Citizens for Limited Taxation & Government
18 Tremont Street #608 * Boston, MA 02108
Phone: (617) 248-0022 * E-Mail: cltg@cltg.org
Visit our web-page at: http://cltg.org
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*** CLT*G Update ***
Thursday, May 9, 1997

Happy Tax Freedom Day, folks!

Starting today you can start keeping the money you earn! As of today, you’ve paid off your taxes with every cent you’ve earned since New Years Day . . . lucky you!

(Actually, "Tax Freedom Day" in Massachusetts this year was yesterday, one day earlier than the national average, thanks to the increased personal exemption due to the overflow in the state’s "rainy day" stabilization fund—which the state Legislature just increased, insuring *that* tax break will never happen again!)

Chip Ford
Co-director


TAX FREEDOM DAY COMES LATER
Since 1992, the tax burden borne by the average American has risen rapidly, according to the Tax Foundation. This year, for the average American, "tax freedom" arrives after a record 128 days—on the 129th day of the year, May 9. It has taken that long to pay off his or her share of the total tax bill. This is a full week longer than it took to pay the average total tax bill in 1993.

Tax Foundation economists estimate the nation’s effective tax rate is 35.2 percent this year, not including the cost of complying with the tax system. If compliance costs were added, the projected 1997 Tax Freedom Day would have been 13 days later.

Broken down by type of tax:

· In 1997 the average taxpayer will have to work roughly 44 days to pay personal income taxes, 36 days of which will go to federal income taxes.

· Another 38 days will be worked to pay payroll taxes— mainly Social Security and Medicare.

· In addition to these more visible levies, Americans are working 18 days to pay sales and excise taxes—primarily state and local levies—and 12 days to pay property taxes.

· They will work an additional 13 days to pay corporate income taxes—which are initially paid by businesses, but must ultimately be borne by consumers, employees and shareholders.

· Finally, another three days will be spent working to pay miscellaneous taxes.

The tax burden borne by residents of different states varies considerably.

· New Yorkers will bear the nation’s heaviest tax burden in 1997, waiting 142 days (until May 23) for tax freedom.

· At the other end of the tax burden spectrum, the residents of Louisiana bear the lowest average tax burden in 1997 -- needing only 115 days of the year (until April 26) to pay their total tax bill.

Economist Patrick Fleenor attributes the steady rise in Tax Freedom Day to the 1993 tax increases, continued economic expansion and the progressive nature of the current tax system -- which, as national income rises, causes the tax burden to rise more than proportionally.

Source: Patrick Fleenor, "Tax Freedom Day 1997 is May 9! Economic Growth, Progressive Tax System Combine to Add a Day," Special Report No. 69, April 1997, Tax Foundation, 1250 H Street, NW, Suite 750, Washington, DC 20005,(202) 783-2760.