Tax Freedom Day
Tax Freedom Day is the first day of the year in which a person (or population) has earned enough money to pay all his or her (or their) annual taxes. The concept was introduced by the Tax Foundation—a body advocating lower taxation—as a tool for illustrating the proportion of the income paid in taxes by American citizens.In the United States, Tax Freedom Day for 2003 was April 19, the lowest since 1992. The latest that Tax Freedom Day has occurred is April 30 in 2000. In the 20th century, Tax Freedom Day came as early as January 18 (in 1912). It has steadily moved later into the year, which means that the average net tax burden has increased.
Tax Freedom Day differs from state to state, as American states charge a variety of state taxes and charges. In 2001, Alaskans had the slightest tax burden, earning enough to pay all their tax obligations by April 16. Connecticut had by far the heaviest tax burden—Tax Freedom Day there came on May 25. New Yorkers had the second heaviest tax burden, having to work until May 14 to pay their taxes.
According to the Tax Foundation, here is the list of Tax Freedom Days in the U.S. since 1990:
1990 20-Apr 1997 26-Apr 1991 19-Apr 1998 27-Apr 1992 19-Apr 1999 28-Apr 1993 20-Apr 2000 30-Apr 1994 21-Apr 2001 27-Apr 1995 23-Apr 2002 19-Apr 1996 24-Apr 2003 19-AprFrom an international point of view the Tax Freedom Day may differ even more. In Denmark, Tax Freedom Day for 2001 was August 14.
Critics of the concept argue that the methodology used exaggerates the amount of tax paid by middle-income taxpayers, as it is calculated, essentially, by dividing the tax raised by gross domestic product - thus producing a distortion as the rich pay a much higher proportion of their income in tax. Another significant distortion, pointed out by Alan Greenspan, in the result is capital gains tax - as income from capital gains is not counted as part of GDP.
See also: income tax
