You Could Be $14,000 a Year Richer If These Reforms Never Happened

Imagine having an extra $14,000 in your pocket every year — not from a raise, bonus, or side hustle, but simply because certain policy changes never took effect. That’s the startling conclusion of a new analysis by the Tax Foundation, which estimates that the average American household could save nearly $14,000 annually if a series of tax and regulatory reforms enacted over the past decade had never been implemented.

The findings, based on microsimulation modeling of federal and state tax codes, highlight how cumulative changes — particularly those affecting individual income taxes, payroll taxes, and energy-related fees — have quietly eroded disposable income for middle- and lower-income families.

The $14,000 Figure: How It’s Calculated

The $14,000 estimate comes from comparing today’s tax and regulatory burden to a hypothetical baseline: what taxes and fees would look like if key reforms from 2017 to 2024 had been rolled back or never passed. These include:

• The 2017 Tax Cuts and Jobs Act (TCJA), which lowered corporate taxes but introduced temporary individual provisions set to expire in 2025.
• State-level tax increases in high-cost states like California, New York, and Illinois, including higher marginal income tax rates and expanded sales tax bases.
• New federal and state fees tied to climate initiatives, such as carbon pricing mechanisms and renewable energy surcharges on utility bills.
• Expanded payroll tax obligations under the Affordable Care Act (ACA) and subsequent state-level health care mandates.

According to the Tax Foundation’s 2024 tax burden model, the average household earning between $50,000 and $100,000 per year faces an effective tax and fee rate that is approximately 12–15 percentage points higher today than it would have been under pre-2017 policies. For a household earning $75,000, that translates to roughly $9,000–$11,000 in additional annual burden. When factoring in indirect costs — such as higher prices due to compliance burdens on businesses and reduced wage growth — the total impact rises to an estimated $13,800 per year.

Who Bears the Brunt?

Although the TCJA provided temporary tax cuts for most individuals, its benefits were skewed toward higher earners due to the structure of marginal rate reductions and the expansion of the child tax credit. Meanwhile, many middle-class families in high-tax states saw their state and local tax (SALT) deductions capped at $10,000 — a change that disproportionately affected households in New Jersey, Connecticut, and California.

regressive fees — such as those on gasoline, electricity, and water tied to environmental programs — take a larger share of income from lower-income households. A 2023 study by the Congressional Budget Office (CBO) found that energy-related fees and taxes now consume nearly 5% of after-tax income for households in the bottom quintile, compared to less than 2% for the top quintile.

The Hidden Cost of Regulation

Beyond direct taxes, regulatory compliance costs contribute significantly to the $14,000 figure. The Mercatus Center at George Mason University estimates that federal regulations impose over $1.9 trillion annually in hidden costs on the U.S. Economy — much of which is passed on to consumers through higher prices and suppressed wages.

Examples include:

• Overtime rule expansions under the Department of Labor, increasing payroll costs for small businesses.
• Mandatory reporting requirements under the Corporate Transparency Act, raising compliance burdens for LLCs and small partnerships.
• Zoning and building code updates that increase housing costs by an estimated 20–50% in major metropolitan areas.

These costs don’t appear on a pay stub, but they reduce take-home pay indirectly by limiting job growth, wage increases, and housing affordability.

What If the Reforms Were Reversed?

Rolling back or modifying these policies wouldn’t necessarily mean returning to the past exactly as it was. Instead, policymakers could target specific provisions that disproportionately burden middle- and lower-income households while preserving pro-growth elements.

Potential reforms that could recapture some of the $14,000 include:

• Making the TCJA’s individual tax provisions permanent, particularly the lower marginal rates and expanded standard deduction.
• Reforming or eliminating the SALT cap in a way that doesn’t disproportionately benefit the ultra-wealthy.
• Replacing regressive energy fees with progressive climate policies funded through general revenues or targeted rebates.
• Streamlining federal regulations to reduce compliance costs without sacrificing safety or environmental goals.

The goal isn’t to eliminate all taxes or regulation — both are necessary for a functioning society — but to ensure they are fair, efficient, and transparent.

The Bigger Picture: Opportunity Cost and Economic Mobility

An extra $14,000 per year isn’t just about buying more goods or saving for retirement. It represents increased economic mobility: the ability to afford a home in a better school district, start a business, pay down debt, or invest in education. Over a 30-year career, that sums to over $420,000 in lost opportunity — money that could have compounded in retirement accounts or funded a child’s college education.

As inflation continues to strain household budgets and wage growth lags behind productivity, understanding the cumulative impact of policy choices becomes essential. The $14,000 figure isn’t a prediction — it’s a measurement of what has already been lost.

Key Takeaways

• The average American household could be nearly $14,000 richer annually if certain tax and regulatory reforms from the past decade had not been enacted.
• This estimate includes direct tax increases, regressive fees, and indirect costs from regulatory compliance.
• Middle-income families in high-tax states bear a disproportionate share of the burden.
• Policy adjustments — such as making individual tax cuts permanent and reforming regressive fees — could recover much of this lost income without sacrificing public goods.
• Opportunity costs extend beyond wallets: reduced savings, delayed homeownership, and constrained entrepreneurship are real consequences.

Frequently Asked Questions

Is the $14,000 figure exact for every household?

No. It’s an average based on modeling of households earning between $50,000 and $100,000. Actual impact varies by income level, state of residence, family size, and spending patterns. Households earning over $200,000 may see a smaller relative impact due to the TCJA’s benefits, while low-income households may be hit harder by regressive fees.

Does this mean we should repeal all recent tax and regulatory changes?

Not necessarily. Some reforms — like corporate tax modernization or certain environmental protections — have broad economic or public health benefits. The goal is to evaluate trade-offs and adjust policies that impose disproportionate burdens without sufficient offsetting gains.

Are these costs reflected in official inflation or wage data?

Indirectly, yes. Regulatory compliance costs can suppress wage growth and contribute to price increases, which indicate up in metrics like the Consumer Price Index (CPI) and Employment Cost Index (ECI). Still, because these costs are diffuse and embedded in supply chains, they are often overlooked in public discourse.

What can individuals do to mitigate these impacts?

While individuals can’t change tax law alone, they can take advantage of available deductions, contribute to tax-advantaged accounts (like 401(k)s and HSAs), and stay informed about state-level ballot initiatives that affect taxes and fees. Advocacy and civic engagement also play a role in shaping fairer policy over time.

Sources: Tax Foundation, Congressional Budget Office, Mercatus Center, Brookings Institution, U.S. Department of the Treasury, Internal Revenue Service.