According to the Tax Foundation today is the day when the nation as a whole has earned enough money to pay its total tax bill for the year. This day comes 5 days later than last year. On average in 2013, Americans will pay 29.4% of their income in taxes.
What is Tax Freedom Day?
Tax Freedom Day is the day when the nation as a whole has earned enough money to pay its total tax bill for the year. A vivid, calendar based illustration of the cost of government, Tax Freedom Day divides all federal, state, and local taxes by the nation’s income. In 2013, Americans will pay $2.76 trillion in federal taxes and $1.45 trillion in state taxes, for a total tax bill of $4.22 trillion, or 29.4 percent of income. April 18 is 29.4 percent, or 108 days, into the year.
Why is Tax Freedom Day later this year?
Tax Freedom Day is five days later than last year, due mainly to the fiscal cliff deal that raised federal taxes on individual income and payroll. Additionally, the Affordable Care Act’s investment tax and excise tax went into effect. Finally, despite these tax increases, the economy is expected to continue its slow recovery, boosting profits, incomes, and tax revenues.
When is Tax Freedom Day if you include federal borrowing?
Since 2002, federal expenses have exceeded federal revenues, with the budget deficit exceeding $1 trillion annually from 2009 to 2012. In 2013, the deficit will come down slightly to $833 billion. If we include this annual federal borrowing, which represents future taxes owed, Tax Freedom Day would occur on May 9, 21 days later. The latest ever deficit-inclusive Tax Freedom Day occurred during World War II, on May 21, 1945.
When is my state’s Tax Freedom Day?
The total tax burden borne by residents of different states varies considerably, due to differing state tax policies and because of the steep progressivity of the federal tax system. This means higher income states celebrate Tax Freedom Day later: Connecticut (May 13), New York (May 6), and New Jersey (May 4). Residents of Mississippi will bear the lowest average tax burden in 2013, with Tax Freedom Day arriving for them on March 29. Also early are Louisiana (March 29) and Tennessee (April 2).
How has Tax Freedom Day changed over time?
The latest ever Tax Freedom Day was May 1, 2000 – meaning Americans paid 33.0 percent of their total income in taxes. A century earlier, in 1900, Americans paid only 5.9 percent of their income in taxes, meaning Tax Freedom Day came on January 22.
Who calculates Tax Freedom Day?
Tax Foundation economists calculate Tax Freedom Day using federal budget projections, data from the U.S. Census and the Bureau of Economic Analysis, and projections of state and local taxes. Tax Freedom Day was conceived in 1948 by Florida businessman Dallas Hostetler, who deeded the concept to the Tax Foundation when he retired in 1971. Tax Freedom Day by state has been calculated since 1990, when sufficient data became available. Learn more about Tax Freedom Day at www.TaxFoundation.org/taxfreedomday.
For more on this please visit the Tax Freedom website by clicking here.