Tax freedom day comes later
Americans will work three days longer than last year to pay off their federal, state and local taxes. Residents of the Northeast will take longer than most.
By Jeanne Sahadi, senior writer

NEW YORK ( - When you file your tax returns, you can total the sum of what you've paid in federal, state and local income taxes combined. But you probably don't calculate how many days you worked just to make enough to pay those income taxes plus all the other taxes you pay during the year.

Well, the Tax Foundation, a nonprofit fiscal policy research group, annually calculates what it calls "Tax Freedom Day" for the country as a whole and for residents of each state. That's the day when you've earned enough to pay your federal, state and local taxes for the year and can start to pocket the rest of your pay to, say, support yourself.

Tax Foundation researchers calculate that Tax Freedom Day for American workers as a group will be April 26, three days later than last year and 10 days later than in 2003 and 2004.

That's not because tax rates have gone up, but rather it's in part because more taxable income has been generated as a result of economic growth since 2003. "Those growing incomes are pushing people into higher tax brackets. When that happens, tax collections grow faster than incomes," said Tax Foundation president Scott Hodge in a statement.

Among the 10 states with the latest tax freedom days, six are in the Northeast: Connecticut (May 12), New York (May 9), New Jersey (May 6), Massachusetts (May 2), Maine (May 1) and Rhode Island (May 1).

The other four states are: Washington (May 4), Minnesota (May 3), California (April 30) and Illinois (April 30).

Many of the states with late tax freedom days relative to the rest of the country tend to have areas with a high cost of living. Consequently, salaries tend to be higher, putting residents living a middle-class lifestyle in higher federal tax brackets than they would be if they held similar jobs in a lower cost-of-living area. (See why this makes them more susceptible to the alternative minimum tax.) Plus, the amount of sales tax and property tax collected can be higher because prices are higher on goods, services and real estate.

The states with the lightest combined federal, state and local tax burdens are: Alabama (April 11), Alaska (April 12), Mississippi (April 13), Oklahoma (April 14), Tennessee (April 14), New Mexico (April 15), South Dakota (April 16), Montana (April 16), Idaho (April 16) and West Virginia (April 17).

The Tax Foundation also compares the number of days Americans work to pay off all their taxes (116 days in 2006) with the number of days they work to afford food, clothing and housing (106 days combined), medical care (52 days), transportation (30 days), recreation (22 days) and other typical consumer expenditures (39 days). Top of page

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