Soon the federal tax-filing deadline will come and go. On its heels, Iowa taxpayers will reach another milestone in the tax calendar year: tax freedom day.
According to an annual report issued by the nonpartisan Tax Foundation, Iowa taxpayers will work on average until April 18 to fulfill all local, state and federal tax obligations. That makes Iowans fall roughly in the middle of high- and low-tax states. Workers living in the Northeastern corridor toil the longest to fulfill their tax obligations. Residents in Connecticut rank first (or last depending on one’s perspective) and must work until May 12 this year before they will earn enough to foot their tax burden.
As a nation, tax freedom day falls on April 26. According to the Tax Foundation’s analysis, Americans must work 77 days to afford their federal taxes, three days more than last year.
Tax freedom day puts a price tag on what Americans are paying for their government. And for 2006, Americans will pay 31.6 percent of their income to finance local, state and federal governments.
Now some may argue that’s not enough. Some may say it’s just right. My philosophy says that taxpayers work hard for their money and deserve to keep more of it. That’s why I will continue efforts to extend pro-growth tax breaks on investment income, relieve middle-income families from the Alternative Minimum Tax and rein in tax dodgers whose dishonesty creates a bigger burden for those who voluntarily pay their fair share.
As chairman of the Senate Finance Committee, I am charged with steering through tax policy that sets in place how federal revenue is raised. I led the charge in the U.S. Senate in 2001 to enact the largest tax relief laws in a generation.
Now I am working to make sure Congress keeps the pro-growth, pro-jobs and pro-taxpayer tax relief laws on the books. I understand lawmakers need to thread a fine needle to forge a bicameral, bipartisan compromise. Some of us want to extend and expand the landmark tax relief laws that lowered marginal tax rates, reduced taxes on capital gains and dividends, addressed the unfairness of the Alternative Minimum Tax and winnowed down the federal estate tax. At the same time, we wrestle with the need to curb deficit spending and fund the people’s government, including reconstruction money for America’s Gulf Coast.
Lawmakers are working within a five-year budget window that allows for $70 billion in tax cuts. Anything more than that cannot add to the federal deficit. If tax relief projections reach beyond the $70 billion approved for tax relief, lawmakers must find other savings to offset the revenue. So congressional negotiators remain at a standstill on how to proceed.
At a minimum, Congress owes it to hardworking taxpayers to clamp down on the deficit and find a way to protect the middle class from the parallel tax system (AMT). Where there’s a will, there’s a way. I will do my best to find a way.
In the meantime, Iowa taxpayers should enjoy reaching tax freedom day on April 18. For the rest of the year, Iowa families may save, spend, invest or donate their own money as they see fit.
Although big spenders in Congress believe higher taxes are the cure to Uncle Sam’s financial shortfalls, I disagree. As a watchdog for taxpayer interests, I will continue my longstanding oversight efforts to root out waste, fraud and abuse. I take seriously my job to hold the government accountable to taxpayers so that hardworking taxpayers get the best value for their money. I call it getting the most bang out of every buck. If only more lawmakers saw it my way, taxpayers could celebrate tax freedom day earlier in the year