Freedom is a good thing. But I’m not sure you, I or others necessarily feel better this week at the opportunity to enjoy Tax Freedom Day for 2010.
According to the Tax Foundation, national Tax Freedom Day is tomorrow — April 9. That means Americans will have worked well over three months of the year before they have earned enough money to pay this year’s tax obligations at the federal, state and local levels. (Due to different income levels and tax burdens, the Tax Freedom Day for Hoosiers was actually Tuesday).
Tax Freedom Day is one day later than in 2009, but more than two weeks earlier than in 2007. The reasons for the three-year change: recession, temporary tax cuts and several tax repeals. Nevertheless, we will pay more taxes in 2010 than we will spend on food, clothing and shelter combined.
See what I mean; not exactly cause for celebration. The Tax Foundation offer the following facts and figures:
- Tax Freedom Day does not count the deficit even though deficits must eventually be financed. If Americans were required to pay for all government spending this year, including the $1.3 trillion federal budget deficit, they would be working until May 17 before they had earned enough to pay their taxes – an additional 38 days of work.
- In 2000, Tax Freedom Day was celebrated May 1, the latest date ever. A string of tax cuts between 2001 and 2003 pushed Tax Freedom Day up by two weeks, so that it fell on April 16 in 2003 – at the time the second earliest Tax Freedom Day since the Johnson administration.
- Five major categories of taxes dominate the tax burden. Individual income taxes – including federal, state and local – require 32 days’ work. Payroll taxes take another 25 days’ work. Sales and excise taxes, mostly state and local, take 15 days to pay off. Corporate income taxes take eight days, and property taxes take 12. Americans will log six more days to pay other miscellaneous taxes, most notably including motor vehicle license taxes and severance taxes, and about half a day for estate taxes.
- Each state has its own Tax Freedom Day. Because of modest incomes and low state and local tax burdens, Alaska and Louisiana celebrate Tax Freedom Day earliest on March 26, the 85th day of the year. Connecticut celebrates last on April 27, the 117th day of the year, because income per capita is higher than in any other state.
- Tax Freedom Day answers the basic question, “What price is the nation paying for government?” An official government figure for total tax collections is divided by the nation’s total income. The answer this year is that taxes will amount to 26.89 percent of our income, and the stretch of 99 days from January 1 to April 9 is 26.89 percent of the year. Income and tax data are then parsed out to the states, yielding 50 state-specific Tax Freedom Days.