According to the Tax Foundation, Tax Freedom Day this year is April 12, 2011. This is the day you stop working for the government and start working for yourself. This includes federal, state and local taxes. Unfortunately this is three days more than it was last year.
According to the Tax Foundation, "Americans will pay more in taxes in 2011 than they will spend on groceries, clothing and shelter." That's amazing.
Keep in mind that the calculation the Tax Foundation uses does not include the current deficit. If it did, Tax Freedom Day would be pushed back to May 23, 2011. This would add another 41 days of working to pay your taxes.
The breakdown as to the type of taxes is as follows:
* Individual Income taxes 36 days
* Payroll Taxes 22 days
* Sales, Excise, State & Local 15 days
* Corporate income taxes 12 days
* Property taxes 12 days
* Miscellaneous 4 days
In Connecticut, where I live, we don't get to celebrate Tax Freedom Day until May 1, 2011. We are the LAST state to celebrate this day which means we have the highest combined taxes in the country. Mississippi was the first to celebrate Tax Freedom day on March 26, they have the lowest combined taxes in the country. In Mississippi they have to only work 85 days to pay all of their taxes. In Connecticut we have to work 122 to pay our taxes.
It doesn't appear to be getting any better in Connecticut. Due to significant projected deficits, Governor Malloy has proposed tax increases. Time will tell what happens with these proposals.
ACTION ITEM: Enjoy Tax Freedom Day. More importantly figure out how you can reduce your tax obligations so as you can keep more of what is yours.
Thomas F. Scanlon, CPA, CFP®
Tom Scanlon has over thirty years experience in public accounting with an extensive background in the areas of financial, tax, and estate planning. He prides himself on providing in-depth and customized solutions to privately held businesses and their owners. He is a Certified Public Accountant and Certified Financial Planner®. Tom is a frequent speaker for area organizations and has recently been quoted on CNBC, Fox 61 News and AARP's blog. Tom also has been a guest columnist for numerous publications including The Wall Street Journal, Barron's, Money Magazine, The Hartford Courant, The Hartford Business Journal, and The New Haven Register. He is a member of the American Institute of Certified Public Accountants, the Connecticut Society of Certified Public Accountants, and the Financial Planning Association. Active in the community, Tom supports a variety of not-for-profit organizations.
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