Everything you need to know about Tax Freedom Day®
Monday, April 21, was 2014 Tax Freedom Day®, according to the Tax Foundation. The Tax Foundation is not exactly known for unbiased research, and its promotion of Tax Freedom Day® is no exception.
The Foundation claims that Tax Freedom Day® is “a vivid, calendar-based illustration of the cost of government.” In other words, instead of saying that its analysts expect total taxes in the United States (including social insurance) to reach 30.2% of net national income (NNI) in 2014, they say that Tax Freedom Day® arrives three days later than last year. Precise, huh?
Of course, the word “freedom” tips us off to the fact that the Tax Foundation is actually trying to create an emotional response. Something along the lines of, “Oh boy, after today I’m working for myself rather than the greedy government!” The implication further is that the later Tax Freedom Day® occurs, the worse it is for the country. The thing is, neither of these insinuations is true.
As the Center on Budget and Policy Priorities points out every year, that emotional response, frequently picked up directly by the media, is not true for the vast majority of Americans. As CBPP’s Figure 1 below shows, for the federal portion of taxes, more than 80% of Americans are paying less than the 20.1% federal component of Tax Freedom Day® would suggest. (In addition, the burden of some taxes does not fall on individuals at all.) The Tax Foundation responds that it’s not trying to mislead anyone, it’s just comparing “total U.S. tax collections with total U.S. income.” Of course, if that were all it was really trying to do, it could just say that projected tax collections equal x% of NNI. But no, it trumpets Tax Freedom Day®.
Moreover, a relatively late Tax Freedom Day® is usually a sign that incomes are increasing, so taxes are, too. As the Foundation writes this year,
Tax Freedom Day is three days later than last year due mainly to the country’s continued slow economic recovery, which is expected to boost tax revenue especially from the corporate, payroll, and individual income tax.
Despite the dig “slow,” the Foundation is saying that economic recovery boosts tax revenue. Another example should make this clearer. The same document continues, “The latest ever Tax Freedom Day was May 1, 2000, meaning Americans paid 33.0 percent of their total income in taxes.” Horrors! Such confiscatory taxation obviously meant that the economy was in the tank in 2000. You know I’m joking: Actually, the economy was booming and the federal government had a budget surplus. Again, higher incomes and profits boosted tax revenue. Indeed, the economy in 2000 created 2,088,000 jobs, way more than during the entire George W. Bush administration (1,282,000). Maybe the Tax Foundation should pay attention.
This brings me to the ultimate point about Tax Freedom Day®. It’s all there in the ®. As it indicates, Tax Freedom Day® is a trademark registered with the U.S. Patent and Trademark Office. If it were a serious concept, there would be no reason to trademark it at all. What the ® tells us is that Tax Freedom Day® is just a marketing gimmick.
For the right, society is totally about marketing. It’s the only way the comprehend the world around them. Hell, even their party (s) is a “brand” now. And they are always “rebranding”.
They really are an example of what was and still is the American way of business: no substance, just a lot of imagery to make you believe.
I wonder which year had their earliest Tax Freedom Day?
I see that 2009 was a nice early Tax Freedom Day, April 13th, having dropped from April 23rd the previous year. Maybe those celebrating Tax Freedom Day could engineer a giant economic crash every year and we’d get to celebrate early every year.
Funny, I’ve got a friend who has long been a financial planner, and he and his clients didn’t seem to be celebrating so hearty on that early Tax Freedom Day. Mumbled something about losing 40% of his portfolio value. Hardly an excuse to not celebrate the extra early Tax Freedom Day.
tax freedom day does not interest me much. I am more curious about interest freedom day. In other words, when do I stop working for the bank. What day of the year is that?
class is not ready to be dismissed so early…
besides the strange “average” for taxes, the whole enterprise forgets that some things are more efficiently paid for by taxes than by market purchases. i could say “defense” for one, but actually i am thinking of roads, unemployment insurance, social security, and health care.
the proportion of “your” money that goes to taxes is meaningless without some idea of what you get for your money… compared to what you could get for it in the market
and this applies even to the rich who don’t seem to think they get anything from the government that holds the country together… or would if the rich hadn’t bought it.