Happy Tax Freedom Day

Happy Tax Freedom Day! It has taken us just 99 days to get here, but today, Americans will celebrate Tax Freedom Day. Tax Freedom Day marks the day that taxpayers have earned enough money to pay their taxes for the year. This year, US taxpayers have to work nearly 100 days before they have earned enough money to pay for this year's federal, state, and local tax obligations.

The idea of Tax Freedom Day was conceived in 1948 by Florida businessman Dallas Hostetler. Hostetler eventually transferred the trademarked day to the Tax Foundation, which has calculated Tax Freedom Day for various nations and the states ever since.

To arrive at the calculation, every tax dollar in the US received as income is counted. This includes dollars other than the personal income tax, even though the personal income tax is the largest single contributor to the revenues. Personal income taxes, including federal, state and local taxes, are a whopping one-third of the calculation, requiring 32 days' work to pay off. Payroll taxes take another 25 days' work; sales and excise taxes take 15 days to pay off; corporate income taxes take 8 days; and property taxes take 12. It will take an additional 6 days to pay other taxes, including motor vehicle license taxes and severance taxes, and about half a day to pay off estate taxes.

This year's Tax Freedom Day arrived one day later than last year, but more than two weeks earlier than in 2007. It's still better than the year 2000, when Tax Freedom Day didn't roll around until May 1. Tax cuts over the past decade have helped roll back the date ever since -- we're paying fewer taxes these days than before.

Of course, don't get too excited: Tax Freedom Day does not count the deficit. If we were required to factor that in, too, we'd be working more than another month. An additional 38 days would be required to pay off our taxes and
obligations if we added in the federal deficit.

I'm celebrating by going to work. You?

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