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  • How much do you really know about taxes?

    Liann Walborsky

    Do you know what Tax Freedom Day is? For the uninformed (myself included), it’s the date when the entire country has made enough money to pay its taxes for the year. This year is somewhat unique in that Tax Freedom Day is five whole days later than it was in 2012. In other words, it’s taking five more days than last year to pay off the bill to Uncle Sam. Why the extra days? It’s mainly because of the whole “fiscal cliff” deal which raised taxes on individuals and payrolls. For example, the tax bracket was raised to 39.6% for individuals earning over $400k. It can also be attributed to a stronger job market — the more people make, the more taxes they need to pay.

    Couple of things you may not know about your taxes:

    • In 2013 alone, Americans will pay $2.76 trillion in federal taxes and $1.45 trillion in state taxes, for a total tax bill of $4.22 trillion, or 29.4 percent of income.
    • This number is more than what we spend on food, clothing and housing combined during the year.
    • We work 40 days to pay down federal, state and local income taxes.
    • It takes 25 work days to pay down payroll or social insurance taxes (funding for social security and medicare).
    • Tax due dates vary by state. Higher income states celebrate Tax Freedom Day slightly later. These include: Connecticut (May 13), New York (May 6), and New Jersey (May 4). Residents of Mississippi boasted the lowest average tax burden in 2013, with Tax Freedom Day having already taken place on March 29. Louisiana (March 29) and Tennessee (April 2) are also early.

    Although April 18 is five days later than last year, the latest date ever instituted was May 1, 2000. What does this mean? Tax rates were higher at this time, with Americans paying approximately 33.0 percent of their total income in taxes. By the way, in 1900, Americans paid only 5.9 percent of their income in taxes.

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