How bad is the tax burden in America? According to the Tax Foundation, people will spend more on state, municipal, and federal taxes than the annual financial burdens of food, clothing, and housing combined, according to its data.
The calculation is based on the date of Tax Freedom Day, the point at which Americans have gone enough days to pay their annual taxes, beginning from the first day of the year. This year, that date will be April 24. It is worth noting that U.S. tax payers are better off than those in several other countries.
The organization’s researchers explain:
- This year, Tax Freedom Day falls on April 24, or 114 days into the year (excluding Leap Day).
- Americans will pay $3.3 trillion in federal taxes and $1.6 trillion in state and local taxes, for a total bill of almost $5.0 trillion, or 31 percent of the nation’s income.
- Tax Freedom Day is one day earlier than last year, due to slightly lower federal tax collections as a proportion of the economy.
- Americans will collectively spend more on taxes in 2016 than they will on food, clothing, and housing combined.
- If you include annual federal borrowing, which represents future taxes owed, Tax Freedom Day would occur 16 days later, on May 10.
- Tax Freedom Day is a significant date for taxpayers and lawmakers because it represents how long Americans as a whole have to work in order to pay the nation’s tax burden.
The Tax Foundation points out the actual Tax Freedom Day varies wildly by state because of local taxes.
The total tax burden borne by residents of different states varies considerably due to differing state tax policies and the progressivity of the federal tax system. This means a combination of higher-income and higher-tax states celebrate Tax Freedom Day later: Connecticut (May 21), New Jersey (May 12), and New York (May 11). Residents of Mississippi will bear the lowest average tax burden in 2016, with Tax Freedom Day arriving for them on April 5. Also early are Tennessee (April 6) and Louisiana (April 7).
According to Trading Economics, the personal income tax rate is, one average, 40%, in the U.S.. The number is Sweden is 57%, in Portugal 56%, in Denmark 56%, and in Japan 51%. Presumably in some of these countries, citizens get a larger portion of education and medical expenses paid by the government. If not, the onus is terrible.
Tax Freedom Day means Americans pay more in taxes than food, housing and clothing combined, each year. The modest comfort is that it costs more as a percentage of income in some other countries.
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