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Tax Freedom Map

Tax Freedom Map

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Published by The Post-Standard
Tax Foundation calculation of national Tax Freedom Day in calendar form
Tax Foundation calculation of national Tax Freedom Day in calendar form

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Published by: The Post-Standard on May 02, 2013
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05/06/2013

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by William McBride, PhD, Kyle Pomerleau, & Elizabeth Malm April 2013
What is Tax Freedom Day?
 Tax Freedom Day is the day when the nation as a whole has earnedenough money to pay its total tax bill or the year. A vivid, calendar-based illustration o the cost o government, Tax Freedom Day dividesall ederal, state, and local taxes by the nation’s income. In 2013,Americans will pay $2.76 trillion in ederal taxes and $1.45 trillionin state taxes, or a total tax bill o $4.22 trillion, or 29.4 percent o income. April 18 is 29.4 percent into the year.
Why is Tax Freedom Day later this year?
 Tax Freedom Day is ve days later than last year, due mainly to thescal cli deal that raised ederal taxes on individual income andpayroll. Additionally, the Aordable Care Act’s investment tax andexcise tax went into eect. Finally, despite these tax increases, theeconomy is expected to continue its slow recovery, boosting prots,incomes, and tax revenues.
When is Tax Freedom Day if you include federal borrowing?
Since 2002, ederal expenses have exceeded ederal revenues, withthe budget decit exceeding $1 trillion annually rom 2009 to 2012.In 2013, the decit will come down slightly to $833 billion. I weinclude this annual ederal borrowing, which represents uture taxesowed, Tax Freedom Day would occur on May 9, 21 days later. Thelatest ever decit-inclusive Tax Freedom Day occurred during WorldWar II, on May 21, 1945.
When is my state’s Tax Freedom Day?
 The total tax burden borne by residents o dierent states variesconsiderably, due to diering state tax policies and because o thesteep progressivity o the ederal tax system. This means higher-income states celebrate Tax Freedom Day later: Connecticut (May 13),New York (May 6), and New Jersey (May 4). Residents o Mississippiwill bear the lowest average tax burden in 2013, with Tax FreedomDay arriving or them on March 29. Also early are Louisiana (March 29)and Tennessee (April 2).
How has Tax Freedom Day changed over time?
  The latest ever Tax Freedom Day was May 1, 2000—meaningAmericans paid 33.0 percent o their total income in taxes. A centuryearlier, in 1900, Americans paid only 5.9 percent o their income intaxes, meaning Tax Freedom Day came on January 22.
Who calculates Tax Freedom Day?
 Tax Foundation economists calculate Tax Freedom Day using ederalbudget projections, data rom the U.S. Census and the Bureau o Economic Analysis, and projections o state and local taxes. TaxFreedom Day was conceived in 1948 by Florida businessman DallasHostetler, who deeded the concept to the Tax Foundation when heretired in 1971. Tax Freedom Day by state has been calculated since1990, when sufcient data became available. Learn more about TaxFreedom Day at www.TaxFoundation.org/taxreedomday.
Tax FreedOm day
 
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2013
april 18, Five ds Lter Thn Lst yer
 
For ore inforation, visit www.taxfoundation.org/taxfreedoday
  Tax Freedom Day has not always been this late in the year.World War I tax increases led to a jump in Tax FreedomDay rom 1917’s January 24 to 1918’s February 8 to 1921’sFebruary 22. In the 1920s, when Justice Oliver WendellHolmes described taxes as the price o civilized society, TaxFreedom Day was arriving in February. The Great Depression and the Hoover/Roosevelt tax increasesled not only to a later Tax Freedom Day but a shit in who wascollecting. In 1932, Americans spent 10 days paying ederaltaxes and 46 days paying state and local taxes. By 1940,Americans worked 33 days to pay each. World War II broughtincreased ederal spending and borrowing, with Tax FreedomDay arriving in April or the rst time in 1943. The ederal tax burden never returned to pre-war levels. The1950s and 1960s also saw a rise in state-local tax burdens anda boost in economic growth ollowing the 1964 Kennedy/Johnson tax cut. Vietnam War-era tax increases and the“stagfation”o the 1970s pushed personal incomes intohigher tax brackets, and by 1981, Tax Freedom Day arrived onApril 24. The Reagan tax cut signed into law that year ushered in aneconomic boom; ederal revenues grew but the economygrew even aster. Despite pressure on state and local taxesollowing taxpayer revolts like Proposition 13 in Caliornia, thestrong economic growth led to increased tax collections, andin 1989, Tax Freedom Day arrived on April 22. That year, ederalincome tax revenues as a share o the economy were higherthan they had been in nearly all years prior, and higher than allbut one year (1952) o the 1940s, 1950s, and early 1960s, whenthe top rate exceeded 90 percent.A string o record-setting ederal tax burdens ollowed, andthe latest ever Tax Freedom Day occurred on May 1, 2000.With ederal revenue routinely exceeding orecasts, there wasstrong popular pressure or a major tax cut. The new president delivered on his tax cut promises, which,combined with a recession in 2001, caused the tax burden toall considerably. In 2003, Tax Freedom Day arrived on April 14,more than two weeks earlier than it had in 2000.Beginning in 2007, stimulus tax cuts and a weakeningeconomy pushed Tax Freedom Day earlier still; in 2009, TaxFreedom Day was on April 10, earlier than any year sinceLyndon Johnson was in the White House. Federal tax increasesand the economic recovery will push Tax Freedom Day thisyear to April 18, ve days later than last year.
 Americans will spend more in taxes in 2013than they will onood, clothing, and housing combined.Individual income taxes represent the largest component o Americans’ tax bills. All but seven stateslevy a state income tax on top o the ederal income tax.Paying these taxes together takes Americans about 40days o work. Americans will spend 14 days working to pay salesand excise taxes, 12 days to pay property taxes,and 7 days or other miscellaneous taxes (such ascar taxes, severance taxes, and estate taxes). Americans will work 25 days to pay their payroll, or social insurance,taxes—those taxes dedicated to unding social insurance programssuch as Social Security and Medicare. Americans will work 9 days to pay their share o corporate income taxes. This fgure peaked, along with corporate profts, in 2006 at 14 days, and dropped in hal by  2009 to 7 days. All taxes on businesses are ultimately passed on to individuals inthe orm o higher prices, lower wages or employment levels, or lower share value.
methodology
We count in the denominator every dollar that is ocially part o national income according to the Department o Commerce’sBureau o Economic Analysis, and in the numerator every payment to the government that is ocially considered a tax is counted. Taxes at all levels o government are included, whether levied by Uncle Sam or state and local governments. In calculating TaxFreedom Day or each state, we look at taxes borne by residents o that state, whether paid to the ederal government, their ownstate or local government, or governments o other states. Where possible, we allocate tax burdens to the taxpayer’s state o residence. Leap days are excluded to allow comparison across years, and any raction o a day is rounded up to the next calendarday.For a more detailed description o Tax Freedom Day’s methodology and some questions relating to the timing o tax burdens andincome, please see
 
Tax Freedom Day: How It’s Calculated and Addressing Some Methodological Issues
.

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