When are South Carolinians done paying their taxes? No, the answer isn’t April 18 - taxes are just due on that day. You finish paying them on April 11.
That’s when South Carolina taxpayers finally earn enough to pay what they’ll owe for 2016. Put another way: You work 102 days before you actually start to see your hard-earned money. The non-partisan Tax Foundation calls this “Tax Freedom Day,” although you probably won’t feel like celebrating when you consider that you’re likely spending more on taxes than on food, clothing, and housing combined.
You’re also losing more to the tax collector with every passing year. Nationally, Tax Freedom Day is the same day it was last year, but it’s still eleven days later than it was only four years ago. When you stack South Carolina up against other states, it’s actually doing pretty well, with the 8th Tax Freedom Day in the nation.
But expect things to keep getting worse in the years ahead.
Tax Freedom Day keeps getting pushed back mainly because the federal government keeps taking more of our money. This year, Washington, D.C. is expected to rake in a record-breaking $3.36 trillion in tax revenue, $115 billion more than it did last year.
That still won’t be enough to satisfy D.C.’s spending addiction. Washington will once again spend more than it brings in this year, adding $534 billion to the already massive federal debt. But that’s par for the course: Over the past two decades, both Republicans and Democrats have made countless promises while leaving you and me with the bill. The result has been out-of-control federal spending, which has fueled an unprecedented rise in the national debt from just over $5 trillion in 1996 to nearly $20 trillion today.
The wasteful spending is getting worse, too. Last month, the federal government’s fiscal watchdog, the Congressional Budget Office, estimated that D.C. deficits will grow every year for the foreseeable future. The annual shortfall will surpass $1 trillion within six years.
Tax Freedom Day will keep getting later so long as overspending persists. So what can South Carolina lawmakers in D.C. do to avert this deepening crisis?
The obvious answer is to cut federal spending, starting with the waste, fraud, and abuse that are rampant in D.C. But just as important as spending reform is tax reform.
America’s tax code is an absolute mess. We spend a staggering 1.35 billion hours and $20 billion every year trying to comply with it. Why? Because the code is riddled with countless special-interest carve-outs, which force up individual tax rates for the rest of us. We’re also one of only a few countries in the world that double-taxes everything businesses make overseas. Finally, our business tax rate at home is the highest in the developed world.
The results are predictable—businesses fleeing America and less money in your pocket. Perversely, America’s high tax rates actually lead to less tax revenue over time, meaning Tax Freedom Day will keep getting later.
The next president and Congress can reverse this. Real tax reform would simplify the code, eliminating corporate carve-outs and loopholes so that rates can be lowered for you and me. It would end the double taxation on business’ foreign earnings, giving companies a reason to stay in America and create jobs. And it would lower business tax rates to spur the economic growth that ultimately leads to more tax revenue in the years ahead.
That’s preferable to forcing South Carolinians to spend ever more of their year working for the tax collector. It’s already bad enough that South Carolina’s Tax Freedom Day fell on April 11 this year. You can’t afford for it to get any later.
Koenig is senior policy advisor at Freedom Partners Chamber of Commerce.