Tax Freedom Day® Arrives on April 12 in 2011

March 30, 2011

Tax Freedom Day® will arrive on April 12 this year, the 102nd day of 2011. That means Americans will work well over three months of the year, from January 1 to April 12, before they have earned enough money to pay this year's tax obligations at the federal, state and local levels.

Tax Freedom Day arrives three day later in 2011 than it did in 2010, but nearly two weeks earlier than in 2007. This shift toward a lower tax burden since 2007 has been driven by three factors:

• The recession has reduced tax collec­tions even faster than it has reduced income.

• President Obama and the Congress, after a long debate, extended the Bush-era tax cuts for two additional years.

• As part of the extension agreement, the Making Work Pay tax credit was replaced with the 2 percent reduction in the payroll tax.

Despite these tax reductions, Americans will pay more in taxes in 2011 than they will spend on groceries, clothing and shelter combined.

Tax Freedom Day, like almost all tax burden measures, does not take into account the current year's federal budget deficit. Only taxes that will actually be collected dur­ing 2011 count in the tally. In many years the deficit is fairly small as a percentage of total government spending, so Tax Freedom Day alone is a good guide to the size of government.

Since 2008, however, deficits have increased dramatically. As a result, Tax Freedom Day may give the impression that the burden of government is smaller than it is. If the federal government were planning to col­lect enough in taxes during 2011 to finance all of its spending, it would have to collect about $1.48 trillion more, and Tax Freedom Day would arrive on May 23 instead of April 12-adding an additional 41 days to the nation's work for government. This date for a deficit-inclusive measure is the latest since World War II.

Each state has its own Tax Freedom Day. This occurs not only because resi­dents of different states pay different amounts of state and local taxes, but also because their federal tax payments can vary dramatically. Because of modest incomes and low state and local tax burdens, Mississippi celebrates its Tax Freedom Day first in the nation on March 26th, after only 85 days. Tennessee (March 27), South Carolina (March 29), Louisiana (March 30), and South Dakota (March 30) round out the top five.

High-income states pay much more in federal taxes, and they often have higher state-local taxes as well. Connecticut is the last in the nations to observe Tax Freedom Day, on May 2nd, with 122 days required for state taxpayers to pay the year's tax total. Other states with late celebrations include New Jersey (April 29), New York (April 24), Maryland (April 17) and Washington (April 16).

If you are planning to host a Tax Freedom Day event, or would simply like to share the information with friends and colleagues, feel free to photocopy and distribute the eight-page Tax Freedom Day Special Report.

In addition, Tax Freedom Day T-shirts are available on CarePress.

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