Analysis Shows Center on Budget and Policy Priorities’ Criticism of Tax Freedom Day Flawed and Inaccurate

March 30, 2006

For immediate release
Media contact: William Ahern (202) 464-5101

WASHINGTON, D.C. — A new analysis shows criticisms of Tax Freedom Day® made by the Center on Budget and Policy Priorities (CBPP) are based on factual errors and misinterpretations of Tax Foundation figures, potentially misleading reporters and policymakers about the usefulness of Tax Freedom Day® as a popular gauge of the nation’s tax burden. (Click here for full analysis.)

“Tax Freedom Day® is based directly on official government data, and does not over-state the nation’s total tax burden as the CBPP claims,” said Scott A. Hodge, President of the Tax Foundation. “The CBPP’s criticisms of Tax Freedom Day® are flawed and are not serious economic critiques of the Tax Freedom Day® methodology.”

The analysis responds to three of the CBPP’s claims:

• That Tax Freedom Day® should report only taxes of the middle one-fifth of earners, ignoring all other Americans;

• That the Tax Foundation should use the CBPP’s unofficial tallies of income and taxes rather than the official reports of the Commerce Department’s Bureau of Economic Analysis; and

• That the Tax Foundation’s state-local tax burden estimates are supposedly unreliable because—like all statistical estimates based on government data—initial figures are revised when better data become available later.

“The CBPP’s criticisms are designed to distract attention from the nation’s tax burden. That does not promote good tax policy in a democratic society,” said Hodge. “Tax Freedom Day® will continue to serve as a respected and useful concept that helps educate millions of Americans each year about the nation’s tax burden.”

The Tax Foundation completes its calculation of Tax Freedom Day® in early April each year. The 2006 report is scheduled for release shortly before the IRS filing deadline.

The Tax Foundation has monitored tax policy at the federal, state and local levels since 1937. Best known for its annual calculation of Tax Freedom Day®, the Tax Foundation is a nonprofit, nonpartisan 501(c)(3) organization.

(Click here for full analysis.)

The Tax Foundation is the nation’s leading independent tax policy research organization. Since 1937, our principled research, insightful analysis, and engaged experts have informed smarter tax policy at the federal, state, and local levels.