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Tax Freedom Day® 2013Tax Freedom Day is April 18th •Five days later than last year, due to:...
Transcript of Tax Freedom Day® 2013Tax Freedom Day is April 18th •Five days later than last year, due to:...
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Tax Freedom Day® 2013
William McBride, PhD Chief Economist Tax Foundation 202-464-5107
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What is Tax Freedom Day?
• Calendar based measure of cost of government.
• Total of all taxes paid to federal, state, and local governments, divided by national income. – Includes personal income taxes, payroll taxes,
corporate incomes taxes, property and sales taxes, etc.
• This year, Americans will pay $2.76 trillion in federal taxes and $1.46 trillion in state-local taxes, or 29.4% of total income.
• On the calendar, that’s 108 out of 365 days, or …
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Tax Freedom Day is April 18th
• Five days later than last year, due to: – The fiscal cliff deal that raised federal income and
payroll taxes.
– The Affordable Care Act’s investment tax that went into effect this year.
– Despite these tax increases, the economy is expected to continue its slow recovery, boosting profits, incomes, and tax revenues.
• More spent on taxes than food, clothing, and housing combined.
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Deficit-inclusive Tax Freedom Day is May 9.
• Measures the cost of government in terms of both tax-financed spending as well deficit-financed spending.
• This year’s federal budget deficit is $833 billion, adding 21 days to Tax Freedom Day. – Follows four years of $1 trillion plus deficits.
• Three days earlier than last year. – Tax collections up, spending largely flat since
build-up of 2009.
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Tax Freedom Day Through the Years
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24
2
8
3
8
13
12
1
3
0
5
10
15
20
25
30
35
40
45
IndividualIncome
Payroll Sales & Excise Property CorporateIncome
Other
Americans Work 108 Days to Pay Federal, State and Local Taxes
State & Local
Federal
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1/0
1/20
2/9
2/29
3/20
4/9
4/29
5/19
Federal Tax Burden Nearly Twice the State and Local Burden
State-Local Tax Burden
Federal Tax Burden
10 days
46 days 37 days
71 days
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State Tax Freedom Day
• Includes all federal, state, and local taxes paid by the residents of each state, as opposed to who collects it. – Accounts for tax shifting across borders, as well as
economic incidence.
• For example, Alaska’s huge severance taxes on oil and gas are ultimately paid for by consumers throughout the 50 states in the form of higher prices at the pump.
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Earliest and Latest State Tax Freedom Days
• Earliest state is Mississippi (March 29), followed by Louisiana (March
29), and Tennessee (April 2).
– Residents have lower-than-average incomes and thus lower
federal income tax burdens.
– State and local taxes are below average in all these states.
– TN has no state personal income tax (except dividends).
• Latest state is Connecticut (May 13), preceded by New York (May 6),
and New Jersey (May 4).
– Residents have higher income, which increases their federal
income tax burden.
– Residents also pay higher-than-average state and local taxes.
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More Information
• Much more on
website: taxfoundation.org
• Includes details on important historical tax events, as well as data going back to 1900.
• Questions?