107 Days: That's How Long It'll Take to Pay Your Taxes
byApr 3rd 2012 1:15PM
More than three months of your hard-earned wages are going straight to your tax bill this year.
Americans will spend an average of 29% of their income on federal, state and local taxes in 2012, the Tax Foundation announced Monday. That's more than the average family spends on food, clothing and housing combined, the organization said.
And it means that the average American is going to be working 107 days into the year just to earn enough money to pay their taxes.
"Tax Freedom Day," as the Tax Foundation calls the date that the average American is finally free of its tax burdens, arrives on April 17 this year, coincidentally the same day taxes are due. That's four days later than last year.
The day has been arriving later in recent years, thanks to rising incomes -- and therefore higher tax liabilities and tax collection.
"As the economic recovery continues, the growth in individual incomes and corporate profits will increase tax revenues and push Tax Freedom Day ever later in the year," the Tax Foundation said in a statement.
This year's Tax Freedom Day is still a couple of weeks earlier than the latest one on record, which occurred on May 1, 2000. During that time, the economy was booming and Americans paid 33% of their total income in taxes.
The Tax Foundation, a research group that favors lower taxes, calculates Tax Freedom Day each year based on income, Social Security, sales, property and other taxes.
But not everyone agrees with the organization's methodology. The left-leaning Center on Budget and Policy Priorities, for example, argues every year that the report overstates the share of income that average households spend on taxes.
Chuck Marr, the Center on Budget and Policy Priorities' director of Federal Tax Policy, said in a statement that this year's Tax Freedom Day report "leaves a strikingly misleading impression of tax burdens."
He said the 29% share of income that the Tax Foundation cites as the 'average' tax burden is higher than what 80% of American families actually pay.
State by State
In addition to a national Tax Freedom Day, the Tax Foundation calculates a Tax Freedom Day for each state, based on individual state taxes.
The day has already arrived in Tennessee, Louisiana and Mississippi, where average incomes and state taxes are lower. Tennessee taxpayers celebrated Tax Freedom Day the earliest -- on March 31 -- and the holiday fell on April 1 in Louisiana and Mississippi.
South Carolina and South Dakota will celebrate soon afterward, on April 3 and April 4, respectively.
States with higher average incomes will be last to celebrate. Connecticut residents won't be free of their tax burdens until May 5, and those who live in New Jersey and New York won't welcome Tax Freedom Day until May 1.