America to Celebrate Tax Freedom Day 2002 on April 27, Two Days Earlier than in 2001

America to Celebrate Tax Freedom Day®2002 on April 27, Two Days Earlier than in 2001

Washington, D.C., April 10, 2002 - America can celebrate Tax Freedom Day® on April 27, 2002. That is two days earlier than in 2001 and four days earlier than in 2000.

In a new report, Tax Foundation Special Report No. 112, “America Celebrates Tax Freedom Day,” economists Scott Moody and David Hoffman explain why the overall tax burden has been trending down the last two years, pushing Tax Freedom Day back into April, after a long string of later and later Tax Freedom Days.

"Two factors are combining to make the average American tax burden lighter in 2002," said Moody, "federal tax reductions and a slower economy."

Federal tax cuts in 2001 and 2002 lowered this year’s average federal tax burden, and the recession in 2001 followed by slow growth in subsequent months arrested the growth of tax collections at all levels.

Starting in 1992, when Tax Freedom Day fell on April 19, until 2000 when Tax Freedom Day hit May 1, the total tax burden grew markedly, requiring 12 extra days of work from American taxpayers. With state-local tax burdens virtually unchanged in the last decade, the increase was entirely due to the rapid growth of federal tax collections.

Americans face such a plethora of different taxes in their day-to-day lives that it is difficult to total them up.

Individual income taxes represent the largest component of Americans’ tax bills. In 2002, Americans will have to work an average of 51 days to pay federal, state and local income taxes. Another 29 days will be spent working for payroll taxes, which fund social insurance programs such as Social Security and Medicare.

Some taxes are less apparent to the taxpayer than income and payroll taxes. Foremost among these "hidden taxes" are sales and excise taxes. Americans will work 18 days to pay these add-on taxes that raise the prices of nearly all goods and services.

Another 11 days will be spent working to pay property taxes, mostly levied by local governments. Americans will then have to work an additional 8 days to pay their share of corporate income taxes, which are collected from companies but ultimately paid by consumers, employees, and shareholders.

The number of days that the average American must work to pay taxes can be compared to the price of other important categories of consumer spending. Americans will work longer to pay for government (117 days) than they will for food, clothing, and shelter combined (106 days).

Only in the last decade have taxes exceeded spending on these basic necessities, and federal taxes alone cost Americans more (80 days) than any of the other major budget item.

The tax burden borne by different states varies considerably, not only because residents of different states face different state and local taxes, but also because they pay dissimilar federal taxes. Table 1 gives each state’s Tax Freedom Day, which includes all federal, state and local taxes.

Connecticut’s total tax burden is the heaviest among the 50 states, so taxpayers there can’t celebrate Tax Freedom Day until May 14. Outside Connecticut and Washington, DC, where Tax Freedom Day is May 17, residents of the State of Washington work the longest for taxes—until May 9. New York (May 6), New Jersey (May 5), and Wyoming (May 4) round out the top five states.

At the other end of the tax burden spectrum are states with comparatively early Tax Freedom Days. Alaska’s is the earliest, April 8, and Oklahoma is next with a Tax Freedom Day on the tax filing deadline, April 15. Three states will celebrate Tax Freedom Day on the 16th of April: West Virginia, Tennessee and Alabama.

To facilitate comparisons of state/local tax burdens, the new Tax Freedom Day report also presents each state's tax burden with federal taxes excluded for the last decade. The nation's average state/local tax burden is 10.2 percent of residents' income, with the highest being Maine's 12.8 percent and the lowest being Alaska's 6.3 percent.

No regulatory cost is included in the calculation of Tax Freedom Day, but the report does comment on the increasing complexity of the federal income tax code, and concludes that Americans’ time and effort spent complying with just the 2002 federal income tax code is worth $194 billion. America needs to work six days to earn that sum.

Tax Freedom Day, announced by the Tax Foundation each year for 30 years, is used to illustrate the portion of the American budget that goes to pay for taxes. Once Tax Foundation economists project the nation’s effective tax rate, 32.1 percent this year, it is applied to a calendar year to provide a graphic illustration of how long Americans work for government.

The income figure used is Net National Product (NNP), a component of the National Income Product Accounts (NIPA). Computed annually by the Commerce Department’s Bureau of Economic Analysis (BEA), NIPA data is the best measure of income available, and the entire historical series is frequently revised. Therefore, the new report on Tax Freedom Day is the only valid source for historical or current data used to calculate Tax Freedom Day, either at the national or state level.

The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.

My only comment is to quote Alexander Tyler

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising them the most benefits from the public treasury, with the result that democracy always collapses over loose fiscal policy, always followed by dictatorship."

"The average age of the world's greatest civilizations has been 200 years. These nations have progressed through this sequence: from bondage to spiritual faith; from spiritual faith to great courage; from courage to liberty; from liberty to abundance; from abundance to selfishness; from selfishness to complacency; from complacency to apathy; from apathy to dependence; from dependence back again to bondage."

I live in the tax hell of Pittsburgh PA which was named #1 tax hell for retirees in a recent retiree magazine. The local home assessment controversy has continued for the last three years and has the Republicans and Democrats fighting over details like pit bulls in an alley. All I know is that I appealed my assessment a year ago and won, getting it reduced from $113,500 to 75,500. And then this year I was socked (along with everybody else) with an arbitrary increase (a tax increase in disguise). My new assessment is 89,900. How can the value of my property go up almost $15,000 in one year? But there were many others who got socked with 100 percent increases.

This "Tax freedom day" has always been hooey (statistics-wise), and the people who put it out know it.

While it is nice to know that some people are paying less taxes, all the millionaires' "tax freedom day" will come a lot sooner than mine under the new tax cuts.

It does suck that we work more than a third of the year to feed the govt. spending machine. Notice that in the last few days before April 15th, we heard everyone bitching about taxes. Now, not a peep. The sheeple are more than content with the statue quo, it seems. Until next year, that is. Then we'll see the same 'cycle of bitchin' again, with the same pitiful and meaningless result.

Good quote. Here's a couple more:

"It would be thought a hard government that should tax its people one tenth part." -- Benjamin Franklin

"A government that robs Peter to pay Paul can always depend on the support of Paul." -- George Bernard Shaw

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