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IRS & The State of America’s Financial Health March 14, 2007

Posted by Daniel Downs in economics, federal budget, finance, freedom, IRS, news, religion, taxes.
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Chart of Account Balance As far as the IRS is concerned, the state of America is improving. The latest edition of the Statistics of Income Bulletin informs us that the final tally of 2006 income tax returns has yet to be determined. However, last years statistics are complete. The IRS claims they received 134.5 million U.S. individual income tax returns, an increase of 1.6 percent from 2004. I wonder if they also receive non-U.S. returns as well. Adjusted gross income (AGI) increased by 8.9 percent from the previous year to $7.4 trillion for 2005 and taxable income increased 9.5 percent to $5.1 trillion.

Notice Americans could have paid off the 2005 federal budget of $2.4 trillion dollars and still had $2.7 trillion left over. The problem is the average household would only have had $23,863 pre-tax dollars to live on. According to the Bureau of Labor Statistics’ Consumer Expenditures tables, average household expenditures in 2004 were $43,395. I estimate average expenditures in 2005 would have been $44,780. If the federal budget was paid solely by personal income, every household would have incurred an average annual deficit of $20,917.

Heck, that’s more than I make! Well….

Luck for us, individual tax payers only had to pay $928.3 billion of the federal spending spree. That means total after-tax income was $4.2 trillion dollars in 2005. Spread it over about 113.2 million households and the average household income was around $37,102.

All that money only to pay more taxes to states, counties, cities, schools as well as for various use taxes.

Then consider the average annual household expenditures mentioned above. Accordingly, Americans still incurred an average deficit of about $7,678. If we paid off the 2005 deficit of $364 (now $244) billion, the average household deficit would have increased to $10,895.

Personal debt and negative savings account for the household deficit figures mentioned above. In a handy report created by CreditCard.Com, the average household debt in 2005 was $11,840. Revolving debt alone amounted to $7,000, and the average credit card balance was $4,617.

As you can see, spending spree consumerism is killing us. No wonder the government has the same problem. Even worse, the bankruptcy epidemic is symptomatic of this pandemic problem.

The IRS may be witnessing a slight improvement of America’s diseased state of financial health, but Americans are far from being financially or morally healthy. The best prescription for this American illness was stated best by Edmund Burke who said “what is liberty without…virtue? It is…madness, without restraint. Men are qualified for liberty in exact proportion to their disposition to put moral chains upon their own appetites.”

Sources:

SOI Bulletin:Winter 2006-2007, “Individual Income Tax Returns, Preliminary Data, 2005”
Press Briefing by OMB Director Rob Portman on the President’s Fiscal Year 2008 Budget
U.S. Census Bureau, Current Population Reports, “Families and Living Arrangements”
U.S. Bureau of Labor Statistics, “Consumer Expenditures in 2004”
CreditCard.Com, “Credit Card Industry Facts and Personal Debt Statistics”
EarsToHear.Net, “Quotes from America’s Leaders”

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Comments»

1. markrmorris2 - March 14, 2007

GREAT! No what the H*** are they gonna do with all that money? Something brilliant I’m sure!

2. in2thefray - March 15, 2007

“…spending spree consumerism is killing us.” I couldn’t agree more. You hear commercials about debt consolidation and credit consultations companies.The thought that being in debt is somehow something that makes you a victim. The truth is that the materialism of far to many Americans is a deadly character choice.
The projection to the governments “tax and spend” mentality is truly moral based . Any level of government simply doesn’t care about the money they take or who they take it from.

3. Financial Health of America: Bureau of Economic Analysis & Morality « The State of America - May 8, 2007

[…] we are back to the problem addressed last week in IRS and The State of America’s Financial Health. Americans are enslaved to their appetites. Americans are still addicted to the plastic vision of […]

4. Business and Personal Finance - September 9, 2007

I couldn’t understand some parts of this article, but it sounds interesting


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