April 12th, the US Tax Freedom Day

April 12, 2011 Taxation in USA

Tax Freedom DayUS taxpayers are done with working for their government for the year, with Tax Freedom Day marking the point when taxpayers begin earning incomes for themselves.

US taxpayers will spend more of their earnings this year on taxes than they will on food, clothing and housing combined. According to the Tax Foundation, a independent body examining US fiscal policy and taxation, April 12th will mark the day when US taxpayers will begin working for themselves, having covered their tax obligations to the government.

This year’s Tax Freedom Day arrives three days earlier than in 2010, signifying that Americans are paying a smaller portion of their incomes as taxes than they were last year. The changes have been attributed to several factors, most significantly: increases in economic growth causing individuals’ rising incomes to be pushed into a higher tax bracket, a reinstatement of the federal estate tax, President Barack Obama’s recent extension of the Bush-era personal income tax breaks, and the 2 percent reduction in payroll taxes.

Tax Freedom Day do not take into account the size of the federal government’s budget deficit, and only examine the taxes that will be collected for the year. If the USD 1.48 trillion budget was taken into consideration, Tax Freedom Day would need to be pushed by by an additional 41 days.

The date of Tax Freedom Day can change between states, due to different income levels and state taxes.Connecticut is the last state to observe Tax Freedom Day, seeing it fall only on May 2nd. New Jersey and New York also have late dates, with April 29th and April 24th respectively. Mississippi is the first state in the US this year to observe Tax Freedom Day, with taxpayers paying off their obligations on March 26th.

Photo by Newtown grafitti