Each year the Tax Foundation publishes the “Tax Freedom Day,” the day we stop working for the government and begin working for ourselves. For 2015, Tax Freedom Day is April 24. This is 114 days into the full year and is one day later than Tax Freedom Day in 2014. The reason Tax Freedom Day has moved forward is that the recovering economy is generating higher federal tax receipts from individual, payroll and corporate taxes.
The Tax Foundation estimates that, in 2015, there will be $3.28 trillion in federal taxes and $1.57 trillion in state and local taxes, bringing total tax payments to $4.85 trillion. This federal and state tax represents 31% of the national income.
Tax Freedom Day is then calculated by dividing the year into 31% of the days that we work to pay taxes, and 69% of the days that we work for ourselves.
The Tax Foundation report also compares expenditures for federal and state taxes with those for food, housing and clothing.
|Federal||$3.28 trillion||Food||$1.7 trillion|
|State||1.57 trillion||Clothing||$0.3 trillion|
|Total||$4.85 trillion||Total||$4.2 trillion|
We see from the chart above that total taxes for 2015 will exceed the amounts Americans spend for all food, clothing and shelter by approximately $650 billion.
Another way to calculate Tax Freedom Day is to consider total government spending, including the deficit. If total government spending is considered, then Tax Freedom Day is 14 days later, on May 8.
The Tax Foundation also projects Tax Freedom Day by state. Those states with higher incomes typically have a later Tax Freedom Day because there are more persons in the upper-income brackets. The latest Tax Freedom Days are May 13 in Connecticut and New Jersey, and May 8 in New York.
On the other hand, states with more moderate incomes will have lower average brackets and an earlier Tax Freedom Day. The earliest Tax Freedom Days will be April 2 for Louisiana, April 4 for Mississippi, and April 8 for South Dakota.