Today is Tax Freedom Day
Americans have earned enough to pay off the $4.5 trillion tax bill
Washington DC (Apr 21, 2014)—Tax Freedom Day is here! The date on which Americans have collectively earned enough income to pay off their total federal, state, and local tax bill arrives 3 days later than last year and 111 days into 2014, according the nonpartisan Tax Foundation’s annual report.
The study’s key findings include:
Tax Freedom Day is three days later than last year due mainly to the continuing economic recovery, which will boost federal tax revenue collected through the corporate, payroll, and individual income tax.
Americans will spend more on taxes in 2014 than they will on food, clothing, and housing combined.
Americans will pay $3 trillion in federal taxes and $1.5 trillion in state and local taxes, for a total bill of more than $4.5 trillion, or 30.2 percent of the nation’s income.
Americans will spend 42 days working to pay off income taxes, 15 days for excise taxes, and 11 days for property taxes. Click here for a full breakdown.
If you include annual federal borrowing, which represents future taxes owed, Tax Freedom Day would occur on May 6, 15 days later.
Tax Freedom Day is a significant date for taxpayers and lawmakers, because it represents how long Americans as a whole must work in order to pay the nation’s tax burden.
“Arguments can be made for why the collective tax bill is too high or too low, but in order to have an honest discussion, it’s important to understand where we stand,” said Tax Foundation Economist Kyle Pomerleau. “Tax Freedom Day gives us a vivid representation of how much we pay for the goods and services provided by governments at all levels.”
Historically, the date for Tax Freedom Day has fluctuated significantly. The earliest national Tax Freedom Day was in 1900 when Americans paid only 5.9% of their income in taxes, meaning the date came on January 22. A century later, the latest Tax Freedom Day was May 1, 2000—which means Americans paid 33.0% of their total income in taxes.
While the collective national date arrives today, each state’s total federal, state, and local tax burden varies greatly. The majority of states have already reached their Tax Freedom Days, but 15 states remain: New Jersey (May 9), Connecticut (May 9), and New York (May 4) will be the last to arrive. Louisiana, on the other hand, was the first state to arrive back on March 30.
Full report: Tax Freedom Day® 2014 is April 21, Three Days Later Than Last Year