Tax Freedom Day comes later in Colorado and U.S.
Colorado residents will work an extra week this year to earn enough money to pay their taxes, according to the latest results of an annual analysis of tax and income statistics.
Nationwide, taxpayers will work four more days than last year to reach what the Tax Foundation calls Tax Freedom Day.
Tax Freedom Day arrives April 15 in Colorado and April 17 nationwide, according to the foundation, a nonprofit group in Washington, D.C., that monitors government fiscal policy.
Tax Freedom Day is the day in which taxpayers have earned enough income to pay local, state and federal taxes for the year. Tax Freedom Day is calculated by dividing tax collections by income to determine a total tax burden. That ratio then is projected for the current year and multiplied by
365 days to determine the number of days required to earn enough money to pay taxes. The calculation assumes taxpayers work every day, including weekends, and spend nothing.
Tax Freedom Day varies from state to state because of differing state tax policies, but also the effects of progressive tax rates that impose higher rates on higher incomes. Those states whose residents earn comparatively higher incomes face a larger tax burden.
For 2012, Colorado taxpayers will work 105 days to earn enough money to pay taxes. That ranks 21st among the 50 states in terms of the most days spent working to pay taxes.
Tax Freedom Day in Colorado came a week earlier at April 8 in 2011, but more than two weeks later at May 3 in 2000.
Tennessee celebrated the earliest Tax Freedom Day of 2012 on March 31, followed by Louisiana and Mississippi on April 1. In contrast, Tax Freedom Day won’t arrive until May 5 in Connecticut, four days after New Jersey and New York.
Falling on April 17 — coincidentally the same day as the income tax filing deadline — national Tax Freedom Day arrives four days later that last year due to higher federal income and corporate tax collections.
U.S. taxpayers will work 107 days to pay local, state and federal taxes that constitute a collective 29.2 percent of their incomes. U.S. taxpayers will pay a total of $1.42 trillion in local and state taxes and $2.62 trillion in federal taxes.
Of the 107 days, 32 is spent earning money to pay federal income taxes and another 23 spent earning money for social insurance taxes. State and local property taxes account for another 12 days and state and local income taxes for another eight days.
The Tax Freedom Day calculation doesn’t take into account federal budget deficits. If the federal government raised taxes enough to cover the more than $1 trillion in additional spending, taxpayers would have to work an additional 27 days this year to earn enough money to pay for the difference.