Tax Freedom Day® will arrive on April 12 this year, the 102nd day of 2011. That means Americans will work well over three months of the year, from January 1 to April 12, before they have earned enough money to pay this year's tax obligations at the federal, state and local levels.
Tax Freedom Day arrives three day later in 2011 than it did in 2010, but nearly two weeks earlier than in 2007. This shift toward a lower tax burden since 2007 has been driven by three factors:
- The Great Recession has reduced tax collections even faster than it has reduced income.
- President Obama and the Congress, after a long debate, extended the Bush-era tax cuts for two additional years.
- As part of the extension agreement, the Making Work Pay tax credit was replaced with the 2% reduction in the payroll tax.
Despite these tax reductions, Americans will pay more in taxes in 2011 than they will spend on groceries, clothing and shelter combined.
The total tax burdens borne by residents of different states vary considerably. ...This occurs not only because residents of different states pay different amounts of state and local taxes, but also because their federal tax payments can vary dramatically. Higher-income states like Connecticut face a significantly higher total federal tax rate than lower-income states, even before accounting for the fact that many high-income states also have high state and local tax burdens.
Residents of Mississippi will bear the lowest average tax burden in 2011. Because of their modest incomes and extremely low state and local tax burden, we estimate Mississippi’s Tax Freedom Day for 2011 to be March 26. After Mississippi, the four states where Tax Freedom Day will arrive the earliest in 2011 are Tennessee (March 27), South Carolina (March 29), Louisiana (March 30), and South Dakota (March 30).
At the other end of the tax burden spectrum are states with comparatively late Tax Freedom Days. The residents of Connecticut will celebrate last, as usual, working until the 122nd day of the year, from January 1 to May 2, before earning enough to pay all their taxes. Because Connecticut’s income per capita is higher than in any other state, its residents pay extraordinarily high federal income taxes. Nearby states New Jersey (April 29) and New York (April 24) are second and third, respectively. Maryland (April 17) and Washington (April 16) round out the top five.