Why our tax burden and cost of government threatens the American dream
The American Dream was, and is, different than the aspirations of other nations. In the 1950s it was envisioned as a husband and wife and children standing before the home they owned or in the car they owned. House, car, and nice clothes were the material expressions of their agency, their autonomy, their ability to lead the lives they chose with the family and future they would create.
Other nations had classes, aristocrats, powerful governments that constrained the hopes and aspirations of their subjects.
During the colonial period the tax burden on Americas averaged two percent. The British, our colonial masters, paid 20 percent in London. Most Americans owned their own homes and farms. They were in control of their lives and could provide for their families. There was no government-imposed limits to what they could accomplish. And if a local or state government was annoying, they had a continent to move westward into to flee local governments that raised taxes or interfered with their lives.
But as the founders feared, governments tend to grow to fit the interest of the governing class not the citizens. Government spending as a percent of the economy was still only 1.6 percent in 1850, shot up during the American Civil War and was 2.7 percent by 1900 and 9 percent by 1940. After the dust settled from World War II, the federal government was consuming 11 percent of GDP in 1948.
Today the federal government consumes 23 percent of GDP while government at the federal, state and local levels combined consumes 36 percent of GDP. Less than the EU’s 48.6 percent, but many times the cost imposed by government though most of our history.
How does a larger and more intrusive government help or hurt American families pursuit of the American dream of a home, the freedom to travel of an automobile, the promise of a better life for one’s children and the ability to provide them the means to move upwards which today might be a high school and college education rather than a farm next door.
The cost of a home has been driven up by rising property taxes. Some suggest we no longer own our homes but “rent” them from the local government as we pay the government taxes that look a lot like mortgage payments—with the difference being that one never can burn the tax receipt the way one can burn a paid off mortgage.
In the 1990s, then HUD Secretary Jack Kemp, estimated that government regulations increased the cost of the average new home by 25 percent. And then property taxes on top of that.
More expensive homes delay the year in which your children can form their own families and control their own lives.
Parents working to provide for their families face the federal income tax, 42 states levy a state income tax, 45 states impose a state sales tax. Ronald Reagan reduced the top federal income tax rate from 70 to 28 percent so what if you worked on Saturday to earn $100 you kept $30 after tax when Reagan was elected and $72 when he left office. A doubling of the return to work.
Sadly, George H.W. Bush increased federal income taxes as did Clinton, Obama and Biden. Taxes keep fathers and mothers away from home for more hours and more days a year. A cost to every family.
The death tax limits how much parents can share with their children and grandchildren. A family farm or small business can be cut in two with one slice taken by the government—damaging and sometimes destroying the lifetime of work of parents.
And once you have earned a dollar, when you save it in the bank, the government taxes the interest, if you invest in the stock market, they take away the capital gains tax. The government makes it hard to save for your family and its future.
The cost of education has grown. Taxes to pay for public schools—and you get to pay for public schools even if you chose to home school or provide a private faith-based education for your children—have growth to half the cost of state and local government.
The average cost of education for one child for one year in public school is $17,700. Adjusted for inflation, that cost has increased 300 percent since 1960 while the quality of education has declined even as the tax bill—your bill— for what is sometimes little more than expensive babysitting has tripled.
The cost of health care has jumped as government worked hard to make it “free.”
Government subsidies can temporarily mask the true cost of education, housing, and health care. But government help comes out of your pocket not the wishing well. It is a cruelty when politicians lecture us that they are helping us when they hand back a share of what they took in taxes and expect us to thank them.
Enlarged government has made our Iives poorer, our costs of living more expensive and have reduced our ability to make decisions for ourselves on how we spend our money or our time.
Government today at all levels weakens the family, restricts our choices, limits our options and impoverishes our lives and those of our children.
And has replaced self-governance with the heavy hand of government.
Grover Norquist is president of Americans for Tax Reform.
