Cost of Government Day 2013 Arrives!

This past Saturday, July 13, marked the Cost of Government Day for 2013. The Cost of Government Day is the day at which point the average American has earned enough money to pay their portion of the government (national, state, and local) spending and regulatory burdens for the year. The average American would be working for the government until July 13th in 2013 before they could make any money for themselves (if everyone paid for all government spending). 2013 marks the fifth consecutive year that the Cost of Government day has fallen in July.

The Cost of Government Day report examines each state to determine how many days the median income earner would need to pay off state spending for 2013. Residents in states with the highest overall spending have a later Cost of Government Day than those states with lower overall government spending. Generally, states that have the greatest tax burden are also the states that spend the most per capita and end up with the latest Cost of Government Day.

Since 2001, states that have a higher overall tax burden have faced increased levels of emigration as residents move to states with a lower tax burden. When comparing states with the highest tax burden to those with the lowest tax burden, the Cost of Government Center found that those with the lowest tax burden gained more people and more revenue while states with the highest tax burden lost more people and more revenue. These results, consistent with findings in ALEC’s Rich States Poor States, demonstrate that people “vote with their feet” in order to keep more of what they earn in their pockets . With increases in both federal and state taxes, the incentive to move to states with low or no income taxes rises.

Despite recent strains on state budgets, some states, like Texas, Ohio, and North Carolina, have chosen to lower taxes, which consistently attracts businesses and people into their state. Lowering tax burdens promotes investment, creates jobs, and furthers economic growth. Kansas has reshaped its tax system over the past two years and flattened its tax brackets, reduced rates to a reasonable level, and provided major tax relief for small businesses. Tax relief coupled with a reduction in spending help to attract wealth and investment, and lower the pressure on taxpayers.

Good tax policy is the key to economic growth and spending is simply the other side of that same fiscal coin. When people and businesses are allowed to keep more of their income to save and invest, everyone in the state is a winner.