The Tax Foundation bullet-points:
- This year, Tax Freedom Day falls on April 19, 109 days into 2018.
- Tax Freedom Day will be three days earlier than it was in 2017, in large part due to the recent federal tax law, the Tax Cuts and Jobs Act, which significantly lowered federal individual and corporate income taxes.
- In 2018, Americans will pay $3.4 trillion in federal taxes and $1.8 trillion in state and local taxes, for a total bill of $5.2 trillion, or 30 percent of the nation’s income.
- Americans will collectively spend more on taxes in 2018 than they will on food, clothing, and housing combined.
- If you include annual federal borrowing, which represents future taxes owed, Tax Freedom Day would occur 17 days later, on May 6th.
Tax Freedom Day is the day when the nation as a whole has earned enough money to pay its total tax bill for the year. Tax Freedom Day takes all federal, state, and local taxes and divides them by the nation’s income. In 2018, Americans will pay $3.39 trillion in federal taxes and $1.80 trillion in state and local taxes, for a total tax bill of $5.19 trillion, or 30 percent of national income. This year, Tax Freedom Day falls on April 19th, 109 days into 2018.
What Taxes Do We Pay?
This year, Americans again will work the longest to pay federal, state, and local individual income taxes (44 days). Payroll taxes will take 26 days to pay, followed by sales and excise taxes (15 days), corporate income taxes (seven days), and property taxes (11 days). The remaining six days are spent paying estate and inheritance taxes, customs duties, and other taxes.
Speaking of state taxes, here is a remarkable statistic:
Wisconsin’s Tax Freedom Day and the nation’s are both today. That means that, wonder of wonders, Wisconsin’s tax burden, which is 34th lowest (or, more pertinently, 17th highest) in the U.S., is average compared with other states. I’m not sure that has ever been the case before now.
This blog follows Tax Freedom Day every year — April 12, 2010, April 16, 2011, April 21, 2012, April 20, 2013, April 22, 2014, April 25, 2015, April 27, 2016, and April 27, 2017. The first seven years were under Democratic presidents, and Democrats raise taxes as often as the sun rises in the east.
The Tax Foundation adds:
In the denominator, we count every dollar that is officially part of net national income according to the Department of Commerce’s Bureau of Economic Analysis. In the numerator, we count every payment to the government that is officially considered a tax. Taxes at all levels of government – federal, state, and local – are included in the calculation. 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 governments, or governments of other states. Where possible, we allocate tax burdens to each 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.
For 2018, the methodology for calculating each state’s Tax Freedom Day has been updated significantly. As a result, the date of Tax Freedom Day for each state in 2018 is not strictly comparable to the date of Tax Freedom Day for states in previous years. In addition, calculations of the date of Tax Freedom Day for states in 2018 may not take full account of the secondary effects of the recently passed federal tax bill on state and local tax collections.
It would be nice if the Tax Foundation would go back and compute past Tax Freedom Days under this new formula so we could in fact compare. However measured, this is too late, of course. It would be nice if Tax Freedom Day was Jan. 1, because government at every level either wastes or abuses your tax dollars 100 percent of the time. (And sometimes both.) I have lived in several different places in this state, with Democratic and Republican governors and legislatures, and I have never once felt as though my tax dollars are being spent wisely. (Paying high taxes so that people paid by my salary get better benefits than I do for less than I pay is both a waste and abuse of my tax money.)
A reasonable goal for Tax Freedom Day, however, in these flawed times would be March 31. (Not because of the anniversary of this blog.) There have been polls for decades that have asked people how much of their income they should pay in taxes. The consistent answer has been 25 percent. Notice that we haven’t been at 25 percent — a Tax Freedom Day of March 31 — since the mid-1950s.