Americans living on a budget—and that’s most people these days—know the big items that eat up their money.  We have to pay for housing, food, gas, clothes, health insurance, electricity, phones, and internet.  If you have kids, you likely also have to factor in childcare, school expenses, and the terrifying specter of college costs.

Yet here are some line items that don’t make it on most families’ official budgets—but you pay for them just the same.


Okay, taxes aren’t exactly a surprise:  We know we pay taxes to support our federal government that spends trillions on defense and scores of social programs, and to our state and city governments that provide police, schools, and garbage pickup.

It’s easy to lose sight, however, of just how big our government has become and how much Americans pay to support it.   The Tax Foundation explains that in 2015, Americans together will spend $4.8 trillion on government—that’s more than what we will collectively spend on housing, food, and clothes combined.

Even those living modestly, such as families with annual household incomes between $40,000 and $50,000, lose thousands of dollars to taxes.  This is important to remember:  It isn’t just our employers, but politicians in Washington and in state capitols who have the power to give us all a raise by cutting taxes and putting more money in our pockets.

Wireless Taxes

Most Americans are aware of income taxes, payroll taxes, and the sales taxes that hit consumer goods in many states.  Smokers also probably know that a hefty share of their cigarette costs are really a surcharge that goes to the government.  But many will be surprised to learn that wireless services are also singled out like cigarettes and alcohol for some of the highest taxes rates. In fact, on average, wireless is taxed at a rate of 17.05 percent.  That’s twice the average state sales tax.

The logic behind these special taxes may once have been that wireless services were considered a luxury.  But today, the overwhelmingly majority of Americans at all income levels depend on wireless technology, and therefore are being hit with this tax.  A growing number of people are forgoing landlines and just relying on their cell phones for communication.  And, of course, wireless isn’t just for communication, but is a tool used for school, work and entertainment.  Like all sales taxes, wireless taxes impact those with lower incomes the most, and they’d be a little bit more likely to make ends meet if politicians would eliminate this regressive tax.

Unnecessary Regulations

Everyone supporters sensible regulations that protect the environment and keep the public safe.  Yet it’s clear that the government has gone overboard in terms of regulating every aspect of American life and the minutia of everyday business operations.  And all this red tape is costing up big time.

The Competitive Enterprise Institute helps put these costs in perspective with their yearly report called “Ten Thousand Commandments.”  The report concludes: “federal regulation and intervention cost American consumers and businesses an estimated $1.88 trillion in 2014 in lost economic productivity and higher prices.”  That regulatory cost breaks down to $14,976 per household.  As CEI explains, “Although not paid directly by individuals, this “cost” of regulation exceeds the amount an average family spends on health care, food and transportation.”

Surely some of those regulations are sensible investments, but many aren’t.  They needlessly add expense to operating businesses and other entities, and those costs trickle down to all of us for little benefit.

For example, the FDA will soon require chain restaurants to display calorie information on menus and menu boards. This may sound harmless, but these restaurants—many of which are already struggling to stay afloat—will now have to spend money on reprinting their menus and carefully evaluating the content of their meals.  Those new costs will have to be passed on to customers.  Businesses will then be hamstrung in what they can offer:  Restaurant owners won’t want to incur the costs of analyzing new dishes to obtain calorie information. This means consumers can say goodbye to seasonal changes and new and creative additions to menus at their favorite restaurants.  Ironically this could mean that we get fewer of the fresh, local vegetables we know we are all supposed to try to eat since restaurants will be required to stick to the same script.  And frustratingly, studies show that consumers don’t pay attention to the calorie information posted on menus. Certainly some restaurants might want to offer calorie estimates as a feature, but this sweeping government regulation simply doesn’t make sense.

If policymakers and regulators would limit themselves just to regulations and rules that truly advance the public good—not just appease noisy activist groups—we’d all find that our costs would start going down and we’d have a little extra at the end of the month.

Fraud and Theft

Technology enriches our lives in many ways, but it has also opened the door to new kinds of crime, which are a drag on our economy and end up costing all of us.  For example, while credit cards are wonderfully convenient—making it easier for us to buy what we need without worrying about carrying around cash and helping us track where our money goes—they also make it easier for criminals to commit fraud using stolen financial and personal information.  In fact, credit card fraud alone drains an estimated $11 billion from the American economy each year.

It’s easy to think that this doesn’t impose a cost on typical consumers—most of us receive a phone call from our credit card company when a charge looks fishy, and we’re held harmless—but the stores and credit card companies that have to shoulder those losses have to make up for it.  That means higher prices and more fees for all of us.

In fact, the United States has among the highest rates of credit card fraud in the world.  Other developed countries are using newer technologies in the form of chip-and-PIN cards. Chip and PIN cards are embedded with a computer chip that creates a unique code for each transaction and requires consumers to enter a numeric passcode.  Chip-and-PIN cards have successfully reduced fraud where they have been implemented.  The credit card companies and banks are (slowly) moving to chip-enabled cards but they aren’t using PINs.  That’s too bad since it won’t do as much to improve security.   Credit card companies charge businesses more in fees because of the risk of fraud and theft. If chip-and PIN was used and the amount of theft declined, those fees—which consumers end up shouldering in the form of higher costs—would also go down, and we’d all be better off.

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Just as we need better technologies to protect our credit card purchases, we also need to focus on ways to prevent intellectual property theft.  That’s the term for everything from hackers stealing communications technologies, the illegal reproduction of patented medical therapies, to the illegal downloading of creative property like movies and music.  Altogether, intellectual property theft drains a staggering $250 billion each year from American businesses.   Consumers may not see it on their receipts, but we are all paying for it in terms of higher prices, few jobs, and stifled innovation, and have a big interest in policies that combat this kind of crime.

Frivolous Lawsuits

We need a legal system that protects all of our property, but we also need one that discourages frivolous lawsuits that do nothing but enrich lawyers and those who take advantage of the system.  Americans have all heard outrageous stories about people suing big companies over ridiculous grievances – such as the infamous “too hot” coffee from McDonald’s – but sadly the problem isn’t limited to a few greedy individuals trying to get rich quick.  There are business entities, often referred to as “patent trolls,” that exist solely to extract money from businesses by misusing the legal system.

Patent trolls buy up obscure patents and then file lawsuits alleging that others are violating their patent rights. They send letters threatening to drag a business to court unless they pay a fee. Many businesses fear a protracted, costly legal battle so just pay up, even if the charge is meritless.  Harvard Business Review recently reported that the costs of just patent litigation was nearly $30 billion each year.  Again, those cost end up coming out of consumers’ pockets in the form of higher prices.

Congress is considering legislation to discourage abusive patent litigation by setting standards for what letters asserting patent rights must contain and to make it more likely that frivolous or abusive lawsuits are dismissed. It would also require that a losing party that brought a lawsuit recognized as frivolous pay the other side’s attorney fees. This loser pays system could deter people from getting in the business of abusing the legal system.  We need this type of legal reform not just when it comes to patent litigation but in other areas, such as class action suits, which too often do nothing to help the supposed class, but enrich trial lawyers at the expense of the rest of us.

Better Policies for a More Affordable Life

Life can be expensive, but our public policies are making many items more expensive than they need to be.  Americans should be asking government at every level to make common sense changes to our public policies to make it easier for all of us to not just balance our budgets, but do even better.