Texans earn enough money to pay off all tax obligations
Washington, D.C. — Tax Freedom Day, the date on which Americans will have earned enough money to pay this year's tax obligations at the federal, state, and local levels, will fall on April 11th for residents of Texas http://www.taxfoundation.org/research/topic/60.html. The average date for all Americans, as announced recently by the Tax Foundation, will be Tuesday, April 17th.
In the new study "Tax Freedom Day 2012 http://www.taxfoundation.org/taxfreedomday/," economist Will McBride, Ph.D. http://www.taxfoundation.org/staff/show/193.html also calculates how long Americans would have to work in order to close the budget deficit. In order to pay for all spending in the current year, the government would need to raise an additional $1.014 trillion in taxes, pushing Tax Freedom Day to May 14th.
"This year, Americans will pay $2.62 trillion in federal taxes and $1.42 trillion in state-local taxes out of $13.86 trillion in income, for a 29.2% tax bill," said McBride. "That means taxpayers will pay more in taxes in 2012 than they will spend on food, clothing, and housing combined."
Historically, the date for Tax Freedom Day has fluctuated significantly. The latest-ever Tax Freedom Day was May 1st, 2000-meaning Americans paid 33.0% of their total income in taxes. A century earlier, in 1900, Americans paid only 5.9% of their income in taxes, meaning Tax Freedom Day came on January 22nd.
Five major categories of taxes dominate the tax burden. Individual income taxes - including federal, state and local - require 40 days of work. Payroll taxes take another 23 days of work. Sales and excise taxes, mostly state and local, take 15 days to pay off. Property taxes take 12 days, and corporate income taxes take another 10.
The total tax burden borne by residents of different states varies considerably, not only due to differing state tax policies, but also because of the steep progressivity of the federal tax system. This means higher-income states celebrate Tax Freedom Day later; Connecticut (May 5th), New Jersey (May 1st), and New York (May 1st) residents face a significantly higher total federal tax burden than lower-income states. Residents of Tennessee will bear the lowest average tax burden in 2012, with Tax Freedom Day arriving for them on March 31. Also early are Louisiana (April 1st), Mississippi (April 1st), South Carolina (April 3rd), and South Dakota (April 4th).
For more information, go to http://www.taxfoundation.org/taxfreedomday.