By Roberta L. Nestor
In case you missed it, Tax Freedom Day has passed and for the average US worker, it was April 23rd, 113 days into the year. Tax Freedom Day varies from state to state and from country to country, however, it all comes down to the actual date each year where we have theoretically earned enough income to pay its taxes. This includes all federal, state and local taxes; therefore, it can be a significant date for taxpayers and lawmakers because it represents how long Americans as a whole have to work in order to pay the nation’s tax burden. By the way, for CT the Tax Freedom Day was May 21st, putting us dead last in the country.
Why does it take CT residents longer to pay their tax bill? Higher incomes mean higher taxes and a longer period of time to pay those taxes. New York and New Jersey are about a week to 10 days less than for Connecticut workers. Actually, our state has remained the last state to celebrate Tax Freedom Day for more than six years and that date keeps getting closer and closer to June. This means that Connecticut’s tax burden has been continuously increasing.
A Florida businessman, Dallas Hostetler actually trademarked the phrase “Tax Freedom Day” in 1948. He did the calculations for over 20 years and when he retired sold his trademark to the Tax Foundation who has been calculating it ever since. The Tax Foundation started doing individual state calculations in 1990. Historical charting shows that the earliest Tax Freedom Day would have been in the year 1900 and arrived on January 22nd. Compare that to the longest period, which would have been in the year 2000 with a May 1st arrival.
Each year the Tax Foundation files a report and for 2017 Americans will pay $3.5 trillion in federal taxes and $1.6 trillion in state and local taxes. According to the Tax Foundation, “Americans will collectively spend more in taxes in 2017 than they will on food, clothing and housing, combined.” While the thought of working 113 days just to pay taxes is distasteful, compared to some countries it’s not so awful. Norway and France top the charts with 210 days before reaching Tax Freedom (that means nearly 7 months of work goes toward taxes); Belgium is slightly higher with 218 days; Spain 181 days; Greece 169 and Germany 172 days.
So, if we have paid our debt why are they still taking out taxes from our paychecks? Can we slack off? Of course not; it just doesn’t work that way. Look at the positives of all the federal, state and local services we have available to us: Education, highway building, bridges and maintenance, welfare programs, healthcare and hospitals. Don’t forget the visible services like garbage collection, traffic lights and snow removal. And, especially remember the firemen and police forces who protect us and will ensure we all have a safe and colorful celebration for Independence Day.
Roberta L. Nestor is a financial advisor practicing at 491 New Haven Avenue in Milford, CT offering retirement, long term care, investment and tax planning services. She also offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network – a member FINRA/SIPC and a Registered Investment Adviser. Fixed insurance products offered through Nestor Financial Network are separate and unrelated to Commonwealth. Commonwealth Financial Network or Nestor Financial Network does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation. Roberta can be reached at Nestor Financial Network, 203-876-8066 or firstname.lastname@example.org.