According to the Tax Foundation, “Tax Freedom Day” — the day when the nation as a whole has earned enough money to pay all of its taxes for the year — arrived this year on Thursday, April 18, five days later than last year. The math is simple: The foundation adds up all the taxes Americans pay to any level of government — federal, state, and local — and compares that to total income earned, and then figures out how many days out of 365 it takes to pay those taxes.
For 2013 Americans will pay $2.76 trillion in federal taxes and another $1.45 trillion in state and local taxes for a total of $4.22 trillion. Total income is $14.4 trillion. So governments extract 29.4 percent of Americans’ income in taxes. That works out to be 107.3 days which is rounded up to 108 days — voila! — April 18.
Except that this calculation leaves out several significant, and expensive, additional factors. The first is that nothing is included in this calculation about the annual deficit. If that is treated as unpaid future taxes, then Tax Freedom Day really occurs 21 days later — on May 9 — according to the Tax Foundation's calculation.
Except that the Tax Foundation excludes any taxes on capital gains because it gets its raw data from the Bureau of Economic Analysis, which doesn't count capital gains as income. If it were counted, Tax Freedom Day would be pushed out even farther.
Except that most Americans pay taxes that they don’t even know — or perhaps care — about, totaling at least 95 others. These include taxes on food, gasoline and meals out, along with accounts receivable tax, accumulated earnings tax, ad valorem tax, alternative minimum tax, aviation fuel tax, cigarette tax, consumption tax, corporate income tax, corporation license tax, court fines, customs duty tax, dog license tax ... and this is just the first 15 of those 95.
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