Your tax burden is bigger than Tax Day (by John Stossel Apr 19, 2006)

Townhall.com :: Your tax burden is bigger than Tax Day by John Stossel Apr 19, 2006

Apr 19, 2006

How was your Monday? Did you file your tax return with a smile, looking forward to the refund check from Washington and forgetting that it was your money in the first place? Even if you wrote a big check, I bet you don't recognize just how heavy your tax burden is.

In 1904, government, federal and state, cost every citizen $20 per year, according to a 1999 Tax Foundation study. Don't blame inflation --that only brought it to $340. For more than 150 years after we declared independence, we spent less than $1,000 each on government. Yet by 1999, government cost every man, woman and child an average of more than $10,000 per year -- more than housing and health care combined. The price went down a little after that, but then it started climbing again.

You probably don't know how much you pay, because the government is sneaky about how it taxes you. Paying withholding taxes each pay period dulls the pain of the income tax -- it's money you earned, but it's never in your hands -- and a hundred other taxes are hidden. For my TV special "John Stossel Goes to Washington," we followed St. Louis construction worker Bill Thurston and totaled the little-known taxes he paid daily. It started with the tax on the electricity that powered the alarm clock that woke him. Bill paid two taxes on his toothpaste. He paid a tax on water to get it into his home, and a sewer fee so it would go out. Daring to drive to work cost him more: He paid personal property tax on his truck; he had to pay sales tax when he bought it. And when he bought the gas, there was a county gas tax, a state gas tax and a federal gas tax.

At work, Bill gets stuck with local income tax, state income tax, federal income tax, Social Security tax and Medicare tax. Bill's boss needs two employees just to calculate how much to withhold from paychecks, and while their salaries don't go to the government (except for local income tax, state income tax, and so on), that's money Bill's employer can't spend on developing his business or giving Bill a raise.

Because Bill's wife works, the Thurstons pay a marriage tax of $1,000 a year. Then there's the grocery tax, property tax, utility tax, FCC tax and a county tax on the cable TV, and a whole bunch of different taxes on the phone. And if after paying all these taxes Bill and his wife want to relax with beer or cigarettes, there are sin taxes on those.

Why should government cost us more than shelter? Political scientist James L. Payne examined the record of 14 congressional appropriations hearings and found that of 1,060 witnesses who testified, only seven spoke against spending money, while more than a thousand testified that the spending -- whatever it was -- was necessary. Even a politician who believes in limited government has a tough time resisting a constant onslaught of "needy" people saying, "This program is crucial!"

The testimony is lopsided because of the "concentrated benefits-diffuse costs" problem: The benefits of any given government program go to a few, but the costs are spread among many. If sheep and goat ranchers get $200 million in handouts, it costs each of us less than $1. What are you going to do about that? Go to Washington and protest? For a buck, you probably won't even write your congressman, let alone take him out to dinner or give him a $2,000 campaign contribution. Yet the sheep ranchers have an incentive to spend $199 million lobbying if it gets them a $200 million subsidy back. Economists call it rent-seeking.

Of course, even the sheep ranchers would be better off if the government stuck to its basic purposes. But it makes no sense for them to pay for everyone else's programs and not demand their own.

The big bill came Monday. But see if you can catch all the taxes you paid today.

Award-winning news correspondent John Stossel is co-anchor of ABC News "20/20" and author of "Give Me a Break."

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