The federal estate tax has returned after a one-year repeal, this time at a rate of 35 percentand with an exemption of $5 million. Inaddition, taxes associated with the PatientProtection and the Affordable Care Act con-tinue to be phased in.
The Federal Budget Defcit Day
Tax Freedom Day, like almost all tax burdenmeasures, ignores the current year’s decit.Only taxes that will actually be collected dur-ing 2011 count in the tally. In many years thedecit is fairly small as a percentage of totalgovernment spending, so Tax Freedom Day gives a good idea of the size of government.Since 2008, however, decits have beenmassive by any measure, and as a result, TaxFreedom Day may give the impression that theburden of government is smaller than it is. If the federal government were planning to col-lect enough in taxes during 2011 to nance all
3/133/234/24/124/225/25/125/226/1Adjusted to Add Federal Budget DecitTax Freedom Day
of its spending, it would have to collect about$1.48 trillion more, and Tax Freedom Day would arrive on May 23 instead of April 12 —adding an additional 41 days to the nation’swork for government. This date for a decit-inclusive measure is the latest since World WarII. Figure 1 shows Tax Freedom Day, as tradi-tionally presented and with the inclusion of thefederal budget decit.The House of Representatives passed H.R.1 on February 18
of this year. This legisla-tion claims to reduce federal spending by $61billion dollars a year. If passed by the Senate,which seems unlikely, and signed into law by the president, also unlikely, it would cause theDecit Day to arrive two days earlier.
Tax Freedom Day Through theYears
The United States has traditionally been a low-tax nation. From the founding of the country
Figure 1Tax Freedom Day 1971–2011
Source: Tax Foundation calculations based on data rom the Bureau o Economic Analysis, Congressional Budget Ofce and Joint Committee on Taxation.