While Julius Caesar was struck down on the 15th of March, modern Americans notice the sting of government’s fiscal blade on the 15th of April. Unlike the blow which fell the Roman ruler that March day, for most Americans the tax burden doesn’t end after placing a stamp on the envelope containing our tax forms. Indeed, the average American works from January 1 to well past April 15 just to pay the combined bill of federal, state and local taxes.
That’s before food, medicine, shelter or clothing!
Even in Texas. With Texans justifiably apprehensive about the approaching special session focused squarely on taxes, the tax burden on Texas – which had been trending down for a decade – is on the rise.
According to the Tax Foundation, back in 1994 the average Texan was working until April 21 to pay federal, state and local taxes – with 9.7 percent of income going to state and local governments, while the federal government took 20.5 percent.
Throughout the 1990s, Texans worked longer and harder to pay their taxes, due to rising federal tax burdens. From 1994 to 2000, the state and local taxes dropped steadily as a percentage of income.
But in 2001 the ratio of state and local taxes went back up, and for the last five years has fluctuated between 9.3 and 9.4 percent. Federal decreases have eased down, allowing Texans to work fewer days to pay taxes.
We hit a low-mark (actually, a high mark) in 2004 when Texans worked only until April 11 to pay their combined tax bill – the shortest time since 1971 (when we worked to April 10 to pay all taxes).
Prepared for bad news? The trends are inching back up. In 2005, Texans worked until April 16 to pay for government. And this year? According to the Tax Foundation’s 2006 analysis, you’ll be working until April 19 to pay your tax bill.
It’s only when you go to work on April 20 this year that Texans will start working for the needs of their family.
So what will this month’s special session do to Texas next year? With the governor and most lawmakers committed to using at least a portion of the surplus to buy-down taxes, one should expect the state tax burden report to fall.
Of course, numbers from the Tax Foundation paint only a picture with broad strokes, comparing taxes paid to individual income. It does not take into account the distorting effects various types of taxes can have on an economy, such as the taxes hidden on business. Already Texans suffer from one of the 10 highest hidden-tax burdens in the nation, with the existing taxes remitted by business – but paid by customers, employees and business owners as passed-on costs.
Whether lawmakers will brush the cost of government under the carpet by putting more burden on “business” remains to be seen. Doing so might provide a temporary reduction in taxes (and any reduction is welcome), but could pave the way for future lawmakers to surreptitiously raise the tax burden down the road.
Legislators would better serve the public by dedicating the entire surplus to tax reduction. Some claim the $4.3 billion surplus is already spoken for by various spending priorities, suggesting that well-intentioned, if poorly considered, legislative intent is comparable to holy script; it is not. If Texas’ elected officials wish to adopt as a priority the protection of taxpayers from the expensive growth of government, they must simply commit to doing so in the most practical fashion imaginable: devoting current and future surpluses to tax relief.
Spending the surplus on expanding programs and projects should not be an option. It increases the costs to taxpayers by encouraging legislators to continue a never-ending cycle of government growth. As we work more days of the year to pay the demands of government, we have fewer days to meet the needs of our families, and even fewer resources to fuel growth in the economy.
Poets suggest that if Caesar had heeded the warning about the Ides of March, or even just paid closer attention to the mannerisms of his Senate, he might not have gasped his last words on those marble steps. As lawmakers return to the Capitol on April 17, Texans will serve themselves well by following closely not the rhetoric in the debate, but the practical implications of the works. Otherwise, our economic prosperity could be mortally wounded under the pink granite dome.
Michael Quinn Sullivan is the vice president of the Texas Public Policy Foundation, a non-partisan research institute based in Austin.