Tax Freedom Day is the first day of the year in which a nation as a whole has theoretically earned enough income to pay its taxes. Every dollar that is officially considered income by the government is counted, and every payment to the government that is officially considered a tax is counted. Taxes at all levels of government – local, state and federal – are included.

Purpose[edit]

According to Neil Veldhuis, Director of Fiscal Studies, Fraser Institute, the purpose of Tax Freedom Day is to provide citizens of tax-paying countries with a metric with which to estimate their “total tax bill”. The premise is that by comparing the benefits received by citizens to the amount they pay in taxes, the value of paying taxes can be assessed.

History and methodology[edit]

The concept of Tax Freedom Day was developed in 1948 by Florida businessman Dallas Hostetler, who trademarked the phrase “Tax Freedom Day” and calculated it each year for the next two decades.^[1] In 1971, Hostetler retired and transferred the trademark to the Tax Foundation.^[2] The Tax Foundation has calculated Tax Freedom Day for the United States ever since, using it as a tool for illustrating the proportion of national income diverted to fund the annual cost of government programs. In 1990, the Tax Foundation began calculating the specific Tax Freedom Day for each individual state.
Tax Freedom Day only examines taxation, and does not account for debt and inflation as means for funding government.

1. Debt comes with a guarantee of future repayment. Governments run at a deficit by promising creditors to service and repay debts by taxing future labor or generating revenue through other means such as sale or exploitation of state owned assets.
2. Inflation or currency debasement increases the supply of currency. This new currency could be used to pay for government, but the increased supply results in a decrease in value of each unit of currency. As the value of currency decreases, commodity prices increase as a result.

Leap years have one day more, 29 February. This creates some bias in Tax Freedom Day charts. However, this bias is equal to roughly 1/366, which is about 0.27%.

United States[edit]

In the United States, it is annually calculated by the Tax Foundation, a Washington, D.C.-based tax research organization. In the U.S., Tax Freedom Day for 2015 is April 24, for a total average effective tax rate of 31 percent of the nation’s income. The latest that Tax Freedom Day has occurred was May 1 in 2000. In 1900, Tax Freedom Day arrived January 22, for an effective average total tax rate of 5.9 percent of the nation’s income. According to the Tax Foundation, the most important factor driving changes in Tax Freedom Day from year to year is growth in incomes, as the progressive structure of the U.S. federal tax system causes taxes as a percentage of income to rise along with inflation.
Tax Freedom Day varies among the 50 U.S. states, as incomes and state and local taxes differ from state to state. In 2015, Louisiana had the lowest total tax burden, earning enough to pay all their tax obligations by April 2. Connecticut had the heaviest tax burden – Tax Freedom Day there arrived May 13.
According to the Tax Foundation, the following is a list of Tax Freedom Days in the U.S. since 1900:^[3]

Year	TFD	Percentage tax burden
1900	January 22	5.9%
1910	January 19	5.0%
1920	February 13	12.0%
1930	February 12	11.7%
1940	March 7	17.9%
1950	March 31	24.6%
1960	April 11	27.7%
1970	April 19	29.6%
1980	April 21	30.4%
1990	April 21	30.4%
2000	May 1	33.0%
2001	April 27	31.8%
2002	April 17	29.2%
2003	April 14	28.4%
2004	April 15	28.5%
2005	April 21	30.2%
2006	April 26	31.2%
2007	April 24	31.1%
2008	April 16	29.0%
2009	April 8	26.6%
2010	April 9	26.9%
2011	April 12	27.7%
2012	April 13	29.2%
2013	April 18	29.4%[4]
2014	April 21	30.2%[5]
2015	April 24	31%[6]