Each year, most Americans refer to April 15th as ‘Tax Day’. That’s understandable given the reality that April 15th is typically the ‘deadline’ for filing income tax returns, so many people use it as a target date of sorts.
Despite that practice, 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 liability to the federal and state levels of government. ‘Tax Freedom Day’ obviously varies for each of us given the variables involved. Still, there is good work done with data analysis by the Tax Foundation in Washington, DC that gives us insight, and the opportunity to compare tax burdens by state of residence plus the District of Columbia.
Before you continue to read, it is in your interest to pause for several moments, and consciously bring to your thought process the date you are actually reading this column, as well as your state of residence.
Now, with those two facts in the forefront of your mind, you’re ready to proceed.
This year, ‘Tax Freedom Day’ is April 23rd. Which means the average taxpayer will work their first 113 days for the government – federal and state.
Don’t want to think of yourself as ‘average’?
OK; you just might be ‘above’ or ‘below’ average – as a U. S. taxpayer.
Thanks to the Tax Foundation, we can look at taxpayer data by state to find the answer for you.
If you live in Colorado or Illinois you are ‘average’ in that April 23rd is, this year, ‘Tax Freedom Day’ for you and 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 reference:
Live in any of 39 states and you are doing better than average. Examples include: Delaware (4/14), Georgia (4/19), Iowa (4/16), New Hampshire (4/15), New Mexico (4/12), Michigan (4/16), Ohio (4/17) etc.
Live in any of the following states and you will be doing better than 80% of all states. Specifically, the top ten states, in order, for the shortest time in 2008 to ‘Tax Freedom Day’ are: Alaska (3/29), Mississippi (4/7), West Virginia (4/8), Montana (4/8), Alabama (4/9), Kentucky (4/10), Oklahoma (4/11), Tennessee (4/11), North Dakota (4/12) and Texas (4/12).
If you reside in any of the aforementioned states, you are 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.
Live in the states of Rhode Island, Wisconsin, Virginia, Florida, Hawaii and Nevada? Then, you will work a few extra days - one to three - more than the average taxpayer. While that is ‘not good’ for you, it could be ‘worse’ - which follows.
The states where taxpayers must work the longest (Date in parenthesis) before reaching ‘Tax Freedom Day’ are: Minnesota (4/27), Massachusetts (4/28), Maryland (4/28), Washington (4/29), California (4/30), District of Columbia (5/3), New York (5/5), New Jersey (5/7) and Connecticut (5/8).
Taxes are necessary. How much tax is necessary for our federal government? And, how much tax is necessary for your state government? These are questions for each citizen taxpayer to consider this year?
Richard Olivastro is a professional member of the National Speakers Association, president of People Dynamics - an executive leadership development company - founder of Citizens For Change. He can be reached at mailto:Rich@Olivastro.net or 877.RichSpeaks.
