in 1993, I mailed a letter to Milton
Friedman asking about his view on TFD. He kindly responded with a
letter and a 1974 Newsweek article in which he proposed a “Personal
Independence Day.” That day would be based on total government
spending, which is larger than total taxes, and thus our day to
celebrate freedom from the government hasn’t yet arrived this year.
In his letter to me, Friedman stressed that total spending is the
important variable in assessing the burden of government: “If
government spends an amount equal to 50 percent of the national income,
only 50 percent is left to be available for private purposes, and that
is true however the 50 percent that government spends is financed.” And
while some economists focus on how government borrowing may “crowd out”
private investment, Friedman said, “What does the crowding out is
government spending, however financed, not government deficits.”
In its TFD report, Tax Foundation includes a supplemental calculation
looking at spending. The thinktank figures that Americans will work
until May 14 this year to be free from the burden of federal, state,
and local spending. The Foundation is lacking a snappy name for that
important day, but now we are reminded that Friedman has already
suggested one.
Friedman hoped that “Personal Independence Day” would complement our
national Independence Day of July 4. The latter is the day we celebrate
independence from the “Royal Brute of Britain,” as Tom Paine called him
in Common Sense. But for Paine and the other Founders, the deeper goal
of July 4, 1776 was to create a limited government to ensure the
maximum space for the exercise of individual freedom. As Paine noted,
private “society in every state is a blessing, but government, even in
its best state, is but a necessary evil.”
So Milton Friedman’s Personal Independence Day can be our annual
reminder that while our forefathers gave the boot to the “crowned
ruffians” of Old Europe, we’ve still got work to do in limiting the
power grabbing of our own elected ruffians in Washington.
Read this and other articles at Townhall Finance
|
|
|
|
