'Tax Freedom Day' Still a Sham
by Gary Therkildsen*, 4/1/2011
On Wednesday, the Tax Foundation released their estimate for this year's "Tax Freedom Day" (TFD). For those not familiar with the right-leaning organization's annual made-up holiday, it marks when, according to the Tax Foundation, Americans will have "earned enough money to pay this year's tax obligations at the federal, state, and local levels." As is always the case with TFD, it's an exceptionally simplistic and misleading way to look at taxes.
As the Center on Budget and Policy Priorities (CBPP) shows, the Tax Foundation's estimates of the average American's federal tax burden is wildly skewed toward high-income households because the organization simply divides total federal tax receipts by total national income. As can be seen from the chart below, this drastically misrepresents the average American's federal tax burden.
CBPP explains, "In a progressive tax system like ours, only upper-income households pay tax at rates at or above the overall level of revenues as a share of the economy." There are also plenty of problems with the Tax Foundation's methodology in compiling state and local tax data as well.
Moreover, the Tax Foundation's trademarked (seriously) "holiday" neglects to take into account the benefits of paying taxes. As I noted last year:
On a deeper level, the character and tone of ... TFD misleads the public about taxes in general. TFD pits individuals against government, calculating the days an individual works to pay off their share of debt to the state, and the days they work for "themselves." The implication being that Americans derive no benefit from the taxes they pay.
Of course, that’s not the case. As CBPP rightly points out, government revenues are used for everything from building and maintaining "the roads and bridges that families use every day," to funding "the educational system, justice system, and other basic infrastructure, without which many Americans would not be able to earn the incomes they do."
Right. While "Tax Freedom Day" might be April 12 this year we can and should celebrate "Tax Benefit Day" year-round.
First image by Flickr user Rich Anderson used under a Creative Commons license.
Second image by Flickr user johnsolid used under a Creative Commons license.