Current expenditures are far and away too high, and most are grossly unconstitutional.
The country managed to survive for a century with an income tax of zero, and was then introduced with a "guarateed" maximum cap of 4%. Although the direct taxes are now about 20-30%, the things people buy with after-tax money were produced by tax-paying companies, and for which sales tax is collected, and people even have to spend after-tax income to pay for income-tax compliance, such as tax software, tax return preparation services, and so forth... I think the real tax rate ends up being something like 70% when you calculate how much of your labor pays directly for goods that you wish to buy, the balance is taxes somewhere or other.
An effective tax rate of 70% is clearly too high.
I think the real tax rate ends up being something like 70% when you calculate how much of your labor pays directly for goods that you wish to buy, the balance is taxes somewhere or other.
Pretty close:
We must . . . End Tax Slavery Now; Nov '97
by Jarret B. Wollstein
HOW MUCH DO YOU REALLY PAY?
According to the Tax Foundation, in 1994 the average American paid 22.4% of his or her income in federal taxes, plus 11.8% in state and local taxes - 34.2% total.
But that's just the beginning! Dr. James Payne of the University of California found that in addition to direct taxes we also pay huge, hidden taxes including:
- Compliance costs - record keeping, monies spent on tax planning, computers and software purchased to fulfill IRS requirements, etc.
- Enforcement costs - IRS audits, field investigations, service center corrections, criminal investigations, litigation, and forced collections.
- Emotional, moral and cultural costs - families forced onto welfare, time and creative energy lost figuring out how to avoid taxes, etc.
For every $1 we pay in direct taxes, we spend an additional $0.65 in compliance costs. And even that figure doesn't include the cost of import duties, license fees and other government regulations. For a typical U.S. family, the real cost of taxes and regulations is at least:
Federal taxes 22.4% of income
State & local taxes 11.8%
Compliance costs 22.2%
Regulatory costs 12.7%70.1% of your income is now consumed by government