Tax Freedom Day a useful metaphor
Published 7:40 pm Thursday, April 16, 2015
Ready for some good news? Today is “Tax Freedom Day” in Texas — the day we stop working for the government and start working for ourselves. It’s a little later than last year, when Tax Freedom Day fell on April 12, but it’s better than many, many other states.
It’s an abstraction, of course, but it’s a useful abstraction. So many of our taxes are taken from us in inconspicuous ways that it’s good to have a visual to show just how much of our income we’re actually paying.
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“Tax Freedom Day gives us a vivid representation of how much we pay for the goods and services provided by governments at all levels,” says Tax Foundation Economist Kyle Pomerleau. “Arguments can be made for if and why the tax bill is too high or too low, but in order to have an honest discussion, it’s important for taxpayers to understand cost of government. Tax Freedom Day helps people relate to that cost.”
National Tax Freedom Day is April 24. Last year, it was April 23.
“Tax Freedom Day is one day later than last year due mainly to the country’s continued steady economic growth, which is expected to boost tax revenue especially from the corporate, payroll and individual income tax,” Pomerleau explains. “Americans will collectively spend more on taxes in 2015 than they will on food, clothing and housing combined.”
According to the Tax Foundation, “Tax Freedom Day computed by dividing total tax collections by the nation’s income, as reported by the Bureau of Economic Analysis. Every dollar that is officially called income by the government is counted, and every payment that is officially considered a tax is counted. The resulting percentage is then converted into days of a 365-day calendar year.”
The Foundation adds, “Americans will pay $3.3 trillion in federal taxes and $1.5 trillion in state and local taxes, for a total bill of more than $4.8 trillion, or 31.1 percent of the nation’s income.”
Folks in Connecticut and New Jersey have to work until May 13 in order to pay off what they owe to the government.
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The states with the earliest Tax Freedom Days are Louisiana (April 2), Mississippi (April 4) and South Dakota (April 8).
“Tax Freedom Day has not always been this late in the year,” the Foundation notes. “World War I tax increases led to a jump in Tax Freedom Day from 1917’s Jan. 24 to 1918’s Feb. 8 to 1921’s Feb. 22. In the 1920s, when Justice Oliver Wendell Holmes described taxes as the price of civilized society, Tax Freedom Day was arriving in February.”
The latest it’s ever arrived nationally is May 1, 2000 — which signifies that Americans paid 33 percent of their total income in taxes.
Critics of Tax Freedom Day say the focus shouldn’t be just on how much we pay, it also should be on what we receive — the services and infrastructure that benefit us all. And that’s true.
But knowing the scope of how much we pay is a good starting point.