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Tax Freedom Day® Arrives April 18




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April 2, 2013 | 1811 views | Post a comment

Deficit Adds 21 Additional Days of Government Spending

Washington, D.C., April 2, 2013--Tax Freedom Day will arrive on April 18th this year, the 108th day of 2013, according to the Tax Foundation’s annual calculation. Americans will work well over three and a half months of the year before they have earned enough money to pay this year’s tax obligations at the federal, state, and local levels. Both higher federal taxes and rebounding incomes contribute to this year’s date, which is five days later than in 2012.

In the new Tax Foundation study, “Tax Freedom Day 2013,” economists William McBride, Ph.D., Elizabeth Malm, and Kyle Pomerleau also calculate how long Americans would have to work in order to close the federal budget deficit. In order to pay for all spending in the current year, the government would need to raise an additional $833 billion in taxes, pushing Tax Freedom Day to May 9th.

“This year, Americans will work five days later than in 2012 to pay all of their taxes. The total tax bill at all levels comes to approximately $4.2 trillion, or 29.4% of their total income,” said McBride. “That means Americans will pay more in taxes in 2013 than they will spend on food, clothing, and housing combined.”

The total tax burden borne by residents of different states varies considerably, not only due to differing state tax policies, but also because of the progressivity of the federal tax system. This means higher-income states celebrate Tax Freedom Day later: residents of Connecticut (May 13th), New York (May 6th), and New Jersey (May 4th) face a significantly higher federal tax burden than lower-income states. Residents of Mississippi and Louisiana will bear the lowest tax burdens in 2013, with Tax Freedom Day having arrived for them on March 29th. Also early is Tennessee, where Tax Freedom Day arrives today, April 2nd.

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 one-third of their total income in taxes. A century earlier, in 1900, Americans paid only 5.9% of their income in taxes, meaning Tax Freedom Day came on January 22.

Five major categories of taxes dominate the tax burden. Individual income taxes -- including federal, state and local -- require 40 days of work. Payroll taxes take another 24 days of work. Sales and excise taxes, mostly state and local, take 15 days to pay off. Property taxes take 12 days, and corporate income taxes take another 9.

For more information, go to http://www.taxfreedomday.org.

The Tax Foundation is a nonpartisan research organization that has monitored fiscal policy at the federal, state and local levels since 1937. To schedule an interview, please contact Richard Morrison, the Tax Foundation’s Manager of Communications, at 202-464-5102 or morrison@taxfoundation.org.
 
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