It’s Labor Day: a holiday that has been set aside to provide a day of rest for the American worker. Today, most of us will relax, perhaps spend some time at the beach or barbecue some steaks. Tuesday morning we’ll return to our work, as past generations did after their Labor Day rest, forced back to one inevitable reality that most can’t escape — the need to labor for a living.
It’s a good day to reflect on the state of our personal balance sheets. Congress officially declared Labor Day a national holiday in 1894. In the later years of the 19th century, when the industrial revolution reconstructed American society, and talk of honoring workers first arose among union organizers, workdays could far surpass the current eight-hour standard. Many people worked very hard for modest “personal profit.”
Nineteenth century founder and president of the American Federation of Labor, Samuel Gompers, acknowledged the importance of profit when he said, “The worst crime against working people is a company that fails to operate at a profit.” We agree. Workers prosper when businesses do.
Of great concern, however, is that the average worker’s after-tax profit is being reduced dramatically by an overwhelming tax burden. By one measure, each American worked a total of 193 days this year, or 52 percent of the year, from January 1 to July 11, simply to pay for the cost of national, state and local governments. The number includes all taxes, regulations and government deficits, according to the advocacy group Americans for Tax Reform. As a national average, 52 percent of what Americans earn, a little over half the profit of the workday, goes directly to the government.
Think about that. Half of all your productive labor is in service to government.
The cost of all forms of taxation, if one lives in California, is even higher at 55 percent, according to the chief economist for Americans for Tax Reform, Daniel Clifton. He told us that Californians work a hefty 204.3 days per year to pay for their total tax burden — 11 days beyond the national average. Furthermore, California ranks at the bottom, 47th nationally, in overall taxation costs. Only residents of New York, Massachusetts and Connecticut pay more out of pocket for their combined tax burden than Californians do.
Given the tax burden, consider the amazing creativity the marvelous work ethic the average American has. On about 48 percent of their pay — or in the average Californian’s case, on about 45 percent of their pay — workers pursue an education, pay their way through life, raise kids, provide for their retirement and help others by giving to charity. What further generosity and grace would be possible from average workers if allowed to keep more of their hard-earned money?
Yet, earning a fair profit could prove even harder for Californians in the future. Despite a well-publicized deficit of $38 billion, and enough ire from the citizens to impose a recall election, California legislators still don’t get it.
Legislation continues to be pushed that could cost taxpayers millions of dollars more. Three bills being considered, SB 2, AB 1527 and AB 1528, would move California closer to a state health-care system. Word has it that Sen. John Burton, D-Leader of the California senate, is personally invested in SB 2 as a “legacy” to his time in office.
One likely outcome of the expansion of medical insurance with these bills would be to stagnate job growth as companies are forced to pay for medical insurance they cannot afford. And fewer jobs means less people working, less job mobility and less profit for the workers. In the end the workers will pay for the choices of their leaders and their personal profit margins will drop even further.
How can the average Californian, or America for that matter, stop the money drain? Try this idea as a strike against government spending:
Take a lesson from the Orange County (Calif.) bankruptcy imbroglio of 1994-95, when Orange County citizens revolted, refusing to approve a county sales-tax increase to cover the shortfall. The county survived and bounced back, despite the prophets of doom and gloom, when prudent business measures were taken and another, no-new-tax solution was found. So, also, the state can bounce back, if our funds are handled correctly. Californians need to encourage their leaders to fix the deficit and stick to their guns on no new taxes and regulations — no matter who they choose to govern the state in the recall election on Oct. 7.
The average citizen’s profit margin after taxes isn’t good enough. Americans have learned to live with less and less take-home pay over the years. This Labor Day we encourage the government to live on less. America’s personal balance sheets deserve a brighter future.