BERLIN – Tax Freedom Day, the point in the year when typical Americans stop working for Uncle Sam and start working for themselves, arrives nationwide today, four days earlier than it did last year, but most Marylanders and Worcester County residents will have to wait until April 19 to hit the milestone.
Researched and announced each year by the Tax Foundation, Tax Freedom Day represents the point on the calendar when workers across the country have earned enough to meet their federal, state, and local tax burden for the coming year.
In Maryland, known for its onerous tax burden, Tax Freedom Day will not arrive until April 19, which is exactly the same day it arrived last year. Maryland will be the 45th state in the country to reach the milestone this year. Residents in Alaska hit their Tax Freedom Day back on March 26, the first to the milestone. Connecticut residents will be the last in the country to hit Tax Freedom Day this year on April 27.
The Tax Foundation formula divides the per capita tax burden, which is the combination of federal, state, and local taxes, by the per capita income to arrive at the date workers across the country have earned enough to meet their respective tax burdens and can start earning money for themselves. For example, Americans in general will have worked the first 99 days of 2010 to meet their combined tax burden, while it will take Marylanders 109 days.
Perhaps the most alarming statistic to come out of the annual report is that most Americans will pay more in taxes than they will spend on food, clothing and shelter combined. In Maryland, the per capita income projected for 2010 comes in at just under $50,000, with residents paying around $16,000 in federal and state income taxes, meaning the typical worker in the state spends about 33 percent of what he or she makes paying taxes. The statistics further illustrate the sheer magnitude of the tax burden for most Americans and Marylanders.
For example, the typical American worker will spend 99 days at work this year just to meet his or her tax burden, but it will take just 62 days to earn enough to pay for housing, 52 days for medical care, 30 days for food and 30 days for transportation. Sadly for most wage earners, just 20 days are spent working each year to pay for recreation and only two days of work are dedicated to savings.
When Tax Freedom Day was first calculated at the turn of the 20th century, the typical American worker met his or her tax burden for the entire year in the first month of the year. The earliest Tax Freedom Day was recorded in 1912 when American workers reached the break-even point on Jan. 22. The latest was 2000 when Tax Freedom Day did not arrive nationally until May 3.