Tax season can be … taxing. Considerable effort and expense goes into compiling paperwork, complying with tax codes, computing the amount owed and finally paying federal and state taxes.
Taxation funds government. But what should citizens fund? The Declaration of Independence defined one role of government: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness — that to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed.”
Article I of the Constitution specifically enumerates the duties of the federal government.
Author and professor Richard M. Ebeling addressed this question in an essay. Ebeling wrote: “Government may be narrowly limited to perform the essential task of protecting each individual’s right to his life, liberty and honestly acquired property. Or it may be used to modify, influence or dictate the conduct of the citizenry.”
Since government has no way of making money, it takes money from citizens in the form of taxation. But where do federal tax dollars go? The Center on Budget and Policy Priorities reported in 2017 the following breakdown:
- Medicare, Medicaid, Children’s Health Insurance Program, marketplace subsidies — 26 percent.
- Social Security — 24 percent.
- Defense and international security assistance — 15 percent.
- Safety net programs — 9 percent.
- Benefits for federal retirees and veterans — 8 percent.
- Interest on debt – 7 percent.
- Education — 3 percent.
- Transportation infrastructure — 2 percent.
- Science and medical research — 2 percent.
- Non-security international — 1 percent.
Following where tax dollars go, one would have to conclude government structure is far from limited. In fact, the fingers of government seem to be in every aspect of a citizen’s life. Citizens contribute with their tax dollars to the expansion of government, which in turn requires more taxes and the cycle begins anew.
Individuals aren’t the only ones affected by taxes. The influence on the economy is significant. Every dollar paid in taxes is a dollar not spent for goods or services that would benefit the individual or saved for later expenditures. Every dollar paid in taxes represents money the individual earned, but is unable to choose how that money is spent.
Businesses face risk in the possibility they could lose money. In the event a business earns profit, about 48 percent of that profit is paid in cumulative taxes. These include employment tax, income tax, property tax and sales tax as well as excise taxes on use and consumption and state taxes.
At some point, business owners question why they risk capital and effort for a return of 52 cents on the dollar. When the risk of investment outweighs the rewards of success — which happens as a result of high taxation — every facet of the economy suffers.
Some taxation is necessary. But taxation supporting a continually expanding government hurts individuals, businesses and the country as a whole.
Phyllis Hunsinger is founder of the Freedom & Responsibility Education Enterprise Foundation in Grand Junction. The foundation provides resources to students and teachers in Western Colorado to promote an understanding of economics, financial literacy and free enterprise. For more information, visit www.free-dom.us.com. A former teacher, principal and superintendent, Hunsinger wrote “Down and Dirty: A ‘How To’ Math Book” Reach Hunsinger by email at firstname.lastname@example.org.