July 4, 2007 — On July 4, 1776, America’s Founders declared the country’s independence from Britain, largely as a revolt against excessive and unfair taxation. So in our nation, which is much more overtaxed than it was over two centuries ago, it would be fitting if, in recognition of our Founding principles, federal, state and, local governments made July Fourth a totally tax-free day.
Many cities already suspend sales taxes for a few days a year on items such as clothing and school supplies, usually to garner the favor of overtaxed parents struggling to raise kids and to give mom and pop an incentive to frequent overtaxed downtown enterprises struggling to make profits. So wouldn’t this be appropriate for all of us, who struggle every day to be allowed to keep our money, on that day on which we celebrate our freedom?The total direct tax burden on Americans—not counting the indirect taxes of regulations—is estimated at about 35 percent of our $13 trillion gross domestic product, or $4.5 trillion. That works out to more than $12 billion we would keep in our own pockets if we were truly independent on Independence Day.
We wouldn’t have to pay taxes on the hotdogs, beer, and barbecue we purchase for Fourth of Julypicnics. And since for most of us this is a paid holiday, for that day we would receive our paychecks without income tax, Social Security taxes, unemployment insurance taxes, and the like taken out.
Such a tax-free day would be the time to fill up large SUVs and save $10 a tank in various fuel taxes. Malls would soon see Christmas-season-sized crowds as shoppers seek to stretch their dollars.
“Cute idea” you might say, “but since July Fourth is a holiday, many enterprises would be closed and therefore many individuals would not reap the full benefits of such a policy.”
But no doubt many individuals and enterprises would seek ways around other taxes. Eventually, Wall Street, brokerage houses, banks, and the like would stay open to avoid, for example, capital-gains taxes. Everyone could end up working that day but, hey, most of us would get overtime pay that would not be taxed.
The Fourth of July could become the most commercially active day of the year. Picnics would be pushed aside for pension plans. Fireworks would give way to long work days. Time with the family would be replaced by time with financial facilitators.
But won’t this defeat the spirit of Independence Day? No. Taxes defeat the spirit of Independence Day.
The founding principle of this country is the right of each individual to life, liberty, and the pursuit of happiness, which all of our Founders acknowledged includes the right to acquire and own property.
Millions of individuals came to these shores not to have their income redistributed by politicians but to work producing goods and services to make a prosperous life for themselves and their families. They wanted to realize their dreams of personal autonomy and independence, to run their own lives without the interference of masters, whether feudal lords or local bureaucrats. So what better way to celebrate Independence Day than through economic activity independent of government?
Still, it would be better to retain traditional celebrations of the Fourth of July by returning to the anti-tax traditions we celebrate. Excessive taxes and government regulations rob us of our money and our autonomy and thus undermine that spirit of individualism by which each of us creates our own flourishing lives and which constitutes the spirit of America.
Yes, let’s ask our elected officials as a start to declare July Fourth a tax holiday. And let’s insist they build on that day by cutting back taxes and thus expanding individual independence, which is the essence of America’s political and moral revolution.
Edward L. Hudgins is research director at The Heartland Institute.