March 26, 2008
Tax Freedom Day Will Arrive on April 23 in 2008
Tax Freedom Day, the day on which Americans have earned enough money to pay all their federal, state and local taxes for the year, will fall on April 23 this year, according to the Tax Foundation's annual calculation using the latest government data on income and taxes.
Tax Freedom Day is calculated by dividing the official government tally of all taxes collected in each year by the official government tally of all income earned in each year. Governments—federal, state and local—took 29.6% of income in 1970, 30.4% of income in 1980, 33.6% in 2000, and so on. This percentage is the nation's total tax burden. We then use the historical trend and the most recent economic data to make a projection of what the tax burden will be in the current year and we convert that burden into a date—a percentage of the year—on which Americans will have earned enough income to pay their total tax bill for the year.
This year's Tax Freedom Day falls three days earlier than in 2007. Fiscal stimulus rebates and a projection of slow growth in 2008 are the principal reasons for the earlier celebration. However, if the large projected deficit for 2008 were counted as a tax in the current year, Tax Freedom Day would fall on May 3.
Tax Freedom Day, 1980-2008
(Click chart to enlarge.)
(Click chart to enlarge.)
"Government continues to dominate the American taxpayer's budget," said Tax Foundation president Scott Hodge. "Americans will still spend more on taxes in 2008 than they will spend on food, clothing and housing combined."
In 2008, Americans will work 74 days to afford their federal taxes and 39 more days to pay state and local taxes. Meanwhile, buying food requires 35 days of work, clothing 13 days, and housing 60 days. Other major categories are health and medical care (50 days), transportation (29 days), and recreation (21 days).
Days Americans Work to Pay Taxes Compared to Other Expenses, 2008
(Click chart to enlarge.)
(Click chart to enlarge.)
The new study, Tax Foundation Special Report No. 160, "America Celebrates Tax Freedom Day," by Tax Foundation senior economist Gerald Prante and Tax Foundation president Scott Hodge, also compares tax payments to other major consumer expenditures, traces the course of America's tax burden since 1900, examines the composition of today's tax burden by type of tax, and calculates a Tax Freedom Day for each state.
Be a better friend, newshound, and know-it-all with Yahoo! Mobile. Try it now.
Posts
No comments:
Post a Comment