This year, Utahns would need to work from Jan. 1 through April 13 just to earn enough to pay all their taxes — but that, at least, is five fewer days than the national average.
That news came as “Tax Freedom Day” for the nation and each state was announced Tuesday by the Tax Foundation, a conservative but nonpartisan Washington, D.C., tax research group.
The national Tax Freedom Day this year is April 18, which is five days later than last year — indicating tax burdens have increased.
William McBride, chief economist for the Tax Foundation, said Americans will pay 29.4 percent of their income this year in federal, state and local taxes. That “amounts to more money than is spent on food, clothing and housing combined,” he said during a webinar.
Converting that to calendar terms, McBride said that means Tax Freedom Day does not come until day 108 in the 365-day year.
McBride said three major factors raised tax burdens this year.
“The biggest one is the ‘fiscal cliff’ deal that raised federal payroll and income taxes. Second, there is the Affordable Care Act’s taxes that go into effect this year. Lastly, despite these increases, the economy is continuing to grow. As incomes grow, people are boosted into higher tax brackets so their tax rates go up,” he said.
Tax Freedom Day varies greatly among the states, depending on state and local tax burdens.
Mississippi has the earliest Tax Freedom Day, arriving on March 29 — slightly earlier in the same day than Louisiana, followed by Tennessee on April 2.
The states with the highest tax burdens — and latest Tax Freedom Days — are Connecticut on May 13, New York on May 6 and New Jersey on May 4.
Utah’s Tax Freedom Day on April 13 this year ranks 24th earliest among the states — and is actually five days earlier than the 2012 Tax Freedom Day. The Tax Foundation notes that Utah’s state and local tax burdens are below the national average, and its business-tax climate index ranks 10th best among the states.
McBride said Tax Freedom Day does not include the cost of borrowing to cover federal deficit spending. If that were included, the national Tax Freedom Day would be May 9 — or three weeks later.
The latest Tax Freedom Day ever was May 1, 2000 — a year when Americans paid 33 percent of their total income in taxes. In comparison, a century earlier in 1900, Americans paid only 5.9 percent of their income in taxes and Tax Freedom day came on Jan. 22.
McBride said Americans on average work 32 days to pay federal personal income tax; eight days for state and local income taxes; 24 days for federal payroll tax; 15 days for sales and excise taxes; 12 days for property taxes; nine days for corporate income tax; and about seven days for other types of taxes.