Good News: Tax Freedom Day Arriving Earlier

by Mike Godfrey, Tax-News.com, Washington

28 May 2003

According to calculations made by the Tax Foundation, Tax Freedom Day for the average American taxpayer fell on April 19th in 2003, the same day as in 2002, though eleven days earlier than in 2000.

What this basically means for those unacquainted with the concept of Tax Freedom Day is that Americans spent the first 109 days of the year working for the government to pay off federal, state and local tax demands.

Tax Freedom has generally followed an uphill trend over the last few decades, that is, has tended to fall later and later in the year. This is especially so through the 1990s with Tax Freedom Day hitting a peak of April 30th in 2000, though it has dropped back quite sharply since as depressed economic activity and tax cuts begin to sap the Treasury Department's revenue stream.

The study by the Tax Foundation also compares how much tax people pay compared with spending on a basket of other necessities, like food and clothing for example. According to Tax Foundation Executive Director Scott Hodge: "Americans will work longer to pay for government in 2003 than they will for food, clothing, and shelter combined."

As state and local taxes can vary quite considerably in the United States, the Foundation also compiled a league table of states' individual tax burdens, which found that Alaskans pay the least tax in the union. Tax Freedom Day for Anchorage residents fell on March 30th. Conversely, the most heavily taxed citizens were to be found in Connecticut where Tax Freedom Day didn't arrive until May 9th in 2003.

If you consider that a particularly bitter pill to swallow, spare a thought for our poor transatlantic cousins in the UK. A recent study by the free market think tank the Adam Smith Institute found that the average Brit has to work for 155 days before his tax obligations are paid to HM Treasury. This means that Tax Freedom Day in the United Kingdom did not fall until June 2nd this year. By 2005, the ASI predicts it won't arrive until June 9th - a whole extra week working for Chancellor Brown.

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