The Tax Attic

Jerry Coon, Enrolled Agent

Jerry Coon, Enrolled Agent

When is Tax Freedom Day?

What a difference a year makes. No, I’m not talking about April 15. That day comes hell or high water, or maybe hell AND high water is the more appropriate way of stating it. I’m talking baseball in general and Detroit Tigers baseball in particular.

I’m one of those lifelong Detroit baseball fans who grew up listening to Ernie Harwell and Paul Carey on the radio and watching George Kell and Al Kaline on the television. As a youngster, what a treat it was to get to watch a Tiger game on one of those rare weekday nights when the game was on TV. Today, all of the games are on Fox Sports or ESPN, but back then usually only weekend games were shown on Channel 3. I guess bumping a regular night of programming off the air for a normal regular season baseball game wasn’t all that wise of a choice.

Last year, at this time, the Tigers were zero for April. They lost their first seven games. Their bullpen gave away many of those games. I, personally, was stunned. They had more hitting firepower than any other team in baseball. Their starting pitchers were dependable pitchers. The bullpen was stocked with veteran relievers. Granted, they had a few deficiencies in the field. They were going to make some errors, but out-hitting and outscoring the opposition can make up for not catching every ball.

Things unraveled quickly last year. Getting off to a 0-7 start has a way of doing that. The dependable starting pitchers either injured their arms or seemed to just forget how to pitch. The relievers couldn’t throw strikes or injured their arms, or didn’t throw strikes and injured their arms. What a disaster.

However, it’s a new year, and these Tigers are off to a great start. The fielders actually do catch the ball. The hitters are hitting. Other teams have more and better hitters, but not by much. The starting pitchers are back to being somewhat dependable. Most importantly, the relief pitchers seem to be able to throw strikes, get some people out, and protect a lead in the seventh, eighth and ninth innings. Go, Tigers. Maybe by the time October and the playoffs come around, I will be stunned this year, too.

The Washington, D.C.-based nonprofit agency, Tax Foundation, each year calculates Tax Freedom Day. That is the day, according to the Tax Foundation, that the average American pays 100 percent of his/her tax for the entire year, considering that 100 percent of that average taxpayer’s income was allocated to taxes from beginning on January 1.

The Tax Foundation actually does two calculations. The first formula calculates April 5 as the Tax Freedom Day. This is one week earlier than last year’s calculation. The second formula calculates May 12 as Tax Freedom Day. This is one week later than last week’s calculation. What is the difference? We all know the saying that figures don’t lie but liars figure. I’m not implying that the Tax Foundation is lying. I am implying that calculation number one doesn’t really tell the whole story.

Calculation number one does not include the current budget deficit of roughly two trillion dollars. Calculation number two does include that budget deficit in the calculation. Calculation number one is trumpeted in banner headlines on the front page of the Grand Rapids Press, so to speak. Calculation number two is there, but it’s in a really small article in Section D, page 12.

My take on these two calculations is this: If we are talking about our 2009 tax bill and trying to figure out when that total tax bill is going to be paid, then we should use all of the money the government is going to spend in 2009.

In that regard, calculation number one is very misleading. It makes for a great story, and our bill is paid a week sooner this year. Hooray. But we all know that it is just not possible. Did our government shrink over the past year? Ha, ha.

Calculation number two includes all of the 2009 monies spent to bail out AIG, Fannie Mae, Freddie Mac and various banks; monies spent on the Iraq and Afghanistan wars; monies spent on helping people stave off foreclosure; monies spent on the stimulus bill, and on and on.

Our government is spending all of this money, but it’s not included, because deficit spending isn’t included in calculation number one. Calculation number two may be ugly, but it’s closer to the truth. The true Tax Freedom Day, in my mind, is May 12. This is Jerry Coon signing off.

 

Jerry Coon is an Enrolled Agent. He owns

Action Tax Service on Northland Drive in Rockford.

His e-mail address is jcoon@actiontaxservice.com.

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