Less than one week after the deadline for American taxpayers to file their 2013 tax return, we celebrate yet another tax-related milestone – ‘Tax Freedom Day’. According to Tax Foundation, Monday marks the day in which “the nation as a whole has earned enough money to pay its total tax bill for year.” This year’s Tax Freedom Day comes 111 days into the year – three days later than 2013. The Tax Foundation estimates American taxpayers will pay $3.0 trillion in federal taxes and $1.5 trillion in state taxes in 2014 for a grand total of $4.5 trillion or 30.2% of income.
“Welcome to 'Tax Freedom Day,'” Glenn said on radio this morning. “Well, at least for some.”
While Glenn and Stu both appreciate the visual Tax Freedom Day provides, Pat was not on board with the statistic. Tax Freedom Day implies every penny you earned up until this point goes to cover your federal and state taxes and every penny you earn from this point on is money in your pocket. But, as Pat explained, that is not how the system works.
“I'm just telling you it doesn't work like this,” Pat explained. “It's not how the system works. So it's a stupid statistic.”
Furthermore, while today marks national ‘Tax Freedom Day,’ the tax burden borne by residents of each state actually varies considerably “due to differing state tax policies and because of the progressivity of the federal tax system.”
The map below illustrates when ‘Tax Freedom Day’ occurs in each state:
Perhaps unsurprisingly, progressive stalwarts like New Jersey, Connecticut, New York, and California have the latest dates – ranging from April 30 to May 9. Interestingly, even for states with no income tax, Tax Freedom Day does not occur until mid-April. (story continues after the ad)
“Wow, that's amazing,” Pat concluded. “So even the states with no income tax – Texas, Florida, some of the others – are not that early. Texas [is] April 13. Florida is April 15.”
Check out the entire report from Tax Foundation HERE.
Front page image courtesy of the AP