Tax Freedom Day 2014

Tax Freedom Day 2014
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April 21, Three Days Later Than Last Year
National Press Building
529 14th Street, NW, Suite 420
Washington, DC 20045
What is Tax Freedom Day®?
Tax Freedom Day is the day when the nation as a whole has earned enough
money to pay its total tax bill for year. A vivid, calendar-based illustration
of the cost of government, Tax Freedom Day divides all federal, state, and
local taxes by the nation’s income. In 2014, Americans will pay $3.0 trillion
in federal taxes and $1.5 trillion in state taxes, for a total tax bill of $4.5
trillion, or 30.2 percent of income. This year, Tax Freedom Day falls on
April 21, or 111 days into the year.
Mission
The Tax Foundation is the nation’s
leading independent tax policy research
organization. Since 1937, our principled
research, insightful analysis, and engaged
experts have informed smarter tax policy
at the federal, state, and local levels.
Why is Tax Freedom Day later this year?
When is Tax Freedom Day if you include
federal borrowing?
Since 2002, federal expenses have exceeded federal revenues, with the
budget deficit exceeding $1 trillion annually from 2009 to 2012 and over
$800 billion in 2013. In 2014, the deficit will continue to decline to $636
billion. If we include this annual federal borrowing, which represents future
taxes owed, Tax Freedom Day would occur on May 6, 15 days later. The
latest ever deficit-inclusive Tax Freedom Day occurred during World War
II on May 21, 1945.
Tax Freedom Day by State 2014
WA
Apr 25
#9
CA
Apr 30
#4
Note: Each state’s
Tax Freedom Day
is the day that
residents of that
state have worked
long enough to pay
all tax obligations
at the federal, state,
and local level.
Source: Tax
Foundation
calculations
NV
Apr 15
#25
MT
Apr 14
#28
ID
Apr 11
#36
UT
Apr 17
#21
AZ
Apr 11
#46
WY
Apr 17
#21
CO
Apr 22
#13
NM
Apr 8
#44
VT
Apr 19 #17
ND
Apr 25
#9
SD
Apr 4
#48
HI
Apr 15
#25
IA
Apr 13
#32
NE
Apr 14
#28
KS
Apr 18
#19
OK
Apr 11
#36
TX
Apr 13
#32
AK
Apr 11
#36
MN
Apr 29
#5
WI
Apr 22
#13
NH
Apr 19 #17
PA
Apr 21
#15
OH
IL
Apr 14
IN
Apr 28 Apr 16 #28
WV
VA
#7
#24
Apr 10 Apr 24
MO
#42
KY
Apr 11
#11
Apr 8 #44
#36
NC
TN Apr 5
Apr 14 #28
#47
SC
AR
Apr 9
Apr 12
#43
GA
#34
AL
MS
Apr
12
Apr
7
Apr 2
#34
#46
#49
LA
Mar
30 #50
Earlier
ME
Apr 11
#36
NY
May 4
#3
MI
Apr 17
#21
When does Tax Freedom Day
arrive in your state?
When is my state’s Tax Freedom Day?
FL
Apr 15
#25
Later
MA
Apr 29 #5
RI
Apr 23 #12
CT
May 9 #1
NJ
May 9 #1
DE
Apr 18 #19
MD
Apr 28 #7
DC
Apr 18 (#19)
The total tax burden borne by residents of different states varies considerably
due to differing state tax policies and because of the progressivity of the
federal tax system. This means a combination of higher-income and highertax states celebrate Tax Freedom Day later: Connecticut (May 9), New
Jersey (May 9), and New York (May 4). Residents of Louisiana will bear
the lowest average tax burden in 2014, with Tax Freedom Day arriving for
them on March 30. Also early are Mississippi (April 2) and South Dakota
(April 4).
How has Tax Freedom Day changed over time?
The latest ever Tax Freedom Day was May 1, 2000, meaning Americans
paid 33.0 percent of their total income in taxes. A century earlier, in 1900,
Americans paid only 5.9 percent of their income in taxes, meaning Tax
Freedom Day came on January 22.
Who calculates Tax Freedom Day?
Tax Foundation economists calculate Tax Freedom Day using federal
budget projections, data from the U.S. Census and the Bureau of Economic
Analysis, and projections of state and local taxes. Tax Freedom Day was
created in 1948 by Florida businessman Dallas Hostetler, who deeded the
concept to the Tax Foundation when he retired in 1971. Tax Freedom
Day by state has been calculated since 1990, when sufficient data became
available. Learn more about Tax Freedom Day at www.taxfoundation.org/
taxfreedomday
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2
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4
5
6
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8
9
10
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12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
1
Tax Freedom Day is three days later than last year due mainly to the
continuing economic recovery, which will boost federal tax revenue collected
through the corporate, payroll, and individual income tax.
Visit us online at www.taxfoundation.org.
OR
Apr 20
#16
January
by Kyle Pomerleau & Lyman Stone
February
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2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
1
March
Federal Income Tax
33 Days
Social Insurance
Taxes 27 Days
1
Fed. Excise Taxes
2 Days
5
6
7
8
Fed. Corporate
Income Taxes 8 Days
11
12
13
14
15
Other Fed.
Taxes 4 Days
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
State/Local Income
Taxes 9 Days
State/Local Social
Insurance Taxes 3 hours
State/Local Sales
and Excise Taxes
13 Days
2
3
4
9
10
16
April
1
2
3
4
5
6
7
8
9
10
11
12
Property Taxes
11 Days
13
14
15
16
17
18
19
20
21
21
22
23
24
25
State/Local Corporate
Income Taxes 1 Days
Other State/Local
Taxes 3 Days
Tax Freedom Day
26
27
28
29
April 21
30
31
1
Fo r m o re i nfo rm at i on , vi s i t ta xfo u n d ati on.org/taxfreedomday
May. 1
The Great Depression and the Hoover/Roosevelt tax increases
led to not only a later Tax Freedom Day but also a shift in who
was collecting. In 1932, Americans spent 10 days paying federal
taxes and 46 days paying state and local taxes. By 1940, Americans
worked 33 days to pay each. World War II brought increased
federal spending and borrowing, with Tax Freedom Day arriving in
April for the first time in 1943.
Apr. 1
Federal Tax Burden
Mar. 1
The federal tax burden never returned to pre-war levels. The 1950s
and 1960s also saw a rise in state-local tax burdens and a boost in
economic growth following the 1964 Kennedy/Johnson tax cut.
Vietnam War-era tax increases and the “stagflation” of the 1970s
pushed personal incomes into higher tax brackets, and by 1981,
Tax Freedom Day arrived on April 24.
Feb. 1
State-Local Tax Burden
1930
1940
1950
1960
1970
1980
1990
ax Freedom Day has not always been this late in the year. World
T
War I tax increases led to a jump in Tax Freedom Day from
1917’s January 24 to 1918’s February 8 to 1921’s February 22.
In the 1920s, when Justice Oliver Wendell Holmes described
taxes as the price of civilized society, Tax Freedom Day was
arriving in February.
2000
2010
The Reagan tax cut signed into law that year ushered in an economic
boom; federal revenues grew but the economy grew even faster.
Despite pressure on state and local taxes following taxpayer revolts
like Proposition 13 in California, the strong economic growth led
The new president delivered on his tax cut promises, which,
combined with a recession in 2001, caused the tax burden to fall
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 weakening economy
pushed Tax Freedom Day earlier still; in 2009, Tax Freedom Day
was on April 10, earlier than any year since Lyndon Johnson was
in the White House. This course was reversed in 2013 with tax
increases at the federal level and a slowly recovering economy,
which pushed Tax Freedom Day to April 18. This year, Tax
Freedom Day is April 21, three days later than last year due mainly
to the continuing economic recovery, which will boost federal tax
revenue collected through the corporate, payroll, and individual
income tax.
Individual income taxes represent the largest
component of Americans’ tax bills. All but seven
states levy a state income tax on top of the
federal income tax. Paying these taxes together
takes Americans about 42 days of work.
State-Local
Taxes
Housing
$3.5
$3.0
$2.5
$2.0
Clothing
Federal Taxes
$1.5
$1.0
Food
Deficit-Inclusive Tax Freedom Day
Americans will work 27 days to pay their
payroll, or social insurance, taxes—taxes
which are collected to fund social insurance
programs such as Social Security and
Medicare.
Tax Freedom Day
March 1
Methodology
February 1
1910
$4.0
$0
April 1
1900
$4.5
$0.5
Americans will spend 15 days working
to pay sales and excise taxes, 11 days to
pay property taxes, and 7 days for other
miscellaneous taxes (such as car taxes,
severance taxes, and estate taxes).
May 1
$5.0
A string of record-setting federal tax burdens followed, and the
latest ever Tax Freedom Day occurred on May 1, 2000. With
federal revenue routinely exceeding forecasts, there was strong
popular pressure for a major tax cut.
Tax Freedom Day since 1900
June 1
Americans Will Spend More in Taxes in
2014 Than They Will on Food, Clothing, and
Housing Combined
to increased tax collections, and in 1989, Tax Freedom Day arrived
on April 22. That year, federal income tax revenues as a share of the
economy were higher than they had been in nearly all years prior,
and higher than all but one year (1952) of the 1940s, 1950s, and
early 1960s, when the top rate exceeded 90 percent.
Trillions of Dollars
Federal Tax Burden Nearly Twice
State-Local Tax Burden
We count in the denominator every dollar that is officially part of national income according to the Department of
Commerce’s Bureau of Economic Analysis. We count in the numerator every payment to the government that is officially
considered a tax. Taxes at all levels of government are included, whether levied by Uncle Sam or state and local governments.
In calculating Tax Freedom Day for each state, we look at taxes borne by residents of that state, whether paid to the federal
government, their own state or local government, or governments of other states. Where possible, we allocate tax burdens
to the taxpayer’s state of residence. Leap days are excluded to allow comparison across years, and any fraction of a day is
rounded up to the next calendar day.
Americans will work 9 days to pay their share of corporate income
taxes. This figure peaked, along with corporate profits, in 2006 at 14
days and dropped in half by 2009 to 7 days. All taxes on businesses are
ultimately passed on to individuals in the form of higher prices, lower
wages or employment levels, or lower share value.
1920
1930
1940
1950
1960
For a more detailed description of Tax Freedom Day’s methodology and some questions relating to the timing of tax
burdens and income, please see Tax Freedom Day: How It’s Calculated and Addressing Some Methodological Issues.
1970
1980
1990
2000
2010