Tax Freedom Day, the theoretical day in which the nation has earned enough to pay its tax burden for the year, will fall on April 18, the Tax Foundation announced Tuesday.
According to the nonprofit, conservative leaning think tank, Americans will need to work for over three-and-a-half months this year to earn enough to pay off their federal, state and local tax obligations — five days later than in 2012.
The group chalked the later day this year to increased payroll and individual income taxes from the fiscal cliff deal, Obamacare excise and investment taxes, and a recovering economy in their Tax Freedom Day 2013 report.
“Tax Freedom Day divides all federal, state, and local taxes by the nation’s income,” the group explained in their report, calculated by Tax Foundation economists William McBride, Ph.D., Elizabeth Malm and Kyle Pomerleau. “In 2013, Americans will pay $2.76 trillion in federal taxes and $1.45 trillion in state taxes, for a total tax bill of $4.22 trillion, or 29.4 percent of income. April 18 is 29.4 percent, or 108 days, into the year.”
According to the group, that tax burden represents more than Americans will spend on food, clothing and housing combined.
The foundation economists also calculated how long Americans would have to work in order to pay for all the spending in the current year, according to the group, Americans would need to work until May 9, raising an additional $833 billion in taxes to eliminate that burden.
The report further noted that while the average calculation is April 18, residents of states with higher tax burdens will have to work longer to reach their Tax Freedom Day — the states with the latest days were Connecticut on May 13, New York on May 6, and New Jersey on May 4.
The states with the lowest tax burdens and therefore earliest Tax Freedom Days were Mississippi and Louisiana on March 29 and Tennessee on April 2.
According to the Tax Foundation the latest Tax Freedom Day was in 2000 when it fell on May 1 and Americans were paying a third of their income in taxes.