Working For The Government

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Working For The Government

Special Report - April 9, 2010
North Carolinians are free of their tax burden slightly earlier than the average American, who will work more than three months in 2010 to earn enough to pay their share of federal, state, and local taxes. North Carolina’s Tax Freedom Day was April 7—two days earlier than national Tax Freedom Day on April 9. Tax Freedom Day, as calculated by dividing total tax collections in the U.S. by the nation’s total income, comes 99 days into 2010. This is one day earlier than in 2009 and two weeks earlier than in 2007. The date has been shifted earlier since 2007 due to the recession’s impact on reduced tax collections, temporary income tax cuts, and the temporary repeal of the estate tax and the so-called PEP and Pease provisions of the income tax. Still, in 2010, Americans will pay more in taxes than they will spend on food, clothing, and shelter combined.

The Tax Foundation, which calculates Tax Freedom Day for America and each individual state each year, also calculates the breakdown of the time it takes to pay off various types of taxes. Americans spend 23 days working to fulfill their individual income tax obligations. Payroll taxes to fund programs like Social Security and Medicare require 25 days of work. Sales and excise taxes, primarily leveled at the state and local level, require 15 days of work. It takes Americans 12 days to earn enough to pay their property taxes, and eight days to pay their share of corporate income taxes. Miscellaneous taxes like motor vehicle license taxes, severance taxes, and estate taxes take another six days of work. In total, the federal, state, and local tax burden consumes almost 27 percent of the nation’s income, and requires Americans to send all the wages they earn for 27 percent of the year to the government.

North Carolina’s “tax freedom” celebration on April 7 ranks 26th highest in the nation. Of her neighboring states, Virginia ranks 10th highest, Georgia 24th, and South Carolina 40th. Tennessee’s 44th placement saw it celebrating Tax Freedom Day and April Fools Day together. Alaska and Louisiana have the smallest tax burden, celebrating Tax Freedom Day on March 26—85 days into the year. Connecticut will be the last in the nation to celebrate on April 27.

The Tax Foundation is quick to add that, “The difference between what governments are spending and what they’re collecting has never been as great as during 2009 and 2010.” If Americans had to pay for all government spending in 2010, they would work an extra 38 days—until May 17. That is the latest debt-inclusive Tax Freedom Day since World War II.