"Tax Freedom Day" Is The Day When America Makes Enough To Pay Its Tax Bill For The Year
According to the Tax Foundation, "Tax Freedom Day" will fall on April 21st this year, three days later into the year than in 2013.
What is "Tax Freedom Day"?
"Tax Freedom Day" is the day when the nation makes enough money to pay all of their federal and state tax liabilities for the year. According to the Tax Foundation, the nation will pay $4.5 trillion in taxes in 2014 ($3.0 trillion in federal taxes, $1.5 trillion in state taxes). According to the Tax Foundation, the slow uptick in the nation's economy means that the nation will pay more in taxes this year, which has resulted in "Tax Freedom Day" being pushed back three days.
If you include the budget deficit in the total, "Tax Freedom Day" gets pushed back even further to May 6th, which would be the latest deficit-inclusive "Tax Freedom Day" since 1945 (May 21st).
Let's look at how long it takes the nation to pay off their various tax liabilities:
Federal Income Tax - 33 days
Social Insurance Taxes - 27 days
Federal Excise Taxes - 2 days
Federal Corporate Income Taxes - 8 days
Other Federal Taxes - 4 days
State/Local Income Taxes - 9 days
State/Local Social Insurance Taxes - 3 hours
Sales and Excise Taxes - 13 days
Property Taxes - 11 days
State/Local Corporate Income Taxes - 1 day
Other State/Local Taxes - 3 days
According to the Tax Foundation, the states with the latest "Tax Freedom Day" are Connecticut and New Jersey (May 9th), while the state with the earliest "Tax Freedom Day" is Louisiana (March 30th).
"Tax Freedom Day" and "Deficit Day" (the day on which the nation has paid for their tax liabilities AND deficit spending) have fluctuated wildly over the past 100+ years. Back in the early 1900s, "Tax Freedom Day" and "Deficit Day" occurred in the second half of January as the nation had a much lower tax burden (relative to income). Over the next 70 years or so, these two days would land later and later in the year, thanks to two World Wars (taxes and deficit spending went up to pay for them) and increased taxes from state and local governments. Over the past 30 years or so, "Tax Freedom Day" and "Deficit Day" have more or less plateaued.
Source: Taxfoundation.org - Tax Freedom Day 2014 is April 21, Three Days Later Than Last Year
Filed under: General Knowledge