Since 1937, the Tax Foundation has provided analysis and policy about federal, state and local taxes. A not-for-profit think tank based in Washington, D.C., the Tax Foundation promotes increased awareness of tax policies and the tax burdens on U.S. taxpayers.
Each year, the Tax Foundation attempts to calculate the point in the year at which U.S. taxpayers have earned sufficient income to cover all the anticipated taxes for the calendar year. The variety of taxes in this analysis includes federal income tax, social security insurance tax, any state and local income taxes, estimates of state and local sales taxes, property taxes and a series of other federal and state taxes.
Based on all these taxes and including an estimate how much income will be earned by the entire U.S., the Tax Foundation estimates the average person will work until April 21 this year before his or her income is sufficient to pay all the estimated taxes. This year's tax freedom day is three days later than the estimate for 2013.
A tax freedom day is estimated for each state in the U.S. Two of the states with the latest tax freedom day of May 9 are Connecticut and New Jersey. At the other end of the timeframe, with the earliest tax freedom days, are Louisiana and Mississippi, with dates of March 30 and April 2, respectively.
Tax freedom day for Utah taxpayers is estimated to be April 17. That puts Utah near the middle of the 50 states, with a ranking of 21. The lower the ranking, the earlier the tax freedom day comes.
These tax freedom day estimates take into account only the amount of taxes due from each taxpayer. If the estimated federal budget deficit for 2014 were included in the national tax freedom day calculation, an additional 15 days of income generation would be needed to cover this year’s federal spending deficit, according to the Tax Foundation.
In 2000, the national tax freedom day was calculated to be May 1. Looking back 100 years, tax freedom day would have been Jan. 22. At that time, U.S. taxpayers paid about 5.9 percent of their income to taxes.
American taxpayers, according to the Tax Foundation, are expected to spend more in 2014 on their various taxes than on the basic necessities of clothing, housing and food.
Kirby Brown is the CEO of Beneficial Financial Group, which is based in Salt Lake City.