Posted on 03/26/2010 10:48:36 AM PDT by Diana in Wisconsin
(America Will Work 8 Days Less to Pay Taxes in 2009 than in 2008; Recession, Stimulus Package Push Date of Celebration Up)
Tax Freedom Day will arrive on April 13 this year, according to the Tax Foundation's annual calculation using the latest government data on income and taxes.
This is eight days earlier than in 2008, and a full two weeks earlier than in 2007, for two reasons: (1) the recession has reduced tax collections even faster than it has reduced income, and (2) the stimulus package includes large temporary tax cuts for 2009 and 2010. Nevertheless, Americans will pay more in taxes than they will spend on food, clothing and housing combined.
In the study, Tax Foundation Special Report No. 165, "America Celebrates Tax Freedom Day," Tax Foundation staff economist Josh Barro traces the course of America's tax burden since 1900, examines the composition of today's tax burden by type of tax, and finally calculates a Tax Freedom Day for each state.
Taxes and Federal Deficit
Tax Freedom Day moves somewhat independently from an alternative calculation that adds the federal budget deficit to total taxes collected. In 2009, an unprecedented budget deficit over $1.5 trillion produces a date of May 29. This is the latest date in the year this deficit-inclusive measure has ever fallen. The only previous years when taxes and deficit spending comprised a similarly large share of national income were 1944 and 1945, at the peak of World War II. In the postwar era, this date had never fallen later than May 9 (in 1992). Figure 1 below shows Tax Freedom Day as traditionally presented and with the inclusion of the federal budget deficit, since 1967.
Tax Freedom Day Fluctuations in Recent Years and Predictions for the Near Future
In 2000, Tax Freedom Day was celebrated May 3, the latest date ever. A string of tax cuts between 2001 and 2003 pushed Tax Freedom Day up by more than two weeks, so that it fell on April 16 in 2003 and April 17 in 2004. For the next three years, incomes and tax collections soared, pushing Tax Freedom Day back to April 26 in 2007.
Since 2006, corporate tax revenues have fallen sharply and are projected to do so again in 2009. Personal income taxes also fell in 2008 and are expected to fall again in 2009 due to the weakening economy and tax cuts in the stimulus package. Because most of this year's stimulus package's tax cuts continue through 2010, Tax Freedom Day could be expected to shift later by a few days next year only if the economy improves. For 2011, both the stimulus package's tax cuts and the earlier Bush tax cuts of 2001 and 2003 are set to expire. The future timing of Tax Freedom Day will depend on which tax cuts Congress and the Obama Administration choose to extend through 2011 and thereafter.
Which Taxes Are the Biggest?
Five major categories of tax dominate the tax burden. Individual income taxes, both federal and state, require 38 days' work. Payroll taxes take another 27 days' work. Sales and excise taxes, mostly state and local, take 15 days to pay off. Corporate income taxes take 6 days, and property taxes take 12. Americans will log 4 more days to pay other miscellaneous taxes, most notably including motor vehicle license taxes and severance taxes, and about 1 day for estate taxes.
Tax Freedom Day by State
Residents of Alaska will bear the lowest average tax burden in 2009. Because of their modest incomes and extremely low state-and-local tax burden, we estimate Alaska's Tax Freedom Day for 2009 to be March 23. Louisiana, Mississippi, South Dakota and West Virginia round out the five states that we project will experience Tax Freedom Day earliest in 2009.
The residents of Connecticut will celebrate last, as usual, working until the 120th day of the year, from January 1 to April 30, before earning enough to pay all their taxes. Because Connecticut's income per capita is higher than in any other state, its residents pay extraordinarily high federal income taxes. Nearby states New Jersey and New York are second and third, respectively. California and Maryland round out the top five.
*SNIP*
How Tax Freedom Day Is Calculated
Tax Freedom Day answers the basic question, "What price is the nation paying for government?" An official government figure for total tax collections is divided by the nation's total income. The answer this year is that taxes will amount to 28.2 percent of our income, and the stretch of 103 days from January 1 to April 13 is 28.2 percent of the year. Income and tax data are then parsed out to the states, yielding 50 state-specific Tax Freedom Days.
The next “Tax Freedom Day” that we will experience will happen on 20 January, 2013.
How’s that “Hope and Change” crap working for ya?
Gee I guess it will come in 2011 sometimes after September?
Enjoy it now ...... it’s probably the last one we will ever have, thanks to the pretender.
IOW, hold your money close and your enemies closer!
Okay, I'm confused. The date on this article is March 26, 2010, but this line says Americans WILL work 8 days less. . .in 2009. Did I miss something?
It IS a little confusing. Tax Freedom Day is April 13th, 2010 this year. That means you and yours and me and mine worked from January 1, 2010 until April 13th, 2010 JUST TO PAY OUR TAXES! So, basically three months of your salary was pre-confiscated by the government for your 2010 tax bill.
They’re just reviewing what happened in 2009 (because we don’t pay those taxes until April 15th, 2010) and to show you what lies ahead for 2010.
What really terrifies the Government is people figuring this out on their own. I sure don’t like handing Uncle Sam 3 months of my sweat and toil! If we had to write a check to Government each month, they’d be screwed. So, they play a numbers game with us poor, dumb serfs.
Be afraid. Be VERY afraid! ;)
P.S. The firm figures come out March 30th, so who knows? On April 13th, they may not be quite done bleeding us turnips! Historically, the worst year had us STILL paying taxes through May of that year; I’m thinking Tax Freedom Day for 2010 is going to get pushed back, waaaaaaay back this year.
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