Effective national tax rate is 29% this year
By Eric Boehm | PA Independent
HARRISBURG — Federal, state and local income taxes are due Tuesday, but Pennsylvanians will have to wait until Wednesday this year to be free of the tax man, according to a national nonprofit tax research center.
In other words, the average worker spends more than a quarter of the year simply earning money for various levels of government.
“This year, Americans will pay $2.62 trillion in federal taxes and $1.42 trillion in state (and) local taxes out of $13.86 trillion in income, for a 29.2 percent tax bill,” said Will McBride, an economist with the Tax Foundation. “That means taxpayers will pay more in taxes in 2012 than they will spend on food, clothing and housing combined.”
According to the report, Tennessee residents pay off their taxes the fastest, with an estimated “freedom day” of March 31 this year.
On the other end of the spectrum, New York, New Jersey and Connecticut residents have to work into May before their obligations to the tax man are resolved.
Because the federal tax code is progressive — meaning the upper 20 percent of earners pay more in taxes than the lower 80 percent — the average calculated for the purposes of a “tax freedom day” is skewed by the higher earners, wrote Chuck Marr, director of federal tax policy for the center.
The Tax Foundation also acknowledges that the total tax burden of residents in different states varies considerably, due to different state tax policies and the complicated, progressive nature of the federal tax system.
“We don’t pretend that this represents any one individual or any collection of individuals. It is a summation of what all Americans pay divided by total national income to produce an effective national tax rate,” said McBride.
Tax Freedom Day in the 50 States
Source: The Tax Foundation