Tax Freedom Day is the first day of the year in which a nation as a whole has theoretically earned enough income to fund its annual tax burden. It is annually calculated in the United States by the Tax Foundation—a Washington, D.C.-based tax research organization. Every dollar that is officially considered income by the U.S. government is counted, and every payment to the U.S. government that is officially considered a tax is counted. Taxes at all levels of government—local, state and federal—are included. One of the most influential doctrines in history is that all humans are divided into groups called nations. ... First discussed by the Physiocrats in France, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare. ... The Tax Foundation logo The Tax Foundation is a Washington-D.C.-based tax research organization founded in 1937. ... Nickname: Motto: Justitia Omnibus (Justice for All) Location of Washington, D.C., in relation to the states Maryland and Virginia Coordinates: Country United States Federal District District of Columbia Government  - Mayor Adrian M. Fenty (D)  - City Council Chairperson: Vincent C. Gray (D) Ward 1: Jim Graham (D) Ward 2: Jack...

The concept of Tax Freedom Day was developed and copyrighted in 1948 by Florida businessman Dallas Hostetler, who calculated it each year for the next two decades. In 1971, Hostetler retired and transferred the copyright to the Tax Foundation. The Tax Foundation has calculated Tax Freedom Day for the United States ever since, using it as a tool for illustrating the proportion of national income diverted to fund the annual cost of government programs. In 1990, the Tax Foundation began calculating the specific Tax Freedom Day for each individual state. The Tax Foundation logo The Tax Foundation is a Washington-D.C.-based tax research organization founded in 1937. ...

United States

In the United States, Tax Freedom Day for 2007 was April 30, for a total average effective tax rate of 32.69 percent of the nation's income. The latest that Tax Freedom Day has occurred was May 5 in 2000. In 1900, Tax Freedom Day arrived January 22, for an effective average total tax rate of 5.9 percent of the nation's income. According to the Tax Foundation, the most important factor driving changes in Tax Freedom Day from year to year is growth in incomes, as the progressive structure of the U.S. federal tax system causes taxes as a percentage of income to rise along with economic growth. 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the AD/CE era. ... is the 120th day of the year (121st in leap years) in the Gregorian calendar. ... May 5 is the 125th day of the year in the Gregorian calendar (126th in leap years). ... 2000 (MM) was a leap year starting on Saturday of the Gregorian calendar. ... Year 1900 (MCM) was an exceptional common year starting on Monday (link will display the full calendar) of the Gregorian calendar, but a leap year starting on Saturday of the Julian calendar. ... January 22 is the 22nd day of the year in the Gregorian calendar. ...

Tax Freedom Day varies among the 50 U.S. states, as incomes and state & local taxes differ from state to state. In 2007, Oklahoma had the lowest total tax burden, earning enough to pay all their tax obligations by April 12. Connecticut had the heaviest tax burden—Tax Freedom Day there arrived May 20. New York had the second heaviest tax burden, having to work until May 16 to pay their total taxes. 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the AD/CE era. ... Official language(s) None Capital Oklahoma City Largest city Oklahoma City Area  Ranked 20th  - Total 69,960 sq mi (181,196 km²)  - Width 230 miles (370 km)  - Length 298 miles (480 km)  - % water 1. ... is the 102nd day of the year (103rd in leap years) in the Gregorian calendar. ... It has been suggested that this article be split into multiple articles. ... May 20 is the 140th day of the year (141st in leap years) in the Gregorian calendar. ... NY redirects here. ... May 16 is the 136th day of the year (137th in leap years) in the Gregorian calendar. ...

According to the Tax Foundation, the following is a list of Tax Freedom Days in the U.S. since 1900:[1]

Year — TFD — Percentage Tax Burden

1900 — 22-Jan — 5.90%

1910 — 19-Jan — 5.02%

1920 — 13-Feb — 11.96%

1930 — 12-Feb — 11.61%

1940 — 7-Mar — 17.98%

1950 — 01-Apr — 24.87%

1960 — 12-Apr — 27.88%

1970 — 20-Apr — 29.90%

1980 — 22-Apr — 30.68%

1990 — 23-Apr — 30.80%

2000 — 5-May — 33.98%

2001 — 1-May — 33.01%

2002 — 21-Apr — 30.27%

2003 — 18-Apr — 29.51%

2004 — 19-Apr — 29.69%

2005 — 26-Apr — 31.53%

2006 — 28-Apr — 32.29%

2007 — 30-Apr — 32.69%

Criticisms

Critics object to misleading portrayals of Tax Freedom Day in the popular media. It is commonly referred to as the day "the average American" has earned enough to pay his (or her) tax obligations. See for example this ABC News report.[2] While Tax Freedom Day presents an "average American" tax burden, it is not a tax burden typical for an American. That is, the tax burdens of most Americans are substantially overstated by Tax Freedom Day. The larger tax bills associated with higher incomes increases the average tax burden above that of most Americans.

Another criticism is that the calculation includes capital gains taxes but not capital gains income, thus overstating the tax burden. For example, in the late 1990's Tax Freedom Day moved later, reaching its latest date ever in 2000, but this was largely due to capital gains taxes on the bull market of that era rather than an increase in tax rates. In other words, variations in capital gains income and their associated taxes cause changes in the amount of taxes, but not in the income used in the calculation of Tax Freedom Day.

The Tax Foundation defends its methodology by pointing out that Tax Freedom Day is the U.S. economy's overall average tax burden -- not the tax burden of the "average" American, which is how it is often misinterpreted by members of the media.[3] Tax Foundation materials do not use the phrase "tax burden of the average American", although members of the media often make this mistake.[4] The Tax Foundation logo The Tax Foundation is a Washington-D.C.-based tax research organization founded in 1937. ...

Secondly, the Tax Foundation argues that the Tax Freedom Day calculation does not include capital gains as income because it uses income and tax data directly from the Bureau of Economic Analysis (BEA). BEA has never counted capital gains as income since they don't represent current production available to pay taxes, and so the Tax Foundation excludes them as well. Additionally, the Tax Foundation argues that the exclusion of capital gains income is irrelevant in most years since including capital gains would only shift Tax Freedom Day by 1 percent in either direction in most years.[5] The Bureau of Economic Analysis (BEA) is an agency in the United States Department of Commerce that provides a comprehensive statistical picture of the economy of the United States. ... In finance, a capital gain is profit that is realized from the sale of an asset that was previously purchased at a lower price. ...

Tax Freedom Day Around the World

Many other organizations in countries throughout the world now produce their own "Tax Freedom Day" analysis. According to the Tax Foundation, Tax Freedom Day reports are currently being published in eight countries. Due to the different ways that nations collect and categorize public finance data, however, Tax Freedom Days are not comparable from one country to another.

For Canada the Fraser Institute ([24]) also includes a “Personal Tax Freedom Day Calculator” that estimates a customized Tax Freedom Day based on additional variables such as age of household head, sex of household head, marital status and number of children. However, the Fraser Institute's figures have been disputed. For example, a 2002 study by Osgoode Hall Law Professor Neil Brooks argues the Fraser Institute's Tax Freedom Day analysis includes flawed accounting, including the exclusion of several important forms of income and overstating tax figures, moving the date nearly two months later.^[1] The Centre for Civil Society is a public policy think tank based in New Delhi, India. ... The Centre for Independent Studies (CIS) is an Australian think tank, founded in April 1976 by Greg Lindsay (Executive Director). ... The Tax Foundation logo The Tax Foundation is a Washington-D.C.-based tax research organization founded in 1937. ... The Adam Smith Institute is a think tank based in the United Kingdom, named after the father of modern economics, Adam Smith. ... A PwC office building (Southwark Towers) in London, England. ... The Fraser Institute is a libertarian think tank based in Canada. ... The Free Society Institute (in Slovenian: Drustvo za svobodno druzbo) was founded in 2006 in Ljubljana, Slovenia. ... Centrum im. ... The Jerusalem Institute for Market Studies (JIMS) is an independent, nonprofit economic policy think tank whose mission is to discover practical ways to promote market solutions and limited government in Israel and the region. ... The Fraser Institute is a libertarian think tank based in Canada. ...

See also

• Income tax

Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        An income tax is a tax levied on the financial income...

Notes

1. ^ Tax Freedom Day - A Flawed, Incoherent, and Pernicious Concept by Professor Neil Brooks. Retrieved December 11, 2005.

External links

• Tax Foundation's Tax Freedom Day
• Tax Freedom Day (UK) calculated by the Adam Smith Institute
• Criticism: Tax Foundation Figures Do Not Represent Middle-Income Tax Burdens
• Response to Criticism: Analysis of the Center on Budget and Policy Priorities' Criticism of Tax Freedom Day and State-Local Tax Burdens