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You're spending even more time working just to pay taxes

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Government Seizes Two More Days From Taxpayers

You’re spending even more time working just to pay taxes

The Tax Foundation each year calculates how many days Americans must work to pay for all local, state and federal taxes.

In recent times, the news has been good. From 2000 to 2004, the overall American tax burden fell and Tax Freedom Day arrived earlier each year.

But this year the news is bad: Americans are losing ground to taxes again. Tax Freedom Day moved from April 15, 2004, to April 17, 2005.

This happened in large part because economic growth pushed many Americans into higher federal income-tax brackets–even as tax rates remained constant.

The forecast, too, is gloomy. Because the Alternative Minimum Tax will hit progressively more Americans in the coming years, and because the Bush tax cuts are set to expire after 2010, the tax burden is expected to grow dramatically. If current policies stay in place, the projection now is that Tax Freedom Day in 2015 will not arrive until April 29!

The foundation calculates Tax Freedom Day by dividing the per capita total tax burden on Americans by per capita income. That yields the total effective tax rate, which this year is 29.1%. On April 17, 29.1% of the year has been consumed. Thus, government this year will take the equivalent of every penny every American earns up to that day.

Because each state has a different total tax burden, the foundation calculates a separate Tax Freedom Day for each state, as seen in the chart below.

The pie chart shows where the money Americans earn will go: We will work longer to pay taxes (107 days) than to pay for housing and food combined (96 days).

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