2007 Tax Freedom Day Press Conference Remarks by Curtis Dubay
Tax Freedom Day is April 30th this year and is on the precipice of May once again due to a surging economy.
Tax Freedom Day’s date of arrival is most heavily dependent on the federal income tax code since the nation’s overall tax burden is composed of 2/3 federal taxes and 1/3 state and local taxes. The federal tax burden’s largest component is the individual income tax.
A surging economy means that incomes at all levels are growing, and as income grows the Treasury Department sees revenues filling its coffers at a faster rate than income growth due to the progressivity of the federal income tax code.
A progressive income tax code assures this will always be the case, much like local governments see a windfall of property tax revenue due to escalating real estate prices-as is currently happening.
The only way for the federal government can restrain its revenue growth is to cut income tax rates, the same way localities should cut rates to mitigate property tax payments.
The nation’s tax burden is growing so fast, in fact, that the benefits of President Bush’s tax cuts have nearly evaporated. In 2003, the series of tax cuts at the federal level lowered Tax Freedom Day to April 18th. Americans had not seen their tax burden that low since 1975! However, Americans have since seen their tax burden grow 12 days!
The Bush tax cuts served their purpose as taxes fell and economic growth has taken off, but the economic growth has inevitably increased the nation’s tax burden. In fact, we will soon surpass the all time record high Tax Freedom Day of May 5, set in 2000, on our current course. This doesn’t even account for the phase out of the Bush tax cuts beginning in 2010.
While American will work until April 30th to pay its tax bill, residents in certain states will work much longer to pay reach their Tax Freedom Day. States with higher incomes will face higher tax burdens, again, because of the progressivity of the federal income tax.
Leading the way once again is Connecticut, which doesn’t celebrate Tax Freedom Day until May 20!
Following behind Connecticut are other high income states New York (May 16), New Jersey (May 10), Vermont (May 9), Rhode Island (May 9), Nevada (May 8), California (May 7), Washington (May 6), Massachusetts (May 6) and 10th is Minnesota (May 4).
States with low incomes have lower tax burdens. This year no state will have a lower tax burden than Oklahoma, which celebrates its Tax Freedom Day first, on April 12th.
Alabama’s Tax Freedom Day is second lowest and also arrives on April 12th. Mississippi is 3rd earliest and sees Tax Freedom Day one day later on April 13th, followed by Alaska (April 13), Tennessee (April 15), New Mexico (April 15), Louisiana (April 16), South Dakota (April 16), Texas (April 19) and Idaho (April 19).