As a result, there is less capital available to invest in the private sector, which is the engine of our economy. What does the data suggest? Perhaps the most obvious point is that taxes are consuming a larger portion of our nation’s income than in the past thereby causing a drag on the economy. In 2015, it took 114.6 days (April 24) to pay the taxes due, nearly three times the number of days it took in 1918, the final year of World War I. With some ebbs and flows, TFD trended higher until it reached its all-time high of 120.4 in 2000. America’s involvement in World War II triggered another TFD increase. Tax Freedom Day jumped again in 1932-33 as the top marginal income tax rate rose from 25% to 63%. This reduction was a key reason for the economic boom, a.k.a., the Roaring Twenties. From 1921 to 1925, the top tax rate was reduced each year until it reached 25%. In 1922, it took 53 days to pay the tax bill. entered a depression, which lasted from January 1920 to July 1921. After WWI, while stuck in a high-tax environment (the top rate was 73%), the U.S. Tax Freedom Day jumped to 38.5 days in 1918, the longest up to that point. In 1918, the top rate hit 77%, which was the final year of the war. In 1917, to help pay for the war, the top income tax rate was raised from 15% to 67%. Tax Freedom Day remained relatively stable until the U.S. As you can see, prior to the enactment of the 16th Amendment to the Constitution in 1913, which created the modern income tax, it took approximately 20 days each year to pay the tax bill. I have added labels to indicate the number of days it took to reach Tax Freedom Day at 10-year intervals beginning in 1910 (ex: 1910 was 18.3 days). To gain a perspective on how America’s Tax Freedom Day has risen during the past 115 years, let’s refer to the following chart. This is because high taxes are a drag on the economy. Therefore, if TFD occurs too late in the year, it would result in slower economic growth. To put it another way, TFD is the number of days of wages consumed each year by the government. Tax Freedom Day takes all federal, state, and local taxes and divides them by the nation’s income. The definition of Tax Freedom Day is the day when the nation as a whole has earned enough money to pay its total tax bill for the year. How do you measure this tax burden? We use the Tax Freedom Day. Support for this ever-growing financial burden rests squarely on the shoulders of all who are required to pay taxes. Regardless of your ideology, it is true that, as the size and scope of government increases, its need for revenue increases. ![]() In this particular discussion, we find ourselves at the intersection of Socialism Street and Capitalism Avenue. Thus, the crux of the debate is over the degree of taxation, an issue that is inextricably linked to the size and the role of government. Because government needs revenue to protect its citizens and provide essential services, there is common ground for the belief that taxes are a necessary aspect of a civilized society. ![]() Individuals have debated the subject of taxes for centuries.
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