We've Got The County Covered
We've Got The County Covered
Tax Freedom Day is the day that Americans, collectively, will earn enough to pay their tax bill for the current year. Tax Freedom Day takes all federal, state and local taxes and divides them by the nation’s income. This year Americans will pay $3.5 trillion in federal taxes and $1.6 trillion in state and local taxes, for a total bill of $5.1 trillion (that’s 31 percent of the national income). For 2017 national Tax Freedom Day is April 23rd, but since each state (because of varying state and local tax rates) has a different tax burden, taxpayers in each state will achieve tax freedom at on different days in a given year.
This year Montanans achieved tax freedom on April 17. That’s in the early quarter of tax freedom days, ranked as the 19th state to reach tax freedom. Mississippi is ranked number one, having celebrated tax freedom day this year on April 5. Connecticut taxpayers will be the last to finally earn enough to pay their tax bill and have to wait until May 21 to reach tax freedom for 2017. Because of the complicated nature of taxes imposed by federal, state and local governments, it is usually about the beginning of April, each year, before a specific Tax Freedom Day can be calculated for a current year.
The idea of pinpointing when taxpayers actually earn enough to pay a given year’s taxes got started in 1948 when an individual, in Florida, began calculating national tax freedom days. He did that until 1971 when he turned the process over to the Tax Foundation—a non-profit that does studies of tax policies and educates policymakers and citizens about taxes.
According to the Tax Foundation, “The latest ever Tax Freedom Day was May 1, 2000. That year Americans paid 33 percent of their total income in taxes. A century earlier, in 1900, Americans paid only 5.9 percent of their income in taxes, so that Tax Freedom Day came on January 22.” Perhaps we will some day hear a candidate for office promise, “If elected I will make sure Tax Freedom Day comes on (such and such a day)” But, don’t count on hearing that, it’s not nearly as catchy as “I’ll drain the swamp,” etc.
So what?
What use is calculating Tax Freedom Day? Well, it’s one of those fun factoids to spring on fellow coffee drinkers sitting around a table…it’s rare that anyone knows what you are talking about until you explain it, then they usually get the idea. (Even if they randomly heard about it on the news or saw it in the newspaper, they are very unlikely to know the Tax Freedom Day for their own state).
Tax Freedom Day calculations may be considered by tax policy makers, particularly in states, to be sure they are not the latest state to achieve tax freedom—meaning they have the highest tax burden in the country. After all, people would not be flocking to a state that took forever for citizens to earn enough to pay their annual taxes. Really, have any “Journal” readers seriously considered moving to Connecticut, the last state to achieve tax freedom this year? I rest my case.
Truth is, calculating and publicizing Tax Freedom Day likely just irritates people. It’s one more reminder that we live in a society where taxes eat up a lot of our earning power (the Tax Foundation says taxes take more of our earnings than what we spend on food, clothing and housing combined). That’s a concern for people who pay taxes. For those not paying any taxes, what difference does it really make, they are unaffected? One thing for sure, with the pain of April 15 still on most taxpayers’ minds, realizing you are just now out from under this year’s tax burden is not happy news. Sorry I brought it up but I thought you ought to know. You are now officially earning for yourself and not the tax collector. Congratulations.
