On July 13, this paper printed a LTTE which I had submitted as a follow-up to Mr. Ochsner's opinion on the subject of taxes and spending. In my submission I made references to Tax Freedom Day, and I quoted findings of the Tax Foundation. Specifically, their statement that Tax Freedom Day in 2012 (adjusted for current federal borrowing) was May 14.
It turned out that last Wednesday The Cost of Government Center (COGC) a different organization, released its study that the wonderful day was July 15. And this bothered me because there's quite a difference between May 14 versus July 15. Turns out there are a lot differences in how these dates were reached.
The two greatest differences are:
The COCG Report calculates the costs of the 2008/2009 TARP (Troubled Asset Relief Program) and the Obama stimulus or ARRA (American Recovery and Reinvestment Act).
The COCG Report does something else that the Tax Foundation did not do: it calculates and includes the cost of government regulation at the federal, state, and local levels.
"Our conservative estimate of total regulatory costs takes into account only the cost of complying with regulations: the material resources and labor needed to carry out compliance.
For example, if a regulation requires new pollution control equipment for power plants, compliance costs include the costs of manufacturing, installing, operating and maintaining equipment. Not counted are the negative economic effects of regulatory requirements - the deadweight loss of these policies.
Deadweight loss is society's valuation of goods and services forgone due to government rules."
Just these two differences in methodologies explain the discrepancies between May 14 and July 15. Paying off TARP and ARRA may require up to 24 additional work days and "the average American must labor 69 days in 2012 just to cover the costs of government regulations."
Both methodologies are valid, and although the resulting dates are different, we can't label either false or inaccurate. I have read studies that estimate the cost of government regulation between 1.3 and 1.85 trillion dollars per year, and that may correctly translate into an additional 69 days of work as stated by COCG.
I prefer to go with the Tax Foundation's May 14, noting that the cost of government regulations is not included; and that if the cost of regulation is included July 15 may be correct.