Get ready to par-tay! Today is Tax Freedom Day.
April 23 is, according to The Tax Foundation, the day in 2008 on which Americans have earned enough money to pay all their federal, state and local taxes for the year. So after today, we can finally start keeping all our paychecks.
Unfortunately, Tax Freedom Day is for illustrative purposes only. It doesn't mean that we actually can quit handing over a portion of our pay to Uncle Sam and his state cousins. But the annual announcement of Tax Freedom Day is a catchy way to show our general tax burdens.
To mark the occasion this year, The Tax Foundation has produced the video below (click here for the YouTube page version) of a flustered taxpayer's countrified rendition of what Tax Freedom Day means to him.
While the Tax Foundation folks obviously had some fun with the video, they say they are serious about Tax Freedom Day, which this year arrives three days earlier nationwide than in 2007. Key reasons why include the upcoming stimulus rebates and a projection of slow growth in 2008.
The graph below tracks Tax Freedom Days from 1982 through 2008. You can click on the image (or here) to see a larger version.
In releasing its 2008 Tax Freedom Day report, the Tax Foundation notes that taxpayers had to work nearly four months of the year before they earned enough money to pay this year's tax obligations at the federal, state and local levels.
"Americans, as a whole, work a significant number of days each year to pay for things other than government, but nothing else is so expensive," says the report. "Americans will work longer to pay for government (113 days) than they will for food, clothing and housing combined (108 days). In fact, Americans will work longer to afford federal taxes alone (74 days) than they will to afford housing (60 days). As a group, Americans will also work longer to pay state and local taxes than they will to pay for food."
State freedom days, too: The Tax Foundation also breaks out the various state Tax Freedom Days. You can click on the map below (or here) for a slightly larger image showing when you were, or will be, free of your state tax obligations.
A text table is available in the full Tax Freedom Day report. It shows that Alaskans were the earliest tax celebrants this year, with that state's Tax Freedom Day arriving on March 29. Here in Texas, we were free on April 12, although the hubby and I, because of telecommuter tax issues, also have to take into account Georgia taxes, which were paid off on April 19.
Tax woe unto you is you live in Connecticut. You'll have to work until May 8, the latest state-level Tax Freedom Day this year, to pay off those taxes.
More information: You can read the full 2008 Tax Freedom Day report here, where you'll also find more graphs and charts, as well as links explaining how The Tax Foundation figures Tax Freedom Day each year.