Taxpayers will have a reason to celebrate later this month. According to the Tax Foundation, this year’s Tax Freedom Day® falls on April 24. On that date, the nation as a whole will have earned enough to pay the total federal, state and local tax bills for the year.
“Arguments can be made that the tax bill is too high or too low, but in order to have an honest discussion, it’s important for taxpayers to understand the cost of government,” said Tax Foundation Analyst Scott Greenberg. “Tax Freedom Day helps people relate to that cost.”
Of the 114 “taxed” days, Americans will work 46 days to pay individual income taxes (federal, state and local) and 26 days to pay payroll taxes. Sales and excise taxes, corporate income taxes, property taxes, estate and inheritance taxes, customs duties and other taxes account for the remaining days.
Here are some additional, tax-related facts from the Tax Foundation’s website:
• 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.
• Americans will collectively spend more on taxes in 2016 than they will on food, clothing and housing combined.
• In calendar year 2016, the deficit will grow significantly, from $592 billion to $698 billion. If we include this annual federal borrowing, which represents future taxes owed, Tax Freedom Day would occur 16 days later on May 10.
Historically, the latest national Tax Freedom Day was May 1, 2000, when Americans paid 33 percent of their income in taxes. A hundred years earlier, Americans paid 5.9 percent in taxes, resulting in a Tax Freedom Day on Jan. 22. Because of our progressive federal tax system and varied state tax policies, residents in different states bear disparate tax burdens. Mississippi, Tennessee and Louisiana have the earliest state Tax Freedom Day (April 5 – 7); New York, New Jersey and Connecticut have the latest (May 11, 12 and 21).
Concerned about current or prospective tax bills? We’d be happy to work with your accountant to evaluate your present tax situation, analyze future scenarios and make recommendations to position your portfolio to reduce your tax liability. Call Jordan Dechtman, Denver wealth manager at 303-741-9772, email him at Jordan@JordanDechtman.com or visit our website www.JordanDechtman.com to schedule an appointment.
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