COGD2012 Hi Res

COST OF
GOVERNMENT DAY
2012 REPORT
Americans for Tax Reform
Foundation / Cost of
Government Center
7 2 2 1 2 t h S t re e t , N W, F o u r t h F l o o r Wa s h i n g t o n , D C 2 0 0 0 5 ( 2 0 2 ) 7 8 5 - 0 2 6 6 F : ( 2 0 2 ) 7 8 5 - 0 2 6 1
Cost of Government Day 2012

2012 Americans for Tax Reform Foundation/Cost of Government Center
722 12th Street NW
Suite 400
Washington, D.C. 20005
Phone: (202)785-0266
Fax: (202)785-0261
www.atr.org
www.costofgovernment.org
For more information, contact ATR Communications Director, John Kartch
jkartch@atr.org
Devin Bowen, Author
Designed by Instinct Design, LLC
Fairfax, VA
Americans for Tax Reform Foundation (ATRF) performs research and analysis in order to educate taxpayers on the true causes and effects of
legislation and regulatory affairs. ATRFs efforts inform debate and emphasize the importance of fundamental tax reform and spending restraint.
In addition to the Cost of Government Day Report, ATRF also produces and publishes the International Property Rights Index, the Index of
Worker Freedom and Tax Bites.
The Cost of Government Center (COGC) is an affiliate of Americans for Tax Reform (ATR) that complements ATRs tax reform agenda by
promoting government spending restraint. The Center promotes limited government by educating taxpayers and policymakers on the full costs
imposed by spending and government regulation. The Center encourages restraint in federal finance, a limited regulatory regime and fights
discriminatory excise taxes.
C2
COST OF GOVERNMENT DAY 2012 REpORT
TABLE OF CONTENTS
About the Author ............................................................................................................................2

The Thomas Jefferson Fellowship ..................................................................................................2
A Message from Grover Norquist and COGC Executive Director Mattie Duppler ........................3
Overview of Results ........................................................................................................................4
Cost of Government Day Components ..........................................................................................5
State by State Breakdown ..............................................................................................................6
The Government Spending Burden................................................................................................8
Federal Spending ..................................................................................................................8
Special Focus: Spending and the Federal Budget Deficit ..................................................10
State and Local Spending ....................................................................................................12
State Tax Increases ......................................................................................................................13
Government Employees................................................................................................................15
The Regulatory Burden ................................................................................................................17
Interstate Migration ......................................................................................................................19
Case Studies ................................................................................................................................24
Taxmageddon ......................................................................................................................24
The Debt Ceiling and the Budget Control Act of 2011 ........................................................28
The Corporate Income Tax in the United States ..................................................................32
Abundance of Supply: Americas Energy Resources ..........................................................35
Methodology ................................................................................................................................39
About The Author

This report was authored by 2012 Thomas Jefferson Fellow Devin Bowen.
Devin holds a B.S.B.A. in Economics from Duquesne University. Currently, she is a second year Mercatus M.A. Fellow in
the Department of Economics at George Mason University. Her primary research interests include, tax policy, financial
regulations, and international policies.
As of 2012, Devin has co-authored a Commonwealth Foundation policy analysis and two Mercatus working papers.
Additionally, she has presented solo-authored and co-authored papers. The first was a policy analysis of urban congestion in
London, presented at the Eastern Economic Association in 2010, in New York City. The second co-authored piece is a piece
on regulation and entrepreneurial activity, which was presented at the 2012 Association for Private Enterprise Conference in
Las Vegas, Nevada.
In 2010, Devin was a Commonwealth Foundation Research Fellow. As a fellow she had the opportunity to participate in
policy analysis and begin her experience in research and publication.
Devin was awarded the Thomas Jefferson Fellowship in March 2012.
The Thomas Jefferson Fellowship

The Cost of Government Day Report is published in the context of the Thomas Jefferson Fellowship, a program run by the
Cost of Government Center (COGC). COGC offers this fellowship to a graduate or highly qualified undergraduate student
with a background in the field of economics interested in the areas of federal and state fiscal and regulatory policy.
The fellowship is named after one of the most influential thinkers in American history, and one of the leading proponents
of accountable government Thomas Jefferson, Founding Father and third president of the United States of America.
Acknowledging that the American people and their economy can thrive and prosper when the role of government is limited
and subject to the scrutiny of taxpayers, the Cost of Government Center seeks to shed light on government expenditures,
and to promote the Jeffersonian ideals of fiscal accountability, fiscal restraint and free market principles.
The aim of the fellowship is to offer a student the opportunity to work independently in the area of federal and state fiscal
and regulatory policy and in collaboration with prominent experts and institutions in the field. The primary task during the
fellows time is to craft COGCs hallmark study, the Cost of Government Day Report.
A MESSAGE FROM
GROVER NORqUIST AND
COGC ExECUTIVE DIRECTOR MATTIE DUPPLER
his year, Cost of Government Day (COGD), the day of the calendar year on which the average American has
earned enough income to pay for the burdens imposed by government spending and regulation at the federal,
state and local levels, falls on July 15.
This marks the second consecutive year in which COGD has fallen slightly earlier than the previous year. It is true
that 2012 was not without victories for taxpayersthe 2010 elections ushered new advocates of limited government
into Congress and statehouses across the country who quickly championed budget and spending reforms. However,
the threat of bigger government is far from ameliorated; this years earlier COGD may be the last if policymakers
dont take seriously the lessons of the past year.
The 2012 Fiscal Year was remarkable in several ways. First, a protracted battle over spending levels resulted in the
first net spending cut from previous year appropriations for the first time this decade. After three years of explosive
discretionary spending baselines, this signaled a major shift in Washingtons spending-as-usual.
The agreement on spending levels was followed closely by an extraordinary debate on the countrys statutory debt
limit. Rather than extend borrowing authority carte blanche, as was customary, the impending ceiling catalyzed a
targeted debate on government spending. This resulted in a final deal that promised over $2 trillion in savings for
taxpayers.
Importantly, the debt limit debate did not result in tax hikes to fan the flame of bigger government. Instead, national
attention was directed wholly to the cause of the fiscal hysteria: government spending.
These victories, however, may be fleeting. A portion of the debt limit deals spending cuts$1.2 trillionare slated
to take effect at the beginning of next yeara pill many politicians are now finding too bitter to swallow.
Whats more, the 2001 and 2003 tax relief is slated to expire at the same time a slew of new taxes imposed by
President Obamas health care law will come into effect. If Congress does not act, taxpayers will be hit with a $500
billion tax hike in 2013 alone. The gravity of these tax hikes has caused some to muse that the victories of the past
year should be erased in hopes of a compromise.
A so-called deal that presents tax hikes as part of any solution will erase the ground gained for taxpayers after a year
of successful efforts to cut spending. It is instructive that the principled stand against big government has resulted in
slightly earlier Cost of Government Days over the past two years. However, if the deluge of new taxes is not
prevented and spending restraint is quickly thrown by the wayside, 2012 may be the last time taxpayers are granted
this reprieve.
Onward,
Grover Norquist
President
Americans for Tax Reform Foundation
Mattie Duppler
Executive Director
Cost of Government Center
3
OVERVIEW OF RESULTS
Definition
Cost of Government Day (COGD) is the date of the calendar year on which the average American worker has earned enough gross
income to pay off his or her share of the spending and regulatory burden imposed by government at the federal, state and local levels.
Cost of Government Day 2012

The Cost of Government Day for 2012 is July 15. On average, workers must labor 197 days out of the year to pay for all the costs imposed
by the government. From a different perspective, the cost of government makes up 54.0 percent of annual gross domestic product (GDP).
Cost of Government Day Trends

Cost of Government Day falls three days earlier than last years revised date of July 18. In 2012, the average American will have to work an additional
29 days to pay off his or her share of the cost of government compared to ten years ago in 2002, when COGD was June 16.
In fact, between 1977 and 2008, COGD had never fallen later than June 26. 2012 marks the fourth consecutive year COGD has fallen in July. The
difference between 2008 and 2009from June 23 to July 17was a full 24 days. The increase was spurred by massive government intervention in
the form of the Emergency Economic Stabilization Act (EESA) that created the Troubled Asset Relief Program (TARP) and passage of the American
Recovery and Reinvestment Act of 2009 (ARRA).
While 2012 marks the second consecutive year of an earlier COGD, this trend will only be temporary absent lasting and institutionalized spending
reform. The start of the 2012 fiscal year came and went once again without a federal budget in place and the threat of bankrupt entitlement spending
continues to loom large. Whats more, the largest tax hike in the nations history is scheduled to take place at the end of 2012 unless Congress acts
to protect taxpayers. If this tax increase is allowed to hit, COGD could permanently be pushed back into August and beyond.
Cost of Government 1977 - 2012
7/19
7/18
7/18
7/17
7/17
6/26
6/18
6/17
6/17
6/16
6/14
6/10
1977
6//26
6/26
6//25
6
6/25
1978
6/22
6/18
1980
1981
6/20
6/19
6/17
6/16
6/16
6/12
6/11
6/7
1979
6/24
6/24
1982
1983
1984
1985
1986
1987
1988
1989
6/2
/23
6/23
6/16
6/15
6/11
1990
1991
1992
1993
1994
1995
1996
7
/15
7/15
1997
1998
6/9
1999
6/17
6/18
6/16
6/16
6/15
6/11
6/7
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
COST OF GOVERNMENT DAY COMPONENTS

Federal Spending
The average American worker will have to labor 88 days just to pay for federal spending, which consumes 24.04 percent of the national income.
This is a small improvement from last year, when individuals had to work 91 days, and the previous year, when taxpayers worked 93 days.
State and Local Spending

In 2012, the average American labored 40.04 days to fund state and local spending. This is roughly the same as the number of days worked
in 2011; but it is one day more than 2010.
Regulatory Costs
The average American must labor 69 days in 2012 just to cover the costs of government regulations. In 2010 and 2011, laborers had to
work 71 days to cover the same costs. 2012 regulations consume about 19 percent of gross domestic product. In 2001, regulations consumed
14 percent of gross domestic product; the gap between 2002 and 2012 represents the largest increase of regulatory burdens yet.
Cost of Government Day Components
24.75 days
worked to
pay for state and
local regulations
87.82 days worked

to pay for federal
spending
44.62 days
worked to pay for
federal regulations
40.04 days
worked to pay for
state and local
spending
STATE BY STATE BREAKDOWN

The calculation of Cost of Government Day for each state is based on the varying government burdens suffered in each state. The large
contributors are federal tax and spending burdens. These federal burdens vary because relatively higher burdens are borne by states with relatively
higher incomes. State and local spending burdens vary as well.
As in previous years, the latest Cost of Government Day is in Connecticut, with the average worker toiling until August 9, 2012 (almost an
entire month beyond the national average) to pay for the full costs of government. Second place is given to New York and New Jersey with
COGD falling on August 5, 2012 for both states. Following closely behind is Washington on July 27 and Wyoming on July 26.
2012 Cost of Government Day for States

2
CT
NY
NJ
WA
WY
MD
IL
MN
MA
WI
VA
DC
CA
VT
PA
ND
NV
UT
ID
DE
NH
RI
OR
MT
KS
CO
MI
IN
OH
NM
FL
TX
NC
NE
AR
GA
AZ
KY
IO
WV
OK
ME
MO
HI
AL
AK
SD
SC
MS
LA
TN
coSt of government day 2012 report
State
Tennessee
Louisiana
Mississippi
South Carolina
South Dakota
Alaska
Alabama
Hawaii
Missouri
Maine
Oklahoma
West Virginia
Iowa
Kentucky
Arizona
Georgia
Arkansas
Nebraska
North Carolina
Texas
Florida
New Mexico
Ohio
National Average
Indiana
Michigan
Colorado
Kansas
Montana
Oregon
Rhode Island
New Hampshire
Delaware
Idaho
Utah
Nevada
North Dakota
Pennsylvania
Vermont
California
District of Columbia
Virginia
Wisconsin
Massachusetts
Minnesota
Illinois
Maryland
Wyoming
Washington
New Jersey
New York
Connecticut
Rank in
2011
Rank in
2012
# of Days
Worked
State
COGD
2
4
1
3
4
13
8
21
17
17
8
4
21
8
8
13
13
36
21
25
34
4
21
19
25
27
30
19
27
38
29
30
13
30
8
34
40
30
43
36
43
40
43
42
47
38
43
49
48
50
1
2
2
3
4
6
7
7
9
10
10
10
13
13
15
15
17
17
17
17
21
21
21
24
24
26
26
26
26
26
31
32
32
32
35
35
35
38
39
39
41
42
42
44
44
44
47
48
48
50
180
181
181
184
185
186
187
187
189
190
190
190
191
191
192
192
193
193
193
193
195
195
195
197
197
197
198
198
198
198
198
199
201
201
201
202
202
202
203
204
204
204
205
207
207
208
208
208
209
218
218
222
6/28
6/29
6/29
7/2
7/3
7/4
7/5
7/5
7/7
7/8
7/8
7/8
7/9
7/9
7/10
7/10
7/11
7/11
7/11
7/11
7/13
7/13
7/13
7/15
7/15
7/15
7/16
7/16
7/16
7/16
7/16
7/17
7/19
7/19
7/19
7/20
7/20
7/20
7/21
7/22
7/22
7/22
7/23
7/25
7/25
7/26
7/26
7/26
7/27
8/5
8/5
8/9
THE GOVERNMENT SPENDING BURDEN

Federal Spending
Federal spending continues to be the major contributor to the total cost of government and the main driving force behind the substantial
increase in the size of government over the last decade.
The average American will have to work 88 days just to pay for federal spending, which consumes 24.04 percent of gross domestic product this
year. We note that this is a slight improvement from 91 days in 2011 and 90 days in 2009. However, over the last ten years, federal spending
has jumped over 17 days from its place in 2002. Federal spending, relative to the economy, has increased by 21.15 percent since 2002.
D
Days Worked for Federal Spending

95.00
93.11
90.41
90.00
90.81
87.82
85.00
79.63
80.00
75.00
74.13
72.49
73.75
74.45
74.49
5 50
75.50
70.00
While there is a slight improvement in the number of days worked to pay for federal spending this year, the growth of government remains the
largest threat to American prosperity today.
Taking spending from 20.8 percent of GDP in 2008 to 25.2 percent in 2009, the Obama Administration has overseen one of the largest
expansions of the state in history.
In 2010, Congress passed and the President signed the Patient Protection and Affordable Care Act (PPACA). This massive overhaul of the
countrys health care system exploits the unfunded liabilities of the current entitlements while exacerbating the crisis of exploding health care
costs. Ultimately, the health care bill could cost upwards of $2.3 trillion, paid for partially with hundreds of billions of new taxes on Americans.
At the time of this writing, the United States Supreme Court is considering the constitutionality of the Presidents health care law. If PPACA is
completely overturned, it would relieve Americans of its twenty new or higher taxes and unbridle the country with its trillions in expected new
spending. However, the countrys fiscal future will still be greatly imperiled by trillions in coming tax hikes beginning at the end of the year,
unsustainable entitlement programs and unrestrained discretionary spending.
In 2011, the government spent $3.753 trillion. Over the last decade, federal spending has gone from $2.112 trillion in 2002 to $3.760 trillion
in 2012. This is an estimated increase of 78.03 percent over the course of ten years. This accelerated spending has led to the largest deficits in
1
history: $1.413 trillion in 2009, $1.294 trillion in 2010, $1.296 trillion in 2011, and an estimated $1.095 trillion in 2012. The deficits from
2009-2012 constitute the largest spending sprees, as a percentage of GDP, since World War II. By 2022 government spending is estimated to
reach $5.520 trilliona 46.81 percent increase from today.
Special Focus: Spending and the Federal Budget Deficit

Due to unprecedented government spending over the last four years, the federal deficit has received a significant amount of attention.
The deficit, however, is only helpful insofar as it forces profligate policymakers to tackle the real problem of fiscal insolvency: out of control
spending.
The size of government is determined not by the deficit, but by levels of spending and revenues. These are the major factors affecting the
economy, as they determine the incentives for saving, investment, entrepreneurship and employment.
However, national debt, at a certain threshold, is correlated with negative economic growth. A 2010 study by Reinhart and Rogoff found
that, median growth rates for countries with public debt over 90 percent of GDP are roughly one percent lower than otherwise; average
(mean) growth rates are several percent lower. As long as President Obama oversees annual deficits exceeding $1 trillion, the rapid pace to
90 percent becomes increasingly evident.
3
The 2012 federal deficit is expected to more than double in size compared to 2008jumping from $459 billion to an estimated $1.095
trillion. This means that the deficit relative to GDP will balloon from 3.2 percent in 2008 to 7.0 percent at the end of 2012.
4
Institutionalizing modest spending restraint could have avoided massive run-ups in debt and prevented the stark austerity measures some have
suggested may be necessary to right the countrys fiscal ship. If federal spending had been chained to GDP, then $4.257 trillion would have been
prevented from 2001-2011. Tying federal spending to CPI would have generated $6.837 trillion in savings and would have produced a $2.360
trillion surplus over the last ten years.
5
Federal Spending and Budget Deficit/Surplus as a Percentage of GDP FY 2000-2022
25.0
25.2 24.1
20.0
18.2 18.2
20.1 19.7
19.1 19.7 19.6 19.9
24.1
23.2
20.8
22.5 22.1 21.8 21.8 21.6 21.5 21.8 21.9 22.0 22.4
15.0
10.0
Spending
Spending
Deficit
5.0
Deficits
2.4
0.0
-5.0
1.3
-1.5
-3.4
-3.5
-2.6
-1.9
-1.2
-2.1
-1.5
-1.6
-1.1 -0.9 -1.2 -1.2

-1.2
-1.4
-3.7
-3.2
-7.0
10.0
-9.0
-8.7
-10.1
15.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Source: Congressional Budget Office, The Budget and Economic Outlook: Fiscals Years 2011 to 2021
10
Federal Spending Constrained by Economic Growth ($ billions)

1,000.0
458
500.0
12
527
19
0.0
9
-500.0
-1,000.0
-1,500.0
-1,413
-2,000.0
2001
Actual Deficits
2002
2003
2004
2005
2006
2007
2008
Deficit/Surplus Constrained at National Income
2009
2010
2011
Deficit Constrained By CPI
11
State and Local Spending

In 2012, the average American will labor 40 days to pay for state and local spending. This is the same as 10 years ago in 2002 and up one day
from 39.2 days in 2010.
The Bureau of Economic Analysis shows that state and local government current receipts exceeded $2 trillion in 2010, including $500 billion
in federal transfers. Similarly, state and local spending is nearly equivalent to federal spending, with outlays amounting to roughly 14 percent
of GDP. The one-time injection of federal stimulus money threw state budgets into flux as those federal funds have dried up while the
spending strings attached to them remain. States now must make smart spending decisions to make their budgets whole.
In 2010, Wisconsin Governor Scott Walker aimed to close a $3.6 billion state budget deficit by confronting the unsustainable liabilities in
the states pension and benefits system. His proposals ended collective bargaining for most state employee union members and offered
paycheck protection to workers. This prohibited unions from deducting dues from workers paychecks and allows employees to choose
whether they would like to cut a check to their union.
In effect, this will save workers in Wisconsin anywhere between $800 and $1400 annually; savings that can be used to cover the modest increase
in personal contributions the budget required them to make to their own benefits. The reforms required state employees to contribute 5.8
percent of salaries to their pensions and 12.6 percent to their health insurance premiums. Despite widespread backlash from organized labor,
this is well below the national average contributions required of union employees.
6
A recent study conducted by the Beacon Hill Institute looked at the effectiveness of the Wisconsin reforms. It found the measures prevented
painful tax increases that would have damaged the states private economy. The study also showed that over 6500 public sector jobs, and
somewhere between 11,500 and 14,000 private sector jobs, have been spared due to the proposals cost-savings.
9
Finally, the Walker budget saved Wisconsin taxpayers over $1 billion during its first year. In terms of COGD, this amounts to 1.37 days of work
in the Badger State. Coupled with other reforms, Wisconsin has gone from an almost $4 billion deficit to a surplus in two years, without raising
taxes. Governor Walkers efforts should be used as a model for other states in order to reduce spending and tackle the unaffordable liabilities of
bloated public worker pay and benefits.
Days Worked for State and Local Spending
44.00
43.00
42.00
41.44
41.00
40.60
40.08
39.90
39.83
40.00
39.24
39.00
38.00
37.00
36.00
12
39.76
39.19
38.83
38.87
38.76
STATE TAX INCREASES

In recent years, most states increased taxes to increase spending even during economic downturns. This report compiles a list of tax increases
by state from FY2003-FY2012. The list is based on data from the National Association of State Budget Officers (NASBO) with three
adjustments. First, we compounded the tax increases to reflect tax hikes adopted since FY2003 which have to be paid in successive years.
Second, we adjusted each states tax increase by population to produce a better comparison across states. Third, the taxes for each year are
indexed so all tax increases are stated in terms of 2012 dollars.
The index shows that this year, as in previous years, New Jersey is the leader among all states in terms of tax increases. Since FY2003 the
Garden State increased taxes per resident by $5,721.82 for a total net tax increase of over $49.9 billion. Connecticut, Rhode Island, New
York, Nevada, Delaware, Tennessee and Minnesota also suffered per capita tax increases of over $2,000 in the same period.
From 2003-2012 only nine states reduced their taxes. This group is led by Idaho, North Dakota and Florida, all of which reduced their taxes
by over $350 per capita.
North Dakota, as in 2011, leads the states in reducing taxes. Since 2003, North Dakota has reduced taxes $428.85 per capita. Over that
period, this is a net tax cut for North Dakotans of $280 million. This year, all nine states that reduced their taxes over the FY 2003-2012
period also reduced their taxes in 2012.
10
For the first time since 2008, net taxes decreased across the states in FY2012. In total, states experienced a $596 million tax cut, less than
last years tax increases of $6.4 billion. However, many states are still attempting to squeeze their taxpayers to fund excessive spending.
For example, the Maryland House of Delegates passed the Budget Reconciliation and Financing Act (BRFA) in May 2012. The act results
in a $300 million tax increase on Marylanders. The BRFA extends the Maryland Millionaire Tax to single filers making over $100,000
and joint filers making over $150,000. This tax hike alone will force Marylanders to work an additional 7 hours for COGD next year.
11
More popular than ever with politicians are sin taxes, or excise taxes on certain products that policymakers can target under the guise of
social welfare efforts. The most constant targets are normally tobacco and sprits or wine, but recently sugar and soda have gained the ire of
revenue-hungry lawmakers as well.
Marylands budget also included two tax increases on tobacco. The tax on smokeless tobacco will rise from 15 percent to 30 percent and the
tax on little cigars will leap from 15 percent to 70 percent of wholesale.
12
Similarly, in Illinois, Governor Pat Quinn recently signed into law a $1-a- pack cigarette tax increase to bankroll the states unstable Medicaid
program. In addition to the increase in the cigarette tax, the legislation also doubles the taxes on other types of tobacco.
13
Estimates show that corporate tax, personal income tax and sales tax make up 80 percent of state tax revenue. In 2012, thirteen states cut
their corporate income taxes, constituting the large change in revenue measures from the previous year; these efforts resulted in a $1.3 billion
net corporate income tax cut. However, personal income taxes are on the rise, with $571 million in increased taxes on personal income going
into effect in 2012. Finally, while sales taxes decreased by $690.5 million, targeted excise taxes on alcohol and cigarettes increased by
$97.1 million and $58.1 million respectively.
14
13
Cumulative State Tax Increases FY 2003-2012

State
New Jersey
Connecticut
Rhode Island
New York
Nevada
Delaware
Tennessee
Minnesota
Vermont
Oregon
Indiana
Ohio
Massachusetts
Michigan
New Hampshire
Kansas
North Carolina
California
Wyoming
Illinois
Maine
Washington
Virginia
Colorado
Maryland
Wisconsin
New Mexico
Oklahoma
Alaska
Kentucky
Alabama
Utah
South Dakota
Georgia
Texas
Mississippi
Hawaii
Iowa
Arkansas
Arizona
Montana
Missouri
Nebraska
Pennsylvania
South Carolina
Louisiana
West Virginia
Florida
Idaho
North Dakota
14
Per Capita (2003-2012)

$ millions
Per Capita (FY 2003-2012)

$ thousands
49967.59
14778.53
3571.91
65111.80
8688.41
2812.37
14445.97
11107.41
1239.65
7513.02
12371.30
21246.12
11623.13
15653.56
1979.79
3974.95
13007.71
50657.96
671.69
15866.36
1470.81
5568.48
6040.76
3600.83
3998.64
3203.88
1001.13
1755.96
318.99
1811.96
1624.06
891.60
239.03
1484.89
3602.49
312.27
126.29
187.07
155.62
298.14
23.87
-24.62
-176.18
-2148.68
-847.01
-1249.70
-524.48
-7111.79
-813.76
-534.62
5721.82
4190.19
3379.71
3325.81
3272.78
3154.78
2279.22
2099.52
1991.61
1948.63
1919.43
1842.34
1752.77
1576.19
1495.84
1399.08
1375.18
1359.34
1226.52
1225.73
1120.24
825.42
759.64
706.70
696.96
565.21
492.23
471.47
450.01
417.56
343.38
314.97
291.47
149.86
142.88
105.48
97.14
61.88
53.47
44.65
24.35
-4.09
-97.28
-170.09
-184.25
-275.91
-287.31
-380.76
-521.71
-817.73
Rank
50
49
48
47
46
45
44
43
42
41
40
39
38
37
36
35
34
33
32
31
30
29
28
27
26
25
24
23
22
21
20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
GOVERNMENT EMPLOYEES
On November 29, 2010 the Obama Administration enacted a two year federal worker pay freeze. The pay freeze was said to save
$2 billion for the rest of the 2011 fiscal year.
In March, House Republicans looked to extend the pay freeze until 2015 in their FY2013 Budget Resolution. In addition to extending the
pay freeze, the Republican Budget would cut the federal workforce by 10 percent through attrition and increase employee contributions to
benefits. Overall, the budget would cut an additional $368 billion in workforce spending over the next decade.
15
In 2010, the Americans for Tax Reform Foundation calculated the cost of hiring new GS-11 federal employees, the median federal salary
level. On average, each newly-hired GS-11 employee costs taxpayers $7 million dollars over the course of a 40 year career.
16
In 2011, the federal government hired 53,933 new employees. The most significant cabinet expansions include:
Department
Education
Air Force
State
Health & Human Services
Veteran Affairs
Homeland Security
Navy
Defense
Army
2010 Employment
2011 Employment
Increase
4,242
165,055
11,625
80,631
301,759
185,259
191,541
105,452
281,340
4,604
175,876
12,250
84,620
314,066
192,845
198,878
109,091
290,402
362
9,062
625
3,989
12,307
7,550
7,337
3,639
9,062
17, 18
% Increase
8.53%
6.56%
5.38%
4.95%
4.08%
4.07%
3.83%
3.45%
3.22%
Source: US Office of Personnel Management, Employment-March 2011 and Employment- March 2010
A widely cited 2010 USA Today study found that average federal salaries exceeded private sector salaries across 83 percent of industries.
These federal workers are less educated and less experienced than private sector workers in the same level of occupational responsibility. These
findings suggest that federal workers receive a premium compensation package while taxpayers pick up the tab.
19
In January 2012, a Congressional Budget Office (CBO) study compared the wages and benefits of federal and private sector employees. CBO
found that overall, federal government employees received 2 percent more in total wages than they would have if the average wages were
comparable to that of private-sector employees. The study takes into consideration observable characteristics of the workers, such as educational
attainment. The only level of education that is more prosperous in the private sector are those with a doctorate or PhD. In addition to comparing
wages of federal and private sector employees, CBO also considers their benefit packages. The benefits included in the study are health insurance,
retirement benefits and paid vacation. On average, the study finds that the benefits earned by federal civilian employees cost 48 percent more
than the benefits received by their private-sector counterparts.
20
Assumptions:
The employee is assigned a Step 5 in the GS table for a 40-year career

The assumed COLA is the five-year moving average for the DC areas COLA: 3.55%
In order to account for benefits, pension contributions, and payroll taxes , the GS dollar levels are increased by 33 percent (standard budgeting practice in the Department of Labor in the Bush Administration)
The dollar value is expressed in nominal terms and after-inflation (2.5%)
15
Finally, the CBO study looks at total compensation. The study concludes that overall, federal government employees receive 16 percent more
in total compensation than they would have if average compensation was comparable with their private sector counterparts.
One of the most illustrative examples of federal employee costs is the United States Postal Services payroll. The exorbitant labor costs that make
up over 80 percent of the Post Offices budget stand to cost taxpayers dearly absent serious reform. In 2010, the USPS lost
$8.5 billion. Even after cooking the books and postponing $5.5 billion in retirement payments, the USPS still lost $5.1 billion in 2011. The
Council for Citizens Against Government Waste points out that in 2010, former Postmaster General John Potter predicted that the USPS would
lose $238 billion over ten years should nothing be done to address its unsustainable overhead costs.
The problem of overpaid public workers bleeds into state and local government budgets. The Bureau of Labor Statistics found that Private
industry employers spent an average of $28.57 per hour worked for total employee compensation in December 2011. Conversely,
compensation for their counterparts, working for state and local governments, averaged $40.90 per hour worked in December 2011. While
federal spending continues to increase, state and local governments have cut employment. In accordance with a slight decline in state and local
spending, state and local government employees have decreased by 1.4 percent.
21
State and Local Employees (thousands)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
State
Local
Total
103
25.9
83.9
76.8
483.4
96.7
66.7
31.9
211
152.3
75.2
27.5
146.7
113.9
62.5
52
99.6
105
27.1
113.3
122.8
176.3
99.1
60.7
99.6
213.6
42.6
275.9
124.6
1649.5
242.5
150.6
26
746
410.9
18.4
75.9
601.8
273.1
167.9
177.8
187.9
225.2
59.6
246.9
260.3
382.2
274.5
161.7
279.5
316.6
68.5
359.8
201.4
2132.9
339.2
217.3
57.9
957
563.2
93.6
103.4
748.5
387
230.4
229.8
287.5
330.2
86.7
360.2
383.1
558.5
373.6
222.4
379.1
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Total: 19,308,900
Source: US Bureau of Labor Statistics, Employment, Hours, and Earnings- State and Metro Area
22
State
Local
Total
25.7
41.6
35.3
24.4
144.6
58.7
263.7
196.7
24.6
164.5
87
80
156
16.1
97.8
18.6
100.3
360.1
68.6
17.6
156.3
147
49.3
100.6
17.3
47.8
110.5
93.6
59.8
422.3
105.4
1105
435.4
44.6
523.6
204.1
183.1
473.5
33.9
211.6
47.8
289.5
1221.4
117.5
28.5
383.7
317.8
81
278.6
48.7
73.5
152.1
128.9
84.2
566.9
164.1
1368.7
632.1
69.2
688.1
291.1
263.1
629.5
50
309.4
66.4
389.8
1581.5
186.1
46.1
540
464.8
130.3
379.2
66
THE REGULATORY BURDEN

The average American must labor 69 days in 2012 just to cover the costs of government regulations. 2012 regulations consume about
19 percent of gross domestic product. This is down two days from 2011.
Days Worked for Total Regulatory Burden

75.00
71.87
70.72
71.00
69.38
70.00
65.00
60.00
55.00
54.18
54.56
53.90
53.60
53.45
53.63
53.46
50.00
45.00
The large jump in regulatory costs between 2008 and 2009 is because of an update to the Crain methodolgy used for calculating regulatory
costs. Crain uses a World Bank index that is more comprehensive than the OECD index. The index values come from 1,751 data points.
Significant advantages over the OECD index include: 1) larger data series, 2) Regulatory Quality Index (RGI) covering international economic
regulations in addition to domestic that newly includes rules and mandates affecting factor markets (for example, Americans with Disabilities
Act), and 3) the World Bank index covers all business sectors.
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 power plants, compliance costs
include the costs of manufacturing, installing, operating and maintaining equipment.
Not counted are the negative economic effects of regulatory requirementsthe deadweight loss of these policies. Deadweight loss is
societys valuation of goods and services forgone due to government rules. These hidden costs stifle the growth of the economy because
they introduce inefficiences and distortions, while reducing the economic reward left over for productive activity. Regulations may
prevent new firms from entering the market or stop exisiting ones from expanding. They may even force some existing firms out of
business altogether. In fact, regulations place small manufacturers at a competitive disadvantage relative to large manufacturers since
compliance costs per worker are twice as high. Overbearing regulations are disastrous for job creation since 64 percent of the net jobs
23
in the last 15 years were created by small businesses. The end result of regulation is a reduction in overall output, fewer jobs, lower wages
and suppressed economic growth.
24
17
Each year, government regulators receive more funding to raise the costs of goods and services that taxpayers buy. In effect, taxpayers pay twice
for regulations: once for agencies to monitor growing government regulations and again when regulations increase prices those citizens pay.
Although not counted as part of the COGD for regulation, the budget for regulators was $57.3 billion in 2012, or 1.3 days. This was an increase
from the previous year of $2.5 billion. Over the last ten years, regulator budgets have grown by 72.5 percent, much faster than the decades
growth in regulatory costs.
25
An April 2011 study by the Phoenix Center found that the expansion of federal regulator budgets led to decreased economic growth and private
sector job losses. The study found that the regulators budget provides a financial gauge of regulatory activity. According to the study, a
5 percent reduction in regulator budgets would increase GDP by $376 billion and expand employment by 6.2 million jobs over the course
of five years.
26
The Reagan Administration attempted to simplify the regulatory burden on taxpayers and businesses in the presence of a slowing economy
in the 1980s. An illustrative measure of the regulatory burden, the federal register fell from over 85,000 pages to under 55,000 pages by the
end of Reagans presidency.
Regulators Budget
Billions of Dollars
Source: Susan Dudley & Melina Warren, "Fiscal Stalemate Reflect in Regulator's Budget: An Analysis of the US Budget for Fiscal Years 2011 and 2012"
18
INTERSTATE MIGRATION
Several studies, including the American Legislative Exchange Councils Rich States, Poor States and past reports by Americans for Tax Reform
Foundation, have documented the migration of taxpayers from high tax to low tax states in recent years.
These studies exhibit strong evidence that taxes are the single largest factor in interstate migration, compared to factors such as climate,
employment, family relocation etc.
Our analysis takes the former methodology one step further. Making use of date from the Internal Revenue Service (IRS), we calculated both
the number of taxpayers migrating and the adjusted gross income (AGI) that left the state. That is, we have calculated how much moneyin
terms of personal incomestates lose or gain due to the migration of taxpayers. Our findings confirm previous studies, in which taxpayers leave
states with high taxes, unfunded pensions and healthcare liabilities.
Due to the ease of interstate migration, taxpayers can easily avoid higher taxes by moving to another state. Consequentially, there is a significant
effect wherein a rise in tax rates can lead to lower government revenues as individuals flee. There are nine states with no income tax: Alaska,
Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. In 2010 alone, these states gained a net total
of over 134,000 new residents; additionally, these migrants brought with them over $6.7 billion of net adjusted income, according to IRS data.
27
In contrast, the ten states with the highest tax burden: California, Connecticut, Maine, Minnesota, New Jersey, New York, Pennsylvania, Rhode
Island, Vermont and Wisconsin lost around 200,921 residents and $7.4 billion of net adjusted income in 2009 alone.
From 2001 to 2010, the ten states with the highest tax burden lost over 2.5 million residents. These residents took with them a staggering $80.03
billion in adjusted income.
During the same period, over 1.45 million migrants moved to the states with the lowest tax burdens, bringing more than $40.1 billion with
them. The ten lowest tax burden states are Alaska, Louisiana, Nevada, New Hampshire, New Mexico, South Carolina, South Dakota,
Tennesee, Texas and Wyoming. In 2009 alone, these states gained 186,685 new residents and over $4.9 billion in adjusted gross income.
Total Residents Lost in Highest Tax Burden States
500000
455936
450000
422679
400000
339076
350000
287785
300000
241801
250000
200000
228489
200921
187996
160588
150000
100000
50000
17325
0
19
At the same time, states with large unfunded liabilities for public employee health care and pension programs are also losing residents.
In particular, workers between the ages of 30 and 40, just entering their prime earning years, are fleeing future higher taxes needed to pay for
the unfunded liabilities.
In accordance with the higher tax burden of states experiencing higher out-migration, these states also experience higher unemployment rates.
This places their increasing tax burden on an ever-shrinking tax base. Not surprisingly, the top five highest tax states consistently have about
.5 percent higher unemployment rates than the five states with the lowest tax burden.
The migration of residents from high to low-tax states has been the biggest issue facing state governments in over ten years. Without significant
fiscal restraint as well as reforms in public employee pension and healthcare retirement programs, states with heavy tax and entitlement burdens
will continue to see residents leave for lower-tax states, further draining state treasuries.
t
Total Incomes Lost in Highest Tax Burden States
($ billions))
15
1
12
28
86
6
13
1
12
2 75
75
11
9.88
9.11
9
7.39
7.32
7
6.61
6.52
5.98
3
1.61
1
-1
20
Total Residents Gained in the Lowest Tax Burden States
160000
138869
140000
120000
94565
100000
80000
99230
91769
68024
60534
60088
59066
60000
40000
26173
20000
0
-20000
-40000
-29529
Total Income Gained in the Lowest Tax Burden States ($ billions)
3.74
3.17
2.96
2.78
2.44
2.29
2.18
2.19
1.87
1.48
21
STATE INCOME MIG
WA
ND
MT
OR
SD
ID
WY
CA
NV
NE
UT
CO
KS
AZ
OK
NM
TX
AK
HI
22
RATION 2009-2010
(for a map displaying 1996-2008 please refer to COGD reports 2007-2010)
ME
VT
MN
WI
NY
MI
IA
NH
MA
CT
RI
PA
IL
MO
OH
IN
MD
NJ
WV
VA
KY
DE
D
DC
NC
TN
AR
SC
MS
AL
GA
LA
FL
gain greater than 0.33%
gain between 0.01% and 0.33%
loss between 0.01% and 0.33%
gain greater
greater than
than0.33
0.33%
gain between 0.01% and 0.33%
loss between 0.01% and 0.33%
loss greater than 0.33%

state with no income tax
Source: IRS
loss greater than 0 33%

23
CASE STUDY: TAXMAGEDDON

Absent intervention from Congress, the United States is facing the largest tax hike in history on January 1, 2013. Known as Taxmageddon
or the coming Fiscal Cliff, taxpayers will be hit with a $500 billion tax hike that year alone. This includes the sunset of the tax relief
provided in the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation of 2003,
expiration of the Payroll Tax Holiday, the Alternative Minimum Tax (AMT) patch and dozens of business extenders.
In addition, the second wave of tax hikes in the Patient Protection and Affordable Care Act (PPACA) comes into play on January 1. The expiration
of the tax provisions, coupled with the PPACA tax hikes, would bring revenues well above their historical averages, to 20 percent of GDP.
The 2001 and 2003 Tax Cuts
The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003
(JGTRRA) are commonly referred to as the Bush Tax Cuts, although they were also extended in 2010 by President Obama. While both bills
made significant changes to tax law, they are unique in that the changes were slated to take effect for only ten years. This allowed the Senate to
pass the tax relief with only a simple majority, rather than the customary 60 votes. However, the current Congress now must grapple with what
to do when the laws are scheduled to sunset at the end of 2012.
The Bush Administration implemented a series of tax cuts and relief programs through EGTRRA to spur economic growth and job creation
following the 2000 recession. The goal of the tax relief was to reduce burdens on individuals; however, the tax cuts were not targeted nor phased
in quickly enough to maximize their economic impact. By the end of 2002 the economy had lost 540,000 jobs and shed an additional 287,000
by the first quarter of 2003. Congress passed and President Bush quickly signed JGTRRA in May 2003 to spur jobs and growth. This second
tax relief plan accelerated the 2001 tax cuts, making most of them effective immediately. Most importantly, JGTRRA reduced the top capital
gains and dividends tax rates to 15 percent. As a result, the third quarter after JGTRRA was implemented the economy grew at an astonishing
rate of 7.5 percent. Additionally, in the fourth quarter payroll employment grew by 311,000 jobs.
28
29
Originally scheduled to sunset in December 2010, the Obama Administration extended the tax cuts until December 31, 2012. With the sunset of
the tax cuts the following changes will take place on January 1.
30
Personal income tax rates will increase:
Bracket Tax Rate
2013 Rate
10%/ 15%
25%
28%
33%
35%
15%
28%
31%
36%
39.6%
In addition to the income tax rates rising there will be a phase-out of itemized deductions as well as personal exemptions:
Tax
Death Tax
Marriage Penalty
Child Tax Credit
24
Current
35%
None
$1000
2013 Rate
55%
Re-instated
$500
There will also be a slew of higher tax rates for savers and investors:
Tax
Current
2013 Rate
Capital Gains
Dividends
15%
15%
23.8%
43.4%
The Heritage Foundation notes that expiration of the Bush Tax Cuts alone will make up 34 percent, or $170 billion, of the $500 billion
Taxmageddon tax hike. Over ten years, the Congressional Budget Office (CBO) shows the tax hike on families amounts to $2.6 trillion.
Payroll Tax Holiday
The payroll tax provision was a temporary tax cut put in place in 2010. It reduced payroll taxes from 6.2 percent to 4.2 percent, allowing
someone making $50,000 to keep an additional $1,000 of that salary in their bank account.
On January 1, 2013 Americans will see their payroll taxes rise once again. The expiration of the tax holiday is said to account for 25 percent,
or $125 billion, of all Taxmageddon revenues.
31
The Alternative Minimum Tax (AMT)

The AMT was created by the Democratic Party under President Johnson to ensure that high earners benefiting from certain tax advantages still
maintained some income tax liability. However, over time, the AMT began to ensnare more families as income rose.
In December 2007, Congress passed a patch to the Alternative Minimum Tax (AMT), relieving 23 million Americans from paying the AMT.
Originally, the AMT patch provided taxpayers with relief for one year, raising the income threshold in which families qualified. The patch was
later extended until December 31, 2012. Today, the AMT hits 4 million people. With the expiration of the patch in Taxmageddon, the tax
created to hit the rich will extend to 31 million families.
32
The combinations of the temporary taxes expiringthe Bush Tax Cuts, Payroll Tax Holiday and the AMT Patchare frightening enough;
but thats not the end of the tax hikes. This January the second wave of Obamacare tax hikes will hit Americans, and businesses will see their
taxes increase when more employer tax hikes take effect.
Obamacare: Wave Two
Obamacare tax increases raise $502 billion in revenue over a ten-year span. This coming year, Americans will see their Medicare Payroll taxes
increase, caps placed on Federal Spending Accounts(FSA), a new Medical Device Tax and a haircut for medical itemized deductions.
33
Tax
Current
2013 Rate
Medicare Payroll
Medical Device
Haircut
FSA
2.9%
No Excise Tax
7.5% of AGI
No cap
3.8%
2.3% excise
10% of AGI
$2500 cap
iii
ii
Currently, the death tax has a $10 million exemption for married couples, as of 2013 the tax is implemented on any estate worth over $1 million.
iii
The 2.9% is on all wages and self-employment, in 2013 the rate increases for singles making more than $200,000 and married couples making more than $250,000.
iv
v
iv
Exemptions apply to items retailing for less than $100

Before Taxmageddon, individuals only needed there high medical expenses to equate to 7.5% of the adjusted gross income (AGI) after Taxmageddon the necessary AGI rises to 10%
25
THE BUFFETT RULE - OBAMA'S AMT

o household making more than $1 million each
America already has a steeply progressive tax code. The top
year should pay a smaller share of their income in
1 percent of earners pay 40 percent of all income taxes and
taxes than a middle class family pays, says the
28 percent of all federal combined taxes. The lower half of
Obama Administration. The White House claims that
all income earners, those making less than $33,000, pay 3
22,000 households had an income above $1 million in 2009
percent of all income taxes and less than 1 percent of all
and paid less than 15 percent of their income in taxes. In
combined federal taxes.
addition to the 22,000 that paid 15 percent, it is stated that

1,470 households paid no federal income taxes.
The Buffett Rule, like the AMT, isnt just a tax on high
34
income earners but also on small businesses. Most small and

The Obama Administration takes this as an example of how
mid-size businesses are organized as S-corporations, LLCs,
the U.S. tax system is unfair, an argument that has
partnership, or sole proprietors whose taxes are assessed
crystalized in 2012 over what has come to be known as the
through their profits on personal tax returns. Further, the
Buffett Rule. The Rule is named after well-known
majority of small and mid-size employer profits face taxation
millionaire Warren Buffett who claimed publicly that he
at the top marginal income tax rate. Thus, businesses
pays fewer taxes than his secretary. Similar to the AMT, the
profits, capital gains and dividends will now be subjected to
Buffett Rule would set a flat minimum income tax of 30
the Buffett Rule.
37
percent on all income for top earners. Obama and some

Members of Congress support this rule, alleging that it
The Administrations focus on the Buffett Rule
ensures every American pays their fair share in taxes.
demonstrates how it is a political tool rather than a serious
35
fiscal solution. The Joint Committee on Tax estimates a

However, looking solely at income taxes doesnt show the
version of the Buffett Rule would raise $31 billion over the
whole picture. High earners are subjected to corporate
next ten years, which is less than one-tenth of one percent of
income tax as well as dividend and capital gains taxes. At the
all revenue expected to be collected during that time. What
end of the day, Warren Buffett and other top earners pay
is more appropriate, for those Warren Buffetts in the world,
more than any other tax bracket. Even the Presidents own
is the idea of a Buffett Line. The Buffett Line would
economic advisors note that the top one percent pay twice as
simply add an extra line to the 1040 tax form that would
much as the middle 20 percent. In 2012, top earners are
allow taxpayers to write-in a voluntary donation to Treasury
expected to pay an average of 29.6 percent in income,
for debt reduction. With a Buffett Line, Warren Buffett and
payroll and corporate taxes, while the middle 20 percent
others who feel the rich should pay more for the
of America paid 13.3 percent in income, payroll and
governments overspending problem could rest easy
corporate taxes.
without penalizing small businesses and families for their
36
patriotic guilt.
26
Extenders
Business extenders refer to a handful of temporary deductions and credits devised as a response to Americas proscriptive tax treatment of
business and entrepreneurship. Like permanent deductions and exemptions, they should not exist in a broad-base, low-rate tax code.
However, these business deductions and credits are a response to the disadvantage American employers face with the highest corporate tax rate
in the developed world. Getting rid of them is a good idea, but only in the context of fundamental tax reform that is revenue-neutral and lowers
marginal tax rates. Piecemeal elimination, without offsetting the increased in revenues, serves to harm businesses and employers struggling to
stay competitive in todays economy.
Some of the changes taking place on January 1 are:
Tax
Current
2013 Rate
Research and Experimentation

IRA charitable contributions
Tuition and Fees
Education
Teachers
Coverdale Education Savings Account
Tax credit
Permitted
Deduction
Credits
Deductions
$2000
Eliminated
No permitted
No deduction
Eliminated
Eliminated
$500 Cap
Economic Impact of Taxmageddon

Federal Reserve Chairman Ben Bernanke recently compared Taxmageddon to a massive fiscal cliff. While Congress decrees that the 2001
and 2003 Tax Cuts created relief for the wealthy, middle income Americans will experience a reinstatement of the death tax and increases in
their income taxes. Outside of the Bush Tax cuts, middle income families face an increase in their payroll taxes, the possibility of paying the
AMT, and a limit on tax credits such as educational tax credits.
38
Despite lawmakers platitudes to deficit reduction as a justification for tax hikes, history shows that any new revenues will be used to fuel
more spending, not to reduce debt.
These tax increases hurt the economy, employment and wages of Americans. Overall, we can expect that the federal government will increase
its spending per household from $30,015 this year to $34,602 next year. After serious efforts to cut spending were undertaken this year,
Americans were granted a slightly earlier COGD in 2012. If Taxmageddon is allowed to hit, taxpayers will likely see a permanent shift to
increasingly later Cost of Government Days in 2013 and beyond.
39
After the $500 billion (minimum) Taxmageddon windfall, we anticipate that COGD for 2013 will have an additional 11.67 days added.
This could make 2013s COGD the latest yet.
27
CASE STUDY: The Debt Ceiling and the Budget Control Act of 2011
The Debt Limit
The debt limit is ostensibly a means to restrain spending by statutorily limiting the amount of borrowing the federal government may do. When
the government has reached the limit it is forced to either extend its borrowing abilities or revisit its spending habits. In 2011, the Treasury
department threatened it would have to dip into social security, military spending or Medicare to keep the United States from defaulting on its
obligations. Previously, the threat of this kind of austerity has relegated the debt limit to little more than a leaking pointevery time the
government got close to its borrowing limits, it would simply raise the debt ceiling, absolving itself from the spending restraint a limit on the debt
is supposed to instill. Fortunately, the tide turned for taxpayers during the debt limit debate in 2011.
40
The 2011 Debt Debate

Importantly, the debt limit debate in 2011 was defined by the fact that there was an actual debatethe debt ceiling has been raised ten times
since 2001 without a single effort to address the crisis of habitual deficit spending. Instead, after unilaterally refusing to allow tax hikes as a
part of the final deal, House Republicans established a new standard for extended borrowing authority. Referred to as the Boehner Rule
after Speaker of the House John Boehner, the new standard requires that any increase in the debt ceiling must be met with an equal, or
greater, dollar amount of spending cuts. On August 2, the Budget Control Act of 2011 was signed into law, cementing this standard. With
zero tax hikes, the BCA requires cuts to spending that exceed the increase on the debt limit, spending caps that will control future spending,
a vote on a Balanced Budget Amendment (BBA) to the Constitution, and the establishment of the Joint Committee on Deficit Reduction
(JCDR).
41
Budget Control Act of 2011

The increase in the debt limit came in two installments. The Budget Control Act of 2011 placed caps on discretionary spending, which
would reduce spending by an approximated $900 billion. With the implementation of the act came the immediate, first, increase of $400
billion to the debt limit. The second increase, of $500 billion, required both chambers to vote on a Balanced Budget Amendment (BBA)
before it was approved.
The Act then created a Joint Committee on Deficit Reduction charging 12 lawmakers with finding up to $1.5 trillion in savings over the
next ten years. If the JCDR approved additional deficit reduction of at least $1.2 trillion, the debt ceiling could be increased by $1.5 trillion.
If the JCDR offered savings of anything less than the scheduled $1.2 trillion, the debt ceiling could only be increased by $1.2 trillion.
However, the BCA states that at least $1.2 trillion in savings must be realized so a sequester was put in place to ensure that if the JCDR
came up with less than that amount, an across-the-board cut would make up the difference. Similarly, if the JCDR did not offer any savings,
a sequestration would take effect for the full $1.2 trillion.
42
The Joint Committee was required to report its savings by November 23, 2011. It failed to offer any plan to cut spending, triggering a
sequester to take place starting in 2013. The sequester will cut $1.2 trillion in spending; the same amount by which the debt limit may now
be increased.
With the BCA, taxpayers were awarded almost $1 trillion in spending cuts with caps placed on discretionary spending. This represented a huge
step forward after years of bailouts, stimulus spending plans and bloated omnibus spending bills. Importantly, a new metric was established
that keeps the focus on the real fiscal problemgovernment spending. By implementing the Boehner Rule, and upholding a firm
commitment to not increasing taxes, the debt limit debate in 2011 bodes well for taxpayers in years to come.
28
Impact on COGD
CBO reports discretionary spending in 2011 was $1,346 billion and $1,308 billion in 2012, for an overall reduction in spending of
$38 billion. Without the Budget Control Act of 2011 this reduction in discretionary spending would have saved the American public
43
.88 days, or 21.3 hours in terms of COGD. The first $917 billion in savings from the discretionary caps in the BCA will save taxpayers
21.4 days. The $1.2 trillion in savings from the sequester amounts to a spending reduction equal to 2.8 days for 2012.
The Budget Control Act of 2011 avoided a debt crisis without raising taxes. It lays the groundwork for lasting restraint in government
spending, necessary to reduce the deficit and promote economic growth.
THE RYAN BUDGET: THE ROAD TO PROSPERITY
he House Budget Committee has offered some of the most serious proposals of the past few years to avert a spending-driven
economic crisis. Provisions under the FY 2013 Budget will cut spending by $6 trillion over the next ten years and bring
spending below the historical average of 21 percent of GDP by 2016. The plan saves entitlement programs by giving states
more flexibility in welfare and Medicaid spending and allows taxpayers to invest in their own healthcare. Additionally, it requires
pro-growth tax reform, cutting individual and corporate tax rates.
44
How does it Replace the Sequester?

After the Joint Committee on Deficit Reduction was unable to propose a plan to cut spending as laid out in the Budget Control Act of
2011, an automatic sequester is required to take effect in 2013, a scheduled $109 billion cut to discretionary spending. The Road to
Prosperity reprioritizes the sequester savings by targeting mandatory spending. It instructs six committees with jurisdiction over
mandatory spending programs to find savings beyond those of the intended sequester through a process known as reconciliation. The
six committees are: Agriculture, Energy & Commerce, Financial Services, Judiciary, Oversight and Government Reform, and
Ways & Means. Between the six committees, they will produce at least $18 billion of deficit reduction in 2013. The budget calls for
reforms with Medicare, Medicaid and other entitlement programs as follows:
45
46
Program
Reform under the Paul Ryan Plan
Obamacare
REPEALEDsaving Americans $1.6 trillion by 2022
Medicare
Establishes a premium-support system. Caps Medicare spending at the

growth rate of GDP plus .5 percent
47
Medicaid
Block grants federal aid, offering flexibility to the states to design their
Medicaid programs in a way that targets aid for those who need it most.
SNAP
Converts into a block grant based on states low-income population,

indexed for inflation. Eligibility requirements are instated in 2016.
This will save $38.5 billion over the decade
Slush Funds
The Obamacare Public Health and Prevention Fund will be eliminated.

Additionally, taxpayers will save billions through the elimination of the
Dodd-Frank too big to fail bailout fund.
49
vi
30
$2.4 trillion worth of spending cuts to Medicaid and other health care programs over ten years, Center on Budget and Policy Priorities
48
While the Congressional Budget Office is required by law to score legislation on a static basis, taking a more realistic look at the House
Republican budget gives a clearer picture of how its reforms could restore solvency in federal finance. When the positive economic effects of
pro-growth tax reform are taken into account, the federal budget could be balanced in the mid-to-early 2020s. CBO notes that the debt
that would occur under the paths specified by the Chairman and his staff would lead to higher national income over the long run.
50
51
The Path to Prosperity, Alternative Growth Scenario $ Deficit Paths

(Deficits/Surplus as % of GDP)
Current Path
52
Path to Prosperity
Impact on COGD
The Paul Ryan Budget Plan cuts federal spending by $5 trillion over the next decade. We find that laborers in America will save 87.94 days
of work over the next ten years under the House FY 2013 Budget. Under the House Republican Budget proposal, Americans are put back
on the path to prosperity for generations to come.
53
31
CASE STUDY: The Corporate Income Tax in the United States

What is the Corporate Income Tax in America?
On April 1, 2012 Japan cut its corporate income tax rate, making the United States corporate income tax (CIT) rate the highest in the developed
world. Since other countries do not necessarily have subnational member states, an accurate comparison of the United States corporate rate requires
integration of the state and national rates. The integrated federal/state corporate income tax rate is 39.2 percent.
Not only do American corporations now pay the highest corporate income tax in the world, they are also subjected to double taxation in the
United States worldwide taxation system. Their profits are taxed once in the foreign country in which their company is operating and then a
second time to make up the difference between rates. Since companies face no double taxation penalty until the funds are repatriated or when the
profits are paid out as dividends, the current system encourages corporations to keep their profits overseas and invest abroad.
Compliance Costs
During the 2010 fiscal year, corporate income tax returns amounted to 9 percent of federal tax revenues. The tax revenue accounts for 2.7 percent
of GDP, accounting for an estimated $422 billion. The full cost of paying taxes, however, is a much larger expression than the amount on the
return. Compliance costs present a significant burden for companies as well. Compliance costs account for tax planning, filing paperwork and
any other hassles caused by the complexity of the tax code. A National Taxpayers Union study found that in 2009, corporations paid $159 billion
in compliance costs. This means private companies are paying nearly forty cents in administrative costs for every dollar they send to the federal
government in revenue.
54
55
56
57
Corporate Reaction
Corporate income taxes distort economic decisions as well as reduce the economic well-being of the nation. In the United States, the
average federal/state integrated corporate income tax rate is 39.2 percent while the average corporate income of Organization for Economic
Co-Operation and Development (OECD) nations is only 25 percent. In fact, amongst the four other countries with the highest corporate
income tax rate 24 states in America have an integrated rate higher than Japan, 32 have an integrated rate higher than Germany, 46 states
have an integrated rate higher than Canada and all 50 states have a higher integrated rate than France.
58
Country
United States of America
Japan
France
Germany
Mexico
Canada
OECD Average
32
Corporate Income Tax Rate

39.2 %
35.0 %
34.4 %
30.2 %
30.0 %
27.6 %
25.0 %
The following table compares the integrated state rates to other national rates:
Country/State
Corporate Income Tax Rate
Iowa
Pennsylvania
Minnesota
Massachusetts
Alaska
Japan
France
Germany
Mexico
Canada
41.6 %
41.5 %
41.4 %
41.2 %
41.1 %
35.0 %
34.4 %
30.2 %
30.0 %
27.6 %
What does this mean for investment?

The United States is one of the only countries in the world that taxes income earned overseas when it is brought back to the country. As a result
of having the highest corporate income tax rate among OECD nations, United States competitiveness for investment continues to spiral. A
recent study released by the National Bureau of Economic Research finds that corporate tax rates have negative impacts on aggregate investment,
foreign direct investment and entrepreneurial activity. More specifically, researchers found that a 10 percent increase in the corporate tax
rate is associated with a reduction in aggregate investment to GDP ratio by two percentage points. This incentivizes firms to keep their
earnings overseas.
Currently, there is an estimated $1.4 trillion American-made dollars sitting in foreign bank accounts. Instead of bringing capital back to the
United States to create jobs, increase wages, fund pensions or grow nest eggs, firms are keeping these funds abroad. In 2005, the Bush
Administration oversaw a Repatriation Holiday, giving US multinational corporations a temporary, substantial relief from double taxation of
profit. The effective corporate income tax rate was lowered to 5.25 percent. During the year of repatriation over $300 billion flowed back to
the United States, providing over $20 billion in new revenues.
60 vii
61
viii
Had a similar holiday taken place in 2012, the United States would have experienced a capital inflow of over $800 billion at minimum. As a
result, the Treasury could have expected at least a $40 billion windfall in tax revenue. This would have been non-inflationary wealth that could
create jobs and investments in America.
viii
The 5.25 percent tax rate comes from the 15 percent of dividend rate included in the corporate income tax rate. The corporate income tax rate is 35 percent; therefore 15 percent of 35 percent is 5.25 percent.
33
Moving Forward
In the Presidents Framework for Business Tax Reform, the US Treasury notes that the current corporate tax rate is uncompetitive and inefficient.
Despite the realization that Americas corporate tax rate is too high, Obamas reformed, corporate tax rate is really a masked tax hike. The
62
framework for reform cuts the CIT rate from 39.2 percent to 32.3 percent, which is still higher than the OECD 25 percent average, leaving the
US behind all other nations except Japan. Even though Obama calls for a reduction in the CIT rate, he is also calling for a global minimum
tax rate and the removal of provisions in todays law that alleviate some of the disadvantages American corporations face in todays corporate
tax system.
63
Even if Obama cut the CIT rate to 25 percent in his proposal, the US integrated rate would still be at a high of 29.8 percent, only ahead of two
major trading partners: France and Japan. In order to be in a competitive position, the United States rate should be 20 percent. At this rate, the
federal/state integrated rate would be 25.1 percent, exactly where the United States needs to be for competing with all major trading partners.
64
Lowering the corporate rate to a competitive level is only half of the battlethe current practice of double taxation of corporate profits must
also be addressed. While the US still utilizes a worldwide taxation system, most countries use a territorial system. Territorial taxation is a tax
system in which a corporations profits are only taxed in the country in which they are earned. This system, which could be galvanized by a
round of repatriation to move towards a territorial tax regime, would relieve firms operating globally of the disadvantage they face compared
to companies from Japan, Canada, and Germany.
Effects on COGD
The high corporate income tax rate not only stymies the United States global competitiveness, it also impacts laborers. Measuring the impact
from the CIT rate on COGD, we estimate the impact of compliance costs and CIT tax revenue. This year, the average laborer will toil an
additional 13.84 days to pay for the costs associated with the current corporate income tax rate.
Cost
Compliance Cost
Tax Revenue
Total
ix
34
$ (in billions)
$170.52
$422
$592.52
To get $170.52 we have adjusted the $159 billion compliance costs for inflation, and put the 2009$ into 2012$.
Laboring Days
3.98 days
9.86 days
13.84 days
CASE STUDY: Abundance of Supply: Americas Energy Resources

The oil and natural gas industry is one of the most robust industries in the American economy. The industry supports roughly 9.2 million jobs
and produced $476 billion state and local revenues in 2010 alone. It is crucial that energy policies reflect the importance of the United
65
States continued investment in drilling and refining oil and natural gas.
Oil and Natural Gas
Oil accounts for more than 35 percent of total American energy consumed. In 2011, the United States produced over 5.67 million barrels
of oil per day, making it the worlds third largest oil producer. Furthermore, the United States has more than 1.44 trillion barrels of
technically recoverable oil resources that could power the country for the next 210 years at the current rate of consumption. While the
potential to recover these resources exists, federal policies prohibit full development of Americas vast resources.
66
67
Similar to oil, natural gas makes up 25.5 percent of Americas total energy, generating 24.8 percent of the nations electricity (heating half of
the homes in the country). Natural gas provides electricity for manufacturers, vehicles, home heating and appliancesin 2011, the United
States produced 23.0 trillion cubic feet of natural gas, becoming the worlds largest natural gas producer. It is estimated that more than 2,744
trillion cubic feet of technically recoverable natural gas resources exist; enough to power the nation for another 109 years at its current rate
of consumption.
Reaching the Nations Potential
Much of the United States resources are currently barred from production by federal policies; simply allowing Americas energy producers to
explore and drill for oil and natural gas would sustain current levels of consumption for decades. A 2011 Wood Mackenzie study considered
the impact of increasing access to resources on lands that are currently off-limits to energy production, specifically the Eastern Gulf of
Mexico, Rocky Mountains, the Atlantic Outer Continental Shelf (OCS), the Pacific OCS and the Alaska Wildlife Refuge ANWR federal
lands. The study showed that implementing positive federal access policies to these lands could produce an additional 1.27 million barrels
of oil per day, by 2015. The study showed that streamlining permitting and lease sales would expand employment in the industry, creating
an additional 130,000 direct jobs and an additional 330,000 indirect jobs by 2020. Also a boon for local and federal governments, over $20
billion in revenues would be generated if productive federal policies were put in place.
68
Leases and Permits Issued on Federal Lands
New Leases Issued

Drilling Permits Approved
Source: Bureau of Land Management, Oil and Gas Statistics

35
Why arent we there yet?

Currently, the federal government owns 28 percent of the land in the United States (a vast majority in the energy-rich western states). This
amounts to 1.76 billion of acres of land, both on and off shore. Of that, the federal government leases less than 2.2 percent of federal offshore
areas and less than 6 percent of federal onshore lands for oil and natural gas production.
69
In order to begin drilling on federal lands to produce oil and natural gas, companies are required to obtain government leases and permits.
However, under President Obama, oil and gas production on federal lands has declined. In 2012, applications for permits
to drill are down 36 percent and natural gas production is down 14 percent from 2010. Compared to ten years ago, oil and natural gas
permits are down by more than 40 percent; 2010 saw the lowest number of federal onshore leases issued since 1984.
70
Year
Action by the Obama Administration
2009
President Obama withdrew 77 expected oil and natural gas lease sales in Utahpostponing
3,000 jobs
President Obamas Interior Department restricted drilling on the majority of Americas OCS
The Obama Administration delayed oil-shale research and development leases in Colorado,
Wyoming, and Utah, costing the nation 350,000 jobs.
71
2010
Department of Interior announced a slew of new administrative requirements to the onshore leasing
processthese new polices will add three layers of regulation to the exploration and development of
oil and natural gas on public lands
72
BLM suspended 61 leases that were issued in the state of Montana in order to review NEPA regulations
BLM introduced the Wild Lands policy; land managers will now be forced to treat lands as
de facto wilderness
Deep water moratorium put in place as a result of the Deep Water Horizon accident in the Gulf of
Mexico. Originally, the moratorium was slated for 6 months; however, the moratorium remains in place
since the Obama Administration slow-walked the issuing of permits, costing 12,000 jobs. This is
viewed as an overblown response to the accident and negatively impacted deep water and shallow
water drilling.
73
2011
BLM placed new barriers in the way of commercial oil-shale development as part of a settlement with
environmental groupsmaking it difficult to turn research and development into a commercial oil shale
production program
After a two-year study on hydraulic fracturing, the Environmental Protection Agency (EPA) will place
federal regulations on the processpreviously these policies were left to the states
x
2012
Obama rejects the Keystone Pipeline and 20,000 jobs, increased energy security and billions of
economic activity associated with the project
x
Hydraulic fracturing (also known as fracking) is the injection of water at high pressures into either oil or natural gas wells. This results in fracturing of rock in the wells, yielding continued or higher
oil and gas production.
36
In addition to these regulatory burdens, for the fourth consecutive year President Obama is proposing taxing energy producers to
fund his bloated government. President Obamas FY2013 budget proposes a whopping $86 billion in tax hikes on oil and natural
gas producers. The President hopes to do this by repealing energy producers Section 199 tax deduction and a slew of other expensing
provisions employed by a variety of industries. Currently, oil and natural gas companies are able to deduct six percent of
their income from domestic productionevery other industry that employs this deduction is afforded a nine percent tax deduction.
In addition to repealing Section 199, the Presidents budget also repeals the expensing of drilling costs, LIFO (last- in, first-out methods),
the deduction for tertiary injections and percentage depletion mechanisms. Currently, these provisions help companies recover costs and
hedge against volatile price swings.
Other provisions under the FY2013 budget include modifying the dual capacity rule wherein oil and natural gas companies will face double
taxation on income earned abroad, reinstating superfund taxes and increasing the geological and geophysical amortization period. All of these
tax hikes discourage oil and natural gas production and the economic benefits tethered to these activities.
If the total $86 billion in tax increases were to fall in 2012, COGD would increase by an additional 2.0 days. This heavy regulatory burden
placed on the industry will prevent research and development as well as the nation reaching sustainable energy practice.
Item
Cost
Section 199 Repealed

Expensing of Intangible Drilling Costs Repealed
Dual Capacity Rule Modified
LIFO Repealed
Deduction for Tertiary Injections Repealed
G&G Amortization Period Increased
Superfund Taxes Reinstated
Percentage Depletion Repealed
Total
$11.6 billion
$13.9 billion
$10.7 billion
$25.8 billion
$100 million
$1.4 billion
$10.5 billion
$11.5 billion
$86 billion
74
37
COGD 2012 with Oil and Nutural Gas Reglations
18-Jul
17-Jul
16-Jul
15-Jul
14-Jul
13-Jul
Projected COGD
COGD with Tax Increase
A Glimmer of Hope
While development of oil and natural gas on federal lands is down, production on private lands is flourishing. Largely located on private lands,
the North Dakota Bakken formation is free of federal government permitting and leasing delays. Without federal interference, the Bakken
formation is responsible for creating tens of thousands of jobs, lowering unemployment levels, and vaulting North Dakota to the 2nd highest
oil producing state in the U.S.
75
76
Rather than hindering the production of the Keystone Pipeline and increasing taxes on energy, the current administration should streamline
permitting and codify current tax policies. The last four years represent a foregone opportunity, foregone employment and foregone revenue,
creating a later Cost of Government Day.
38
METHODOLOGY
The Cost of Government is determined by adding the figures for government spending (federal, state and local expenditures) and an estimate
of compliance costs of government regulations (both on the federal and state level).
The total cost of government is then divided by estimated gross domestic product (GDP) to determine the percentage of national income
consumed by the government. This percentage is applied to the 365.25 weighted calendar year to determine the Cost of Government Day.
Previous studies, before 2012, used the net national product to determine this. As a result, the Cost of Government day appears to occur
sooner than all previous COGDs; however, adjusting for gross domestic product it is evident that this years COGD falls only three days
earlier than 2011s. GDP is found to be far more appropriate measure of the economy as well as a more standardized measure.
All spending figures are based on calendar years and, among others, utilize Congressional Budget Office (CBO) reports, Bureau of Economic
Analysis National Income Product Account (NIPA) data, and the National Governors Association and the National Association of State
Budget Officers (NASBO).
State tax increases are derived from the NASBO data with three adjustments.
The calculation of Cost of Government Day for each state is based on the varying government burdens suffered in each state. Federal
spending burdens vary because relatively higher burdens are borne by states with relatively higher incomes. Of course, state and local tax
and spending burdens vary by state as well.
A 2010 report for the U.S. Small Business Administration Office of Advocacy by Nicole Crain and Mark Crain provided the framework for
determining the cost of federal regulations.
Data on federal and state works was provided by the US Bureau of Labor Statistics and the US Office of Personnel Management.
The migration data was provided by the Internal Revenue Service Office (IRS).
39
ENDNOTES
1
Federal Spending numbers come from BEA Table 3.2, Federal Government Current Receipts and Expenditures. The deficit numbers also come from NIPA 3.2 for 20092011, 2012 is based upon COGD forecasting.
2
Congressional Budget Office, "CBO's January 2012 report The Budget and Economic Outlook: Fiscal Years 2012-2022," Table 1-1. http://www.cbo.gov/publication/42908
Reinhart, Carmen S. and Kenneth S. Rogoff, "Growth in a Time of Debt," American Economic Review, 100(2) , May 2010, pp. 575
http://www.economics.harvard.edu/files/faculty/51_Growth_in_Time_Debt_aer.pdf
Congressional Budget Office, "CBO's January 2012 report The Budget and Economic Outlook: Fiscal Years 2012-2022," Table 1-3 and author's calculations
http://www.cbo.gov/publication/42908
Bureau of Economic Analysis, Tables 3.1 and 1.7.5 and author's calculations
Coughlin, Christopher. "Wisconsin Recall is a Harbinger for November". Examiner, 22 May 2012. http://www.examiner.com/article/wisconsin-recall-is-a-harbinger-fornovember
Ibid.
Bureau of Labor Statistics. National Compensation Survey. Table 4: MEDICAL PLANS: Share of premiums paid by employer and employee for family coverage.
http://www.bls.gov/news.release/ebs2.t04.htm
Tuerck, David, P Bachman and R. Murphy. The Economic Impacts of the Wisconsin Budget Repair Act. Beacon Hill Institute, May 2012.
http://www.beaconhill.org/BHIStudies/Wisconsin2012/BHI-WisconsinBudget%20RepairAct-2012-0525.pdf
10
The National Governors Association and the National Association of State Budget Officers, "The Fiscal Survey of States," Fall 2011, pp. 46
http://www.nasbo.org/sites/default/files/2011%20Fall%20Fiscal%20Survey%20of%20States.pdf
11
12
Upton, Will. The Post Mortem on Maryland's Special Tax Hike Session. Americans for Tax Reform Foundation. 18 May 2012. www.atr.org
Ibid.
13
McKinney, Dave. Gov. Quinn sign Medicaid cuts, cigarette tax into law. Chicago Sun-Times. 14 June 2012. http://www.suntimes.com/news/13180145-420/gov-quinnsigns-medicaid-cuts-cigarette-tax-into-law.html
14
The National Association of State Budget Officers, "Fiscal Survey of the States, " Fall 2011. Pp. 49,
http://www.nasbo.org/sites/default/files/2011%20Fall%20Fiscal%20Survey%20of%20States.pdf
15
Yoder, Eric. "GOP budget pan would extend federal pay freeze. Washington Post. 20 March 2012. http://www.washingtonpost.com/blogs/federal-eye/post/gop-budgetplan-would-extend-federal-pay-freeze/2012/03/20/gIQA2eMWPS_blog.html
16
Ellis, Ryan. "How Much Does it Cost to Hire One New Federal Employee? $4.7 Million to $13.9 Million Over a Career," Americans for Tax Reform, 27 January 2010.
http://www.atr.org/userfiles/011509pr-costoffederalbureaucrat.pdf
17
US Office of Personnel Management, "Employment-March 2011," Fedscope.opm.gov, author's calculations, http://www.fedscope.opm.gov/cognos/cgibin/ppdscgi.exe?DC=Q&E=/FSe%20-%20Status/Employment%20-%20March%202011&LA=en&LO=en-us&BACK=/cognos/cgi-bin/ppdscgi.exe?toc=%2FFSe%20%20Status&LA=en&LO=en-us

18
US Office of Personnel Management, "Employment-March 2010," Fedscope.opm.gov, author's calculations, http://www.fedscope.opm.gov/cognos/cgibin/ppdscgi.exe?DC=Q&E=/FSe%20-%20Status/Employment%20-%20March%202010&LA=en&LO=en-us&BACK=/cognos/cgi-bin/ppdscgi.exe?toc=%2FFSe%20%20Status&LA=en&LO=en-us

19
Cauchon, Dennis. "Federal Pay Ahead of Private Industry." USA Today, 8 March 2010. http://www.usatoday.com/new/nation/2010-03-04-federal-pay_N.htm
20
Congressional Budget Office. "Comparing the Compensation of Federal and Private-Employees," 30 January 2012. http://www.cbo.gov/publication/42921
21
US Bureau of Labor Statistics, "Employer Costs for Employee Compensation- March 2012," 7 June 2012. http://www.bls.gov/news.release/pdf/ecec.pdf
22
US Bureau of Labor Statistics, "Employment, Hours and Earnings- State and Metro Area " (Current Employment Statistics- CES) state and local government date
collected for 3/1/2011 and 3/1/2012, author's calculations. http://www.bls.gov/sae/#data
23
Crain, Nicole V. and W. M. Crain. The Impact of Regulatory Costs on Small Firms. Small Business Administration Office of Advocacy, September 2010, pp. 10.
http://archive.sba.gov/advo/research/rs371tot.pdf
40
24
Small Business Administration Office of Advocacy, "Frequently Asked Questions," http://www.sba.gov/advo/stats/sbfaq.pdf
25
Dudley, Susan and M. Warren. Fiscal Stalemate Reflect in Regulators' Budget: An Analysis of the US Budget for Fiscal Years 2011 and 2012. 2012 Annual Report, Regulators'
Budget Report 33, 11 May 2011. Table 1, pp.5. http://wc.wustl.edu/files/wc/2012_Regulators_Budget.pdf
26
Bear, T. Randolph, G.S. Ford, H. Kim and L.J. Spiwak. Regulatory Expenditures, Economic Growth, and jobs: An Empirical Study. Pheonix Center Policy Bulletin No. 28. April
2011, pp. 4-5. http://www.pheonix-center.org/PolicyBulletin/PCPB28Final.pdf
27
Internal Revenue Service. US Population Migration Data. http://www.irs.gov/taxstats/article/0,,id=212683,00.html
28
Foster, J.D. "The Tax Relief Program Worked: Make the Tax Cuts Permanent." The Heritage Foundation 18 June 2008.
http://www.heritage.org/research/reports/2008/06/the-tax-relief-program-worked-make-the-tax-cuts-permanent
29
Ibid.
30
Ellis, Ryan. Taxmageddon is January 1, 2013. Americans for Tax Reform. 9 April 2012. http://www.atr.org/taxmageddon-january-a6831
31
Dubay, Curtis. "Taxmageddon: Massive Tax Increase Coming in 2013," The Heritage Foundation. 4 April 2012.
http://www.heritage.org/research/reports/2012/04/taxmageddon-massive-tax-increase-coming-in-2013
32
AMT Patched, Taxpayers Win. Americans for Tax Reform. http://www.atr.org/amt-patched-taxpayers-win-a1853
33
Ellis, Ryan. Taxmageddon is January 1, 2013. Americans for Tax Reform. 9 April 2012. http://www.atr.org/taxmageddon-january-a6831
34
The Buffett Rule. The White House. http://www.whitehouse.gov/economy/buffett-rule
35
The Buffett Rule. The White House. http://www.whtiehouse.gov/economy/buffett-rule
36
Economic Report of the President. Council of Economic Advisors. Chapter 3: Restoring Fiscal Responsibility, p. 7
http://www.whitehouse.gov/sites/default/files/microsites/ERP_2012_ch_3.pdf
37
Ellis, Ryan. ATR Supports H.R. 9, the "Small Business Tax Cut Act." Americans for Tax Reform. 18 April 2012. http://www.atr.org/atr-supporters-h-r-small-business-a6847
38
Dubay Curtis. Taxmageddon: Massive Tax Increase Coming in 2013. The Heritage Foundation. 14 April 2012.
http://www.heritage.org/research/reports/2012/04/taxmageddon-massive-tax-increase-coming-in-2013
39
New Federal Budget in Pictures: Soaring Taxes, Spending and Debt Put All Americans as Risk, The Heritage Foundation. 24 April 2012.
http://www.heritage.org/research/reports/2012/04/new-federal-budget-in-pictures-soaring-taxes-spending-and-debt-put-all-americans-at-risk
40
Smith, Robert. "The History of the Debt Ceiling," NPR. 16 May 2011 http://www.npr.org/blogs/money/2011/05/17/136363196/the-history-of-the-debt-ceiling
41
Summary of the Revised Budget Control Act of 2011. Fact Sheet. Speaker of the House: John Boehner.
http://www.speaker.gov/News/DocumentSingle.aspx?DocumentID=254628
42
Duppler, Mattie. Members Should Support BCA of 2011. Americans for Tax Reform. 1 August 2011. http://www.atr.org/members-support-budget-control-act-a6382
43
Congressional Budget Office, "CBO's Budget and Economic Outlook: Fiscal Years 2012-2022. January 2012, pp. 10, table 1-3.
http://cbo.gov/sites/default/files/cbofiles/attachments/01-31-2012_Outlook.pdf
44
Duppler, Mattie. Vote Alert: ATR & COGC Urge Support of Ryan Budget. Americans for Tax Reform. 28 March 2012. http://www.atr.org/vote-alert-atr-cogc-urge-support-a6798
45
Appendix II: Reprioritizing the Sequester Savings http://budget.house.gov/UploadedFiles/Pathtoprosperity2013.pdf
46
Ibid.
47
Path to Prosperity, Appendix I: Summary of Tables. House Budget Committee. http://budget.house.gov/UploadedFiles/Pathtoprosperity2013.pdf
48
Ibid.
49
Appendix II: Reprioritizing the Sequester Savings http://budget.house.gov/UploadedFiles/Pathtoprosperity2013.pdf
50
Ryan, Paul. "The Fiscal Effects of Faster Growth-The Budgetary Impact of the Path to Prosperity under Alternative Growth Scenarios." House Budget Committee. 22
March 2012.
51
"The Long-Term Budgetary Impact of Paths for Federal Revenues and Spending Specified by Chairman Ryan," Congressional Budget Office. 20 March 2012.
52
Ryan, Paul. The Fiscal Effects of Faster Growth- The Budgetary Impact of the Path to Prosperity under AGS.
41
53
Congressional Budget Office, "CBO's January 2012 report The Budget and Economic Outlook: Fiscal Years 2012-2022," Table 1-1. http://www.cbo.gov/publication/42908
54
The Numbers: What are the federal government's sources of revenue. Tax Policy Center. http://www.taxpolicycenter.org/briefing-book/background/numbers/revenue.cfm
55
OECD Statistics. Revenue Statistics, Comparative Tables. http://stats.oecd.org/Index.aspx?QueryId=21699
56
J. S. Moody, W.P. Worcholik and S.A. Hodge-"The Rising Cost of Complying with Federal Income Tax." Tax Foundation. 10 January 2008.
http://taxfoundation.org/article/rising-cost-complying-federal-income-tax
57
"Tax Compliance Time Costs $227 Billion," Olympia Business Week. 25 March 2012 http://www.olympiabusinesswatch.com/2012/03/tax-compliance-time-costs-227billion.html
58
Hodge, Scott A. "U.S. States Lead the World in High Corporate Taxes" Tax Foundation. 18 March 2008 http://taxfoundation.org/article/us-states-lead-world-highcorporate-taxes
59
Djankov S., T. Gansler, C. McLiesh, R. Ramalho, and A. Shleifer (2009). The Effect of Corporate Taxes on Investment and Entrepreneurship. National Bureau of Economic
Research. www.nber.org
60
Wahlen, Michael J., "Update: 30 Free Market Groups Support Repatriation This Year" Americans for Tax Reform. 30 November 2011. http://www.atr.org/free-marketgroups-support-repatriation-a6612
61
Ellis, Ryan. One Month to Go Until We Have the World's Highest Corporate Tax Rate. Americans for Tax Reform. 1 March, 2012. www.atr.org
62
The President's Framework for Business Tax Reform. February 2012. The White House and the Department of Treasury. www.whitehouse.gov
63
Ellis, Ryan. Obama's Business "Tax Reform" is a Tax Hike In Disguise. Americans for Tax Reform. 22 February 2012. www.atr.org/obamas-business-tax-reform-hike-disguise-a6739
64
Ellis, Ryan. 20 is the New 25- In Corporate Income Tax Reform. Americans for Tax Reform. 26 September 2011. www.atr.org
65
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67
Prandoni, Christopher. "Abundance of Suppy: ATR's Energy Candidate one pager," Americans for Tax Reform. www.atr.org
618
Energy Policy at a Crossroads: An Assessment of the Impacts of Increased Access versus Higher Taxes on U.S. Oil and Natural Gas Production, Government Revenue, and
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69
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71
Costing American Jobs, Increasing Energy Prices. Natural Resources Committee http://naturalresources.house.gov/Issues/Issue/?IssueID=15410#2009
72
"Employment, Government Revenue and Energy Security Impacts of Current Federal Lands Policy in the Western US, 2: Adverse Federal Land Policies," American
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73
"Costing American Jobs, Increasing Energy Prices". Natural Resources Committee http://naturalresources.house.gov/Issues/Issue/?IssueID=15410#2009
74
"FY2013 Budget Calls for Targeted Tax Increases on America's Oil & Natural Gas Producers." American Petroleum Institute. http://www.api.org/policy-andissues/~/media/3E404873038D44DA8685086ED083C9EF.ashx
75
Kludt, Tom. "North Dakota Proves Newt Gingrich Wrong on Energy," TPM. 30 March 2012. http://2012.talkingpointsmemo.com/2012/03/gingrich-north-dakota-oilproduction-new-regulations.php
76
42
Prandoni, Christopher. Americans for Tax Reform. www.atr.org
NOTES
43
NOTES
44
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Americans for Tax Reform Foundation / Cost of Gover nment Center

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COST OF

Cost of Government Day 2012

COST OF GOVERNMENT DAY 2012 REpORT

About the Author ............................................................................................................................2

About The Author

The Thomas Jefferson Fellowship

COST OF GOVERNMENT DAY 2012 REpORT

Cost of Government Day 2012

Cost of Government Day Trends

Cost of Government 1977 - 2012

COST OF GOVERNMENT DAY 2012 REpORT

COST OF GOVERNMENT DAY COMPONENTS

State and Local Spending

Cost of Government Day Components

87.82 days worked

STATE BY STATE BREAKDOWN

2012 Cost of Government Day for States

coSt of government day 2012 report

THE GOVERNMENT SPENDING BURDEN

Days Worked for Federal Spending

COST OF GOVERNMENT DAY 2012 REpORT

Special Focus: Spending and the Federal Budget Deficit

Federal Spending and Budget Deficit/Surplus as a Percentage of GDP FY 2000-2022

-1.1 -0.9 -1.2 -1.2

COST OF GOVERNMENT DAY 2012 REpORT

Federal Spending Constrained by Economic Growth ($ billions)

Deficit/Surplus Constrained at National Income

Deficit Constrained By CPI

State and Local Spending

Days Worked for State and Local Spending

COST OF GOVERNMENT DAY 2012 REpORT

STATE TAX INCREASES

Cumulative State Tax Increases FY 2003-2012

COST OF GOVERNMENT DAY 2012 REpORT

Per Capita (2003-2012)

Per Capita (FY 2003-2012)

The employee is assigned a Step 5 in the GS table for a 40-year career

State and Local Employees (thousands)

THE REGULATORY BURDEN

Days Worked for Total Regulatory Burden

COST OF GOVERNMENT DAY 2012 REpORT

COST OF GOVERNMENT DAY 2012 REpORT

Total Residents Gained in the Lowest Tax Burden States

Total Income Gained in the Lowest Tax Burden States ($ billions)

STATE INCOME MIG

COST OF GOVERNMENT DAY 2012 REpORT

loss greater than 0.33%

loss greater than 0 33%

CASE STUDY: TAXMAGEDDON

Personal income tax rates will increase:

Bracket Tax Rate

COST OF GOVERNMENT DAY 2012 REpORT

The Alternative Minimum Tax (AMT)

Exemptions apply to items retailing for less than $100

THE BUFFETT RULE - OBAMA'S AMT

America already has a steeply progressive tax code. The top

year should pay a smaller share of their income in

1 percent of earners pay 40 percent of all income taxes and

taxes than a middle class family pays, says the

28 percent of all federal combined taxes. The lower half of

Obama Administration. The White House claims that

all income earners, those making less than $33,000, pay 3

22,000 households had an income above $1 million in 2009

percent of all income taxes and less than 1 percent of all