The weather is getting warmer, the plants are in bloom, and people are starting to spend more time outside. Yes, it’s springtime, and as we get more comfortable with the season change, one thing continues to put a damper on things — tax day.
April 15 arrived has come and gone, but do you know exactly how long it took you to pay those taxes?
If we add up every tax you have to pay — federal, state, property, etc. — how long would it take? What is the cost of government in the terms of a calendar? The day when you have earned enough money to pay your total tax bill for the year has earned the name Tax Freedom Day.
According to the Tax Foundation, North Carolina taxpayers experienced their Tax Freedom Day this Monday, April 14, four days later than last year. Here are the corresponding Tax Freedom Days for our neighboring states: Tennessee, April 5; South Carolina, April 9; Georgia, April 12; and Virginia, April 24.
The total tax burden imposed on residents of different states varies considerably. The federal tax system is progressive, meaning the more you earn, the more you pay. States also have their own tax policies, which taxes people at different rates and on different sources of income. These two factors are the main reasons why the Tax Freedom Day varies from state to state. For 2014, Connecticut and New Jersey have the latest dates of May 9, and Louisiana residents enjoyed the earliest Tax Freedom Day on March 30.
Looking at the nation as a whole, the national Tax Freedom Day is April 21, which means 111 days into the year. This is three days later than last year according to the Tax Foundation, which publishes this data on an annual basis. The later date is due mainly to the continuing economic recovery, which will boost federal tax revenue collected through the corporate, payroll, and individual income tax.
According to the Tax Foundation’s research:
— In 2014, Americans will pay $3 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.
— 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 Jan. 22.
— Since 2002, federal expenses have exceeded federal revenues, with the budget deficit exceeding $1 trillion annually from 2009 to 2012 and more than $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.
— Sarah Curry is director of Fiscal Policy Studies for the John Locke Foundation.