Tax Freedom Day 2008

Each year The Tax Foundation, a nonpartisan, nonprofit tax research organization, calculates the tax burden faced by Americans using Tax Freedom Day. This answers the question: What price is the nation paying for government. In theory, if all our earnings went first to taxes starting January 1 each year, Tax Freedom Day is the day on which we could start keeping some of our earnings.

“Tax freedom has been a see-saw affair in recent years,” said Tax Foundation senior economist Gerald Prante. “In 2000, Tax Freedom Day® was celebrated May 3, the latest date ever. Then a string of tax cuts between 2001 and 2003 pushed Tax Freedom Day® up by more than two weeks, so that it fell on April 16 in 2003 and April 17 in 2004. For the next three years, incomes and tax collections soared, pushing Tax Freedom Day® back to April 26 in 2007. Now the stimulus rebates and a projected slowing of income growth have made Tax Freedom Day® come three days earlier, on April 23.”

Tax Freedom Day is calculated by dividing the official government tally of all taxes collected in a year by the official government tally of all income earned in the same year. It takes into account federal, state and local taxes. The Tax Foundation has been monitoring fiscal policy in our country since 1937.

It is distressing to realize that each year taxes are taking more and more out of the paychecks of working Americans. For example, in 1900, Tax Freedom Day came on January 22, with taxes accounting for just 5.9 percent of income. By 1950, Tax Freedom Day arrived on April 1, and taxes took up nearly 25 percent of income. In 2007, Tax Freedom Day arrived on April 30, with taxes taking at 32.6 percent, the highest percentage since 2000.

In 2007, we worked 120 days just to pay our taxes. It took 79 days for federal taxes and 41 for state and local taxes. Here's how that works out for the various taxes we face:

• 43 days for individual income taxes (33 for federal; 10 for state)
• 30 days for social insurance taxes (29, federal; 1, state)
• 16 days for sales and excise taxes (3, federal; 13, state)
• 12 days for property taxes (0, federal; 12, state)
• 14 days for corporate income taxes (12, federal; 2, state)
• 5 days for other taxes (2, federal; 3, state)

And as for the other expenses that we incur each day:

• 62 days for housing and household options
• 52 days for health and medical care
• 30 days for food
• 309 days for transportation
• 22 days for recreation
• 13 days for clothing and accessories
• 36 days for other expenses

According to the report for state information, Idaho's 2008 Tax Freedom Day came on April 20.