Tax Freedom Day

From TaxAlmanac

Tax Freedom Day is the day each year when a nation as a whole has earned enough income to fund its annual cost of government. Tax Freedom Day is a registered trademark of the Tax Foundation, a Washington D.C.-based nonpartisan tax research group, and is used as a tool for illustrating the proportion of national income that goes to pay the annual cost of government.

In the United States, Tax Freedom Day for 2005 was April 17. The latest that Tax Freedom Day has occurred is May 3 in 2000. In 1910, Tax Freedom Day fell on January 20. Though Tax Freedom Day has risen and fallen with business cycles, it has steadily moved later into the year over time, which means that the nation's average tax burden has increased.

Methodology

Tax Freedom Day is an estimate of what the nation's tax burden will be in the current year. It is calculated by dividing the official government tally of all taxes collected in each year by the official government tally of all income earned in each year. All data is taken directly from the Bureau of Economic Analysis. Governments — federal, state and local — took 30.3% of income in 1980; 30.5% in 1990; 33.6% in 2000; and so on. This percentage is what is properly called the "nation’s total tax burden." The historical trend and the most recent economic data is used to make a projection of what the tax burden will be in the current year.

Tax Freedom Day Around the World

Although the concept of Tax Freedom Day was trademarked in the U.S. by Florida businessman Dallas Hostetler and later transferred to the Tax Foundation, many other organizations around the world now produce their own “Tax Freedom Day” report:

•Great Britain’s Tax Freedom Day is May 31 in 2005 (Adam Smith Institute: www.adamsmith.org).

•Canada’s Tax Freedom Day was June 28 in 2004 (Fraser Institute: www.fraserinstitute.ca).

•South Africa’s Tax Freedom Day was April 22 in 2002 (Free Market Foundation: www.freemarketfoundation.com).

•Slovakia’s Tax Freedom Day fell on June 18 in 2002 (Association of Slovak Taxpayers: www.zdps.sk).

•The Czech Republic’s Tax Freedom Day fell on June 7 in 2001 (Liberalni Institut: www.libinst.cz/english/index.php).

•Lithuania’s Tax Freedom Day fell on May 8 in 2004 (Lithuanian Free Market Institute: www.freema.org).

•India’s Tax Freedom Day fell March 14 in 2000 (Centre for Civil Society: www.ccsindia.org/index.asp).

•Australia’s Tax Freedom Day fell on April 21 in 2001 (Center for Independent Studies: www.cis.org.au).

External Links:

Tax Freedom Day: www.taxfoundation.org/taxfreedomday

Tax Foundation: www.taxfoundation.org