Every April, citizens of the United States are reminded of their least favorite part about being an American. That’s because it is tax season! And while Congress may view this month as a savory treat for their spending addiction, the rest of us wallow at the thought of hunting down those receipts for various deductions and filling out those daunting forms. Oddly enough, though, the majority of taxpayers in this country actually don’t owe anything in addition to what’s already been pulled out of their paychecks over the course of the last year – in fact, over 70% of Americans receive a refund! In 2011 (the last year we have complete numbers for), the IRS sent out 109.3 million refunds totaling $328.4 billion. That may seem like a pretty huge chunk of change to be floating around our mailing system, but when you realize that the IRS collects over $2.3 trillion (yes, trillion, with a t!) in yearly taxes, those refunds aren’t a terrible loss.
But here’s why Americans should really be lamenting the tax system currently in place: only about $304 billion a year goes towards paying down our national debt. That’s less than what’s paid back in refunds. And that far less than what is necessary to get our debt on a downward spiral. Of that $304, roughly $220 billion is paid on the interest alone. The most troubling part of this notion is that this $220 billion in interest will very soon exceed $1 trillion if we don’t quickly do something about it. According to Erksine Bowles, “That’s $1 trillion we can’t spend to educate our kids or to replace our badly worn-out infrastructure…that trillion will be spent principally in Asia, because that’s where our debt is.” So that means say goodbye to that comfortable tax bracket you’ve been sitting in for the last 30 years or so. Things are about to get crazy up in here come year 2020.
But who’s going to foot this outrageous bill in the coming decades? You guessed it: Millennials. Mom and Dad in the Boomer generation are just now stepping out of the jobbing market and beginning to sit fat and happy on their savings and social security benefits, just in time to miss this avalanche of debt headed our way. And while their generation is largely to blame for this hideous mess, the older voters of this nation refuse to see any changes made to the systems that are currently draining the majority our country’s yearly budget. Without the necessary Social Security and Medicare reforms on the table, the only things left for Congress to play with for budgetary wiggle room is the military budget and the tax code (and also education and infrastructure spending, but as well all know, those areas have already been slashed horrendously). And while, yes, we are seeing some much needed changes being made to military spending, the majority of reform will eventually come in the form of more taxes (much to all of our despair). Unfortunately, increased taxes will come a day late and way too many dollars short to get us out of this ever deepening hole. And if you thought Obama’s rhetoric about “1%-ers” versus Romney’s “job-creators” got nasty, just wait a few more election cycles…
In short, the Millennials’ futures are looking pretty bleak. Not only are a large portion of us underemployed and getting a late start to a successful adulthood, but we’ll be burdened with a debt we didn’t create. Not meaning to end this post on a negative tone, but there’s hardly a bright side to any of this news. Unless you just want to push all this worrisome doom and gloom off til 2020, then in that case, “eat, drink, and be merry, for tomorrow we die.”