Tuesday, July 12, 2005

2005 Cost of Government Day - July 4

Cost of Government Day 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 spending and regulatory burdens imposed by all levels of government, federal, state and local.

Cost of Government Day 2005

Cost of Government Day for 2005 is July 4th, the same date as 2004. With July 4th as the COGD, working people must toil on average 185 days out of the year just to meet all the costs imposed by government. In other words, the cost of government consumes 50.4 percent of national income.

Cost of Government: Trends

  • Cost of Government Day remained the same as last year’s revised date of July 4th and down 4 days from July 8th in 2003.
  • Slower economic growth, a recession, the war, and corporate scandals were responsible for the substantial increases in previous years.
  • However, it appears the index has turned the corner. COGD is now only slightly above 2001 levels.
  • The reduction, however, is due to stronger economic growth in the wake of the Bush tax cuts.
  • The acceleration of economic growth has produced more income for Americans which has mitigated the large increases in spending and regulations in 2004 and 2005.
  • If growth occurred as initially projected then Cost of Government Day would be July 8th.
    However, COGD is still 5 days above 2000’s level.

Cost of Government: Components

Federal Spending

  • After posting its first decline in four years, federal spending shot back up in 2005.
  • The average American is working 4.9 days more in 2005 than was required in 2000.
  • 97 percent of the increase in the total COGD since 2000 has been due to increases in federal spending.

State/Local Spending

  • The average American will work 42.2 days to pay for state and local spending; signifying the third straight decline as a percentage of national income in as many years.
  • Although the decline for 2005 is expected to be 0.6 days, the average American will work 2.7 fewer days in 2005 than was required in 2001.
  • State and local spending as a percentage of national income increased every year from 1998 though 2002 and the recent three-year decline has put state and local spending back around 1999 levels.


  • Regulations as a percent of national income declined for the second straight year following a substantial increase in 2001 and 2002 then holding at the elevated levels in 2003.
  • Regulatory costs have now fallen back to 16 percent of national income.
  • In 2005, the average American will have to work 58.5 days out of the year to pay for all regulations, which is a decline of 0.6 days from 2004.
  • In the broader picture, 2004 experienced a reduction of 1.6 days compared to 2003 and yet the average American is still working an extra day to pay for regulations than was required in 2000.
  • Even with the 2004 and 2005 decline, the average American has worked a cumulative 10 additional days to pay for regulations since 2000.

More Information

Tags: Government, Taxes, Spending, Labor, Tax Freedom Day

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