Each year, most Americans refer to April 15 as Tax Day. While that is understandable, given the reality that many people use April 15 as a target date of sorts for filing income tax returns, there is a more important date for every citizen: Tax Freedom Day. That’s the day when each of us has earned enough income to pay our tax burden to the federal and state governments.
This year, Tax Freedom Day is April 9th for the average American.
That means the average taxpayer will work their first 99 days of 2010 for government. Don’t want to consider yourself as average? OK; you just might be above or below average – as a U.S. taxpayer.
Tax Freedom Day obviously varies for each of us given the variables involved. Still, as a result of the excellent work done with data analysis by the Tax Foundation in Washington, D.C. we have insight and the opportunity to compare tax burdens by state to find where you stand.
Before you continue to read, take note of the date you are actually reading this column, as well as your state of residence.
If you live in Hawaii, you are average in that April 9th is, this year, Tax Freedom Day for you as well as the average U.S. taxpayer.
But, live in any of the other 48 states, or District of Columbia, your total federal and state tax bill will be either: better – that is you pay less than the national average – which places you in the above average taxpayer category; or worse – that is you pay more than the national average – which places you in the below average taxpayer category.
Let’s hone in on your situation with some hard general facts for your personal awareness.
Live in any of 39 states and you are doing better than the national average. Examples include: Kentucky (April 3), South Carolina (April 3), Maine (April 4), Missouri (April 4), Florida (April 5), Texas (April 5) Indiana (April 6), New Hampshire (April 6), North Carolina (April 7), Georgia (April 8) and Ohio (April 8).
If you live in any of the following states you will be doing even better, that is, better than 80 percent of all states. Specifically, the top 9 states, in order, for the shortest time in 2010 to Tax Freedom Day are: Alaska, (March 26), Louisiana (March 26), Mississippi (March 28), South Dakota (March 29), West Virginia (March 30), New Mexico (April 1), Tennessee (April 1), Alabama (April 2) and Nevada (April 2).
Therefore, if you reside in any of the aforementioned groups of states, you are likely in better relative tax shape regarding federal and state taxes than taxpayers in the next groups of states. That’s good news for you and for many other readers.
Next is the not-so-good news; followed by the ‘bad news bear’ states.
Live in the states of Colorado, Delaware, Illinois, Utah, Wyoming, Rhode Island and Wisconsin? Then, you will work a few extra days (one to three) more than the average taxpayer.
While you may not deem the current reality good for you, it could be worse. You could reside in a state where taxpayers must work the longest this year before reaching Tax Freedom Day. The bad news bear states are:
California and Massachusetts (April 14), the District of Columbia and Washington State (April 15), Maryland (April 19), New York (April 23), New Jersey (April 25) and Connecticut (April 27).
Yes, reflecting on reality, taxes are necessary.
Yet, two fundamental questions must be asked:
- How much tax is necessary for our federal government; and,
- How much tax is necessary for your state government?
These are questions each citizen taxpayer must thoughtfully consider – now more than ever.
Richard Olivastro is president of Olivastro Communications, a professional member of the National Speakers Association, and founder of Citizens For Change (www.CFC.us). He can be reached via email: RichOlivastro@gmail.com ; telephone: 877.RichSpeaks.Checkout his blog: www.richardolivastro/blog