Photo (cc) by 401(K) 2013
The day was created by a businessman in the 1940s and has been carried on by the Tax Foundation, a 76-year-old think tank. It marks the day when Americans will have earned enough at work to pay their collective tax bill for the year.
The date is calculated “using federal budget projections, data from the U.S. Census and the Bureau of Economic Analysis, and projections of state and local taxes.” The later the day in the calendar, the more taxes we’re paying.
While it may sound like the date moved a lot this year, historically it’s been worse. The latest Tax Freedom Day was May 1, 2000. It fell on April 15 or later every year from 1968 to 2002 and from 2004 to 2008.
Why did it get moved back this year? It’s the fallout from the Congressional failure to resolve the fiscal cliff. Higher taxes on the rich – the new top tax bracket introduced in January is nearly 40 percent for individuals making more than $400,000 – and the expiration of the payroll tax cut. Some new taxes created by the Affordable Care Act also kicked in this year.
By the Tax Foundation’s calculations, our total tax bill for the year is $4.22 trillion, or about 29.4 percent of American income.