Today is tax day. What have we learned?
Every year, it never fails. April 15th rolls around, people file their taxes, and vats of ink are spilled on what our tax system means and how it could be improved. But the day they should focus on is April 18th this year: tax freedom day. That’s the day that that the average working American stops working for the government and starts working for him or herself. Of course, this varies by state. If you live in Tennessee, tax freedom day is April 2nd; if you live in Connecticut, it’s May 13th.
This is important because no one every changes the oil on a rented car. When people work for themselves, they tend to work harder and longer, innovating when possible, either finding a way forward or making one. We live in an entrepreneurial culture and lower taxes encourage this.
Since the early ‘60s, our Tax Freedom day has hovered around mid-April. Other countries aren’t so lucky: in Germany it’s July 19th; in Belgium it’s August 3rd. Is it any wonder that many Dutch-speaking residents of Belgium want to join Holland, where their tax-freedom day is a month earlier?
Motivation matters; incentives matter. But you need to have enough government to provide adequate basic functions, or you might end up like countries whose tax-freedom day is in March: India, Albania, and Cyprus.
Douglas R. Tengdin, CFA
Chief Investment Officer
If you have questions or comments, please write us at questions.