Happy Tax Freedom Day
And many happy returns.
You probably thought you were done paying your taxes nearly two weeks ago, on
April 15 — but you really won't be done until tomorrow.
That's because Saturday, April 27 is Tax Freedom Day. This is the day
"when Americans will finally have earned enough money to pay off
their total tax bill for the year," according to the Tax Foundation,
which calculates Tax Freedom Day annually. April 27 is the 117th day
of 2002.
This marks progress over last year, when Tax Freedom Day came on
April 29, and also the second year in a row there's been an
improvement. In 2000, Tax Freedom Day fell on May 1, the latest date
ever.
The recession and the Bush tax cut explain the improvement. If neither
had occurred, the Tax Foundation says this year's Tax Freedom Day
would have fallen on May 4. If Al Gore had been elected, there still
would have been a recession but there would not have been a tax cut
— and Tax Freedom Day would have fallen on May 1.
Much remains undone. At the start of Bill Clinton's presidency, Tax Freedom Day
arrived on April 20 — exactly where it was all the way back in 1969. This may be the
real Clinton legacy: In the span of eight years, he managed to rob Americans of a whole
week of their economic lives every year for the foreseeable future.
"Americans [in 2002] will work longer to pay for government (117 days) than they
will for food, clothing, and shelter combined (106 days)," write J. Scott Moody and
David Hoffman in their report. "Only in the last decade have taxes exceeded spending
on these basic necessities. In fact, Americans will work longer to afford federal taxes
alone (80 days) than on any other major budget item."
Here's how Moody and Hoffman explain their methodology: "All income that's
officially called income by the government is counted, and everything the government
considers a tax is counted. Taxes at all levels of government are included, whether
levied by Uncle Sam or state and local governments."
This means that personal Tax Freedom Days will differ, with place of residence
accounting for much of the variation. Yesterday, for instance, was Tax Freedom Day in
Arizona, Delaware, Nebraska, New Hampshire, and Ohio. Sunday is Tax Freedom
Day in Massachusetts and Rhode Island.
Alaska's Tax Freedom Day is the first in the nation, on April 8. The suffering citizens
of Connecticut are last to throw off the yoke of government, on May 14. Only 13 states
have Tax Freedom Days that fall after the national average, but they're some of the
biggest: California (April 29), New York (May 6), and Illinois (April 29).
Assuming the economy recovers from recession and there are no further tax cuts, the
national Tax Freedom Day will resume its march into May. "The current tax cuts have
just about played themselves out," says Moody. "In a growing economy, we need a tax
cut every year just to keep bracket creep in check."
In other words, a prosperous economy bumps people into higher tax brackets, meaning
they surrender a greater share of their income to government. Moody says it would take
a tax cut of about $25 billion each year just to stop Tax Freedom Day from slipping to
later in the year.
"In the absence of a double-dip recession, we'll need more cuts and deeper cuts to
continue seeing the improvement of the last two years," he says.
nationalreview.com |
