Tax Freedom Day, the day on which American’s have collectively earned enough income to pay off the total federal, state, and local tax bill, will arrive 111 days into the year on April 21, according to the annual report released this morning by the nonpartisan Tax Foundation.
While the national date arrives six days after the deadline for filing taxes, each state’s total federal, state, and local tax burden varies greatly. Louisiana’s Tax Freedom Day is the earliest and arrived on March 30, followed by Mississippi (April 2) and South Dakota (April 4). New Jersey and Connecticut are tied with the latest date on May 9 and they are preceded by New York (May 4).
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 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.
- 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.
- 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 have to 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 latest-ever nationwide Tax Freedom Day was May 1, 2000 – meaning that 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.
Source: Tax Foundation
“Tax Freedom Day® This Year 2014 Is April 21, Three Days Later Than Last Year,” Tax Foundation: http://taxfoundation.org/article/tax-freedom-day-2014-april-21-three-days-later-last-year