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What Tax Freedom Day Means For The States

by John Stephenson / /

 

Yesterday, my colleague Dan Barrett wrote about the Tax Foundation's announcement that, this year, "Tax Freedom Day" is April 9th. In looking over the report myself, I noticed some interesting trends.

 

Each state has its own Tax Freedom Day based on the state and local tax burden. For example, Alaskans, who live under a low tax burden relative to other states, will only have to work 85 days to pay off their taxes in 2010 and were the first in the nation to observe Tax Freedom Day on March 26. By contrast, residents of Connecticut, who face a relatively high tax burden, will have to work no less than 117 days to “celebrate” freedom from their taxes on April 27, the last state to do so. What are Americans working so hard to pay for? The Tax Foundation calculates that Americans will spend a total of 24 days working just to pay off their property, sales, and excise taxes; on top of that, Americans will spend another eight days working to pay off their individual income taxes. If states raise even one of these tax rates by just a small percentage, Tax Freedom Day will have to be pushed back. In that case, Americans will have to work that much longer to pay off their tax burden before they can pay for things like groceries, mortgage payments, and electricity.

 

Here you can view two charts prepared by the Tax Foundation showing how many days residents of each state will have to work to pay off their tax burdens, the dates they will mark Tax Freedom Day, and each state’s ranking among the others.

 

Some states of note include Arizona (residents working 94 days – celebrating Tax Freedom Day April 4  – rank 37), Georgia (98 days – April 8 – rank 24), Kansas (97 days – April 7 – rank 25), Illinois (101 days – April 11 – rank 14), New York (113 days – April 23 – rank 3), and Utah (101 days – April 11 – rank 15). These states stand out because they all have either raised income, property, or sales and excise taxes recently or are considering some sort of tax increase in the near future. Georgia has raised its tax on cigarettes by $1 per pack and Utah’s legislature recently approved a similar increase. Kansas is also considering its own tax hike on cigarettes. New York is also considering raising its already high tax on cigarettes and imposing a new tax on soft drinks. Arizonans will soon vote on a ballot measure to raise the state sales tax. And Illinois wants to raise individual income taxes by a staggering 30 percent. 

 

Tax Freedom Day provides us with a quantifiable measure of how the state tax burdens affect hard-working Americans. When states increase tax rates, Americans will have to work more days just to pay off their tax burdens, rather than saving and investing the money they earn in the economy. Let's hope that on April 9th, our nation’s governors and state legislators will take a moment to think about Tax Freedom Day and how their actions impact Americans.