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What is Tax Freedom Day?

April 22, 2016
Senator Chuck Grassley , Dysart Reporter

Q: What is Tax Freedom Day?

A: As tax filing season winds down for the year, taxpayers can look forward to reaching another milestone on April 24. That's the day, 114 days into the calendar year (excluding Leap Day), that the nonpartisan Tax Foundation says taxpayers have worked to meet their federal, state and local tax burden. Federal revenue collections in 2016 will be $3.34 trillion and state and local taxes combined will reach $1.64 trillion. That adds up to $4.99 trillion, approaching one-third of national income. According to the Tax Foundation, Americans will spend more on taxes in 2016 than they will on food, clothing and housing combined. If you factor in savings for retirement and college, it's no wonder so many Americans are wondering why it's so hard to get ahead and stay ahead. Working until the middle of April just to foot their tax bill sure makes people feel like they are spinning their wheels to earn a living and pay their own bills. Factor in federal borrowing, and taxpayers have an even gloomier forecast. That's because if you calculate how much longer taxpayers work to make up for annual federal borrowing, Tax Freedom Day takes 16 days longer to reach: May 10, 2016. There's a small bit of consolation, comparatively, for Iowans. Iowa's Tax Freedom Day falls on April 14, 2016. Iowa ranks 14th among the 50 states to observe the day when taxpayers in their respective states have earned enough money to pay their tax burden for the year. Residents in Connecticut (#50) must work an extra month (until May 21) to clear their tax hurdle before they start earning money for their own expenses and personal savings.

Q: Where is Congress in the budget process this year?

A: In February the President proposed a $4.2 trillion budget. His budget projects that revenue collections would cover 86 percent of spending and the remainder, 14 percent, would be borrowed. It never balances. Washington needs to change its mindset. America can't tax, spend and borrow our way to prosperity. Since President Obama took office, the federal debt has increased $9 trillion to $19 trillion. In fact, the budget deficit the difference between what the government spends and collects - surpassed $1 trillion each year from 2009 to 2012. As a member of the Senate Budget Committee, I work to hold government spending accountable as a watchdog for taxpayers. Congress holds the power of the purse strings. Each year, Congress legislates tax dollars for what's called discretionary and mandatory spending. Roughly speaking, about two-thirds of the budget is mandatory, about one-quarter is discretionary and the rest goes to service the federal debt. The discretionary spending authority changes from year to year to pay for programs and public services such as national security, transportation and infrastructure, scientific research, veterans' healthcare benefits, food and agriculture, and the military, for example. Mandatory spending is authorized by existing law, such as Social Security and Medicare. Its expenditures depend on the number of people who qualify for benefits from year to year. Over the next several months, lawmakers will hammer out public policy and prioritize spending decisions that fund the government. I'll continue working to make sure tax dollars are spent and collected as intended on both sides of the federal ledger. Without exception, Iowans at my 99 county meetings tell me they are fed up with reckless spending habits that mortgage the future of their kids and grandkids. It's morally irresponsible to live high on the hog today and leave it the next generation to pick up the tab. That's one reason I voted against the $1.1 trillion omnibus spending bill in December. Washington needs to get its fiscal house in order. As a fiscal conservative, I'll keep working to rein in the bloated bureaucracy, expose wrongdoing and account for better stewardship of tax dollars. That includes a bill I introduced in April to close a loophole in the farm payment system. Family farmers are hitting the fields this spring with uncertainty about low commodity prices. Congress needs to strengthen the farm safety net for those it was intended to serve, not an unlimited number of "non-farming" family members. Although I secured language in both the House and Senate passed farm bills to curb abusive farm payments, last-minute negotiations on the final 2014 farm bill restricted the USDA's ability to eliminate this loophole. There are more loopholes I'm working to close across the sprawling bureaucracy, from wasteful U.S. military spending in Afghanistan to corruption and cronyism at public housing authorities. What's more, the federal government in 2014 made $124 billion in improper payments, according to the nonpartisan Government Accountability Office, $19 billion more than the previous year. What's worse, the GAO estimates there have been $1 trillion in federal tax dollars lost to improper payments since reporting began in 2003. Also consider the extensive use of paid administrative leave that has resulted in some federal workers collecting tens of millions of dollars not to report to work. Incredibly, the federal government paid 263 employees from 2011-2013 to stay off-the-job for a year or more, with paychecks exceeding $31 million. I'm working to pass bipartisan legislation that would curb abusive practices and federal agencies' misuse of paid administrative leave. As Iowans wrap up another tax filing season, I will continue working to keep a tight leash on federal spending.



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