Are you gearing up for this year’s “Tax Freedom Day” on April 9? If you’ve penciled in that date based on a report released today by the conservative Tax Foundation, you should know that your celebration is most likely going to be much later than it should.
Tax Freedom Day is that annual gimmick that the Tax Foundation uses to, as it says in its report, provide “a vivid, calendar-based illustration of government’s cost,” and each year it gets uncritical press attention. This year’s report says, “Americans will work well over three months of the year, from January 1 to April 9, before they have earned enough money to pay this year’s tax obligations at the federal, state and local levels.”
It makes for good imagery at Tea Party rallies and, like most things at Tea Party rallies, it’s based on a distortion of the facts.
The report calculates the “tax freedom day” based on the total amount of federal, state and local taxes collected nationally and total national income, and comes up with an average tax rate of 26.89 percent. Unstated, but obvious, is the obvious disclaimer: Your tax rate may vary.
Citizens for Tax Justice used a recent Fortune Magazine column by former Treasury Department economist Bruce Bartlett (a former Reaganite turned critic of supply-side economics) to note the disparity between the perceptions fueled by such “tax freedom” reports and reality. Bartlett writes that a number of protesters at a Tea Party rally in Washington earlier this year were asked what they thought a typical family earning $50,000 a year paid in federal taxes. The average of the responses was about $10,000. The actual amount? According to a Citizens for Tax Justice calculation, “After deducting the standard deduction and personal exemptions, a family of four owes only $1,965 in federal income taxes.”
With a gross income of $50,000, you could have taken off New Year’s weekend with much of the rest of America, started fresh Monday morning January 4 and would have fully paid your federal tax bill by lunchtime January 18—with Saturdays and Sundays off to boot. Your state and local tax bills would most likely be paid off by mid-February.
CTJ also notes that, contrary to the impression promoted by conservatives that tax burdens on average families are higher under President Obama than under President Bush, “the reality is that they are lower by every measure. For that working family, last year’s stimulus bill reduced their federal income tax by $800.”
In fact, cumulative tax rates today are much lower than they were under President Reagan in the 1980s, by the Tax Foundation’s own admission.
The real knock on these “tax freedom” reports, of course, is the frame that taxes are something we should be “free” of, without a discussion of the value society gets for its tax dollar. The priorities we set as a nation for how we spend our taxes, and how we distribute the tax burden, are far more important than on what day we allegedly stopped working for the tax man and started working for ourselves. It should be that when we “work for the tax man,” we are working for ourselves, and the real fight is to make sure that conservatives don’t fool us into thinking otherwise.