With the exception of those who’ve filed for extensions, most of those reading this have completed their federal and state income tax returns for 2016. That’s the good news — at least in terms of seeing that onerous task finished for another year.
Here’s the bad news. You’re going to have to work a bit longer to earn enough money to pay your federal, state and local taxes for 2017.
Tax Freedom Day, the day when taxpayers collectively have earned enough money to pay their taxes for the year, falls on April 23 in the United States and April 24 here in Colorado.
The Tax Foundation — a nonpartisan, nonprofit group based in Washington, D.C., that monitors government fiscal policy — calculates Tax Freedom Day each year to offer a measure of how long taxpayers work to earn enough money to pay taxes. For 2017, Americans will work 46 days to pay federal, state and local individual income taxes. Payroll taxes will take 26 days to pay, followed by sales and excise taxes at 15 days, corporate income taxes at 10 days and property taxes at another 10 days. The remaining six days are spent paying estate and inheritance taxes, customs duties and other taxes.
For those keeping score, the collective federal, state and local tax bill in the United States totals $5.1 trillion. That’s 31 percent of all income earned in the country. Americans spend more in taxes than they do for clothing, food and housing combined.
Tax Freedom Day varies by state because of different tax policies as well as a progressive federal tax system that imposes higher taxes on higher incomes. It’s kind of a bad news and good news situation: Tax Freedom Day comes the latest in those states with the highest taxes, but also the highest income levels. For 2017, Colorado will be the 37th of the 50 states to reach the milestone, by the way.
Tax Freedom Day arrived the earliest at April 5 in Mississippi, followed by April 7 in Tennessee and April 8 in South Dakota. Tax Freedom Day won’t come until May 11 in New York, May 13th in New Jersey and May 21 in Connecticut.
So is Tax Freedom Day something to celebrate or bemoan?
For those who see the glass as half full, celebrate the fact you’re done working for Uncle Sam for another year and can start earning some money for yourself. For those who view the glass as half empty and taxes too high, you’ve earned the right to go ahead and complain.
One way or another, Tax Freedom Day affords a good time to reflect on the effects of taxes on our businesses and lives.