Tax Freedom Day a useful metaphor

Published 12:59 am Sunday, April 10, 2016

Chances are you’ll spend at least part of the coming week working on your federal income taxes. But according to the Tax Foundation, you’ll be working until April 17 – a week from today – just to pay your taxes.

April 17 is Tax Freedom Day for Texans; it’s the estimated date when you stop working for the government and start working for yourself.

“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,” the Tax Foundation explained. “Tax Freedom Day takes all federal, state and local taxes and divides them by the nation’s income. In 2016, Americans will pay $3.34 trillion in federal taxes and $1.64 trillion in state and local taxes, for a total tax bill of $4.99 trillion, or 31 percent of national income. This year, Tax Freedom Day falls on April 24, or 114 days into the year (excluding Leap Day).”

It’s an abstraction, of course, but it’s a useful abstraction. Because many of our taxes are taken from us in inconspicuous ways, it’s good to have a visual to show just how much of our income we’re actually paying.

“Tax Freedom Day gives us a vivid representation of how much we pay for the goods and services provided by governments at all levels,” said 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.”



It varies by state, with Texas’ day falling a week before the nation’s as a whole. Mississippi has the lightest burden; its Tax Freedom Day fell on April 5. Connecticut residents, on the other hand, will be working for the government until May 21.

“The latest ever Tax Freedom Day (for the nation as a whole) was May 1, 2000; in that year, Americans paid 33 percent of their total income in taxes,” the Foundation reported. “A century earlier, in 1900, Americans paid only 5.9 percent of their income in taxes, meaning that Tax Freedom Day came on Jan. 22.”

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.

“In calendar year 2016, the deficit will grow significantly, from $592 billion to $698 billion,” the Foundation noted. “If we include this annual federal borrowing, which represents future taxes owed, Tax Freedom Day would occur on May 10, 16 days later.”

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.