Tax Freedom Day is coming.
Unfortunately, that’s not a celebration during which federal, state and local taxes are suspended for the day and taxpayers could feel what it’s like, if only momentarily, to have that particular burden lifted from their shoulders.
Rather, Tax Freedom Day is the day in which the average taxpayer has finally earned enough money to pay all those taxes. The extent of the celebration depends on whether taxpayers have to work more or less to pay taxes.
The Tax Foundation — a nonprofit group in Washington, D.C., that monitors government fiscal policy — calculates Tax Freedom Day by dividing federal, state and local tax collections by income. That ratio then is 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 during that period.
The Tax Foundation hasn’t yet announced the timing of Tax Freedom Day for 2019. For 2018, Tax Freedom Day arrived on April 16 in Colorado and April 19 nationwide.
In the meantime, here’s a look from the Tax Foundation at how Colorado compares to other states in terms of various taxes:
Big picture, Colorado fares comparatively well for its individual income and corporate tax rates and property tax rates. Colorado fares less well for sales taxes and unemployment insurance premiums. Combine all those factors into one analysis, and Colorado ranks 18th among the states in an annual assessment compiled by the Tax Foundation on how taxes affect business. By the way, Colorado obtains 30.8 percent of its local and state collections from property taxes, followed by 26.5 percent from sales taxes, 25.4 percent from individual income taxes and 2.4 percent from corporate income taxes.
State and local taxes come to $4,304 per person and constitute 8.9 percent of income in Colorado. That’s still not too bad compared to top-ranked New York, where the tax burden comes to $6,993 and 12.7 percent of income.
Colorado assesses 22 cents in tax on a gallon of gasoline, which ranks 38th among the states. Pennsylvania assesses 58.7 cents a gallon and California 54.36 cents a gallon.
State and local cell phone tax rates total 12.34 percent in Colorado, which ranks 21st. The rate is highest at 20.91 percent in Illinois.
Cigarette, anyone? Colorado imposes 84 cents in taxes on a pack of 20 cigarettes. But that’s a bargain compared to the $4.35 Connecticut and New York impose on a pack.
Colorado assesses a state excise tax of 32 cents on a gallon of wine and 8 cents on a gallon of beer, near the bottom of the rankings among states.
In Kentucky, the tax comes to $3.26 on a gallon of a wine. In Tennessee, $1.29 in state excise tax is added to the purchase price of a gallon of beer.
But don’t forget. Colorado imposes a 15 percent excise tax and 15 percent sales tax on recreational marijuana. That’s lower than Washington and Oregon, but higher than Maine, Massachusetts and Michigan.
Oh … and Tax Freedom Day? Colorado ranked 27th in 2018 with that April 16 date. Alaska was the first state to celebrate Tax Freedom Day on April 4.