Tax Freedom Day Comes on April 19 in 2003, Earliest Since 1992;
Tax Cuts and Slow Income Growth Force Tax Burden Down



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Q & A about critiques of Tax Freedom Day


According to Tax Foundation calculations using the latest government data on income and taxes, Tax Freedom Day® in 2003 will be celebrated on April 19th. That is the same date that Tax Freedom Day fell on during 2002, but 8 days earlier than in 2001, and 11 days earlier than in 2000 (see Figure 1 and Table 1).


Figure 1: Tax Freedom, 1990 – 2003




"Two factors are combining to make the average American tax burden lighter in 2003," according to Tax Foundation Executive Director Scott Hodge, "federal tax reductions in 2001 and 2002 and a slower economy.

The report was presented in a 10 a.m. conference call on Wednesday, April 9. In the report, Tax Foundation Special Report No. 122, "America Celebrates Tax Freedom Day," Foundation economist Scott Moody traces the course of America’s tax burden since 1900, and he explains why the overall tax burden has dipped sharply in the last three years, pushing Tax Freedom Day back into mid-April, after a string of later Tax Freedom Days.

 

Table 1: Tax Freedom Day, 1990-2003
Year
All Governments
Federal Government
State/Local Governments
Tax Freedom Day
Days of Work to Pay Taxes
Total Effective Tax Rate
Days of Work to Pay Taxes
Effective Tax Rate
Days of Work to Pay Taxes
Effective Tax Rate
1990
April 20
110
30.2%
74
20.2%
36
9.9%
1991
April 19
109
30.1%
72
19.9%
37
10.2%
1992
April 19
109
29.9%
72
19.7%
37
10.2%
1993
April 20
110
30.2%
73
20.0%
37
10.3%
1994
April 21
111
30.7%
74
20.4%
37
10.2%
1995
April 23
113
31.0%
76
20.8%
37
10.2%
1996
April 24
114
31.4%
78
21.3%
36
10.1%
1997
April 26
116
31.8%
80
21.8%
36
10.0%
1998
April 27
117
32.3%
81
22.3%
36
10.0%
1999
April 28
118
32.5%
82
22.5%
36
10.0%
2000
April 30
120
33.0%
84
23.1%
36
9.9%
2001
April 27
117
32.2%
82
22.4%
35
9.8%
2002
April 19
109
30.0%
74
20.4%
35
9.6%
2003
April 19
109
30.0%
74
20.3%
35
9.7%

 

The Future Course of Tax Freedom Day

Tax legislation being debated right now will affect the course of future Tax Freedom Days. "If the President’s retroactive tax proposal is passed," commented Hodge, "Tax Freedom Day will end up being one day earlier in 2003." (See Figure 2.)



Figure 2: Tax Freedom Day Forecast, 2003 - 2013




Taxes and Other Expenses


The report also compares the number of days Americans works to pay taxes is also compared to the price of other important categories of consumer spending.
"Americans will work longer to pay for government in 2003 than they will for food, clothing, and shelter combined," said Hodge.
Only in the last decade have taxes exceeded spending on these basic necessities, and federal taxes alone cost Americans more (74 days) than any other major budget item (see Figure 3).


Figure 3: How Long America Works to Pay Taxes in Days Compared to Major Spending Categories, Calendar Year 2003

 




Tax Freedom Day by State


Tax burdens vary considerably from state to state, not only because of different state and local taxes, but because of divergent federal tax payments. Therefore, the report includes a separate calculation of Tax Freedom Day for each state (see Table 2). Connecticut has the heaviest total tax burden and so celebrates Tax Freedom Day the latest -- on May 14. Alaskans pay the least and are finished working to pay taxes on March 30.


Table 2: Tax Freedom Day by State and Rank,
Selected Calendar Years, 1990 – 2003
 
1990 Tax Freedom Day
1995 Tax Freedom Day
2000 Tax Freedom Day
2003 Tax Freedom Day
Rank in 2003
U.S
April 20
April 23
April 30
April 19

Alabama

April 11
April 13
April 16
April 06
48

Alaska

April 21
April 11
April 15
March 30
50

Arizona

April 22
April 25
April 28
April 17
16

Arkansas

April 12
April 16
April 21
April 09
40

California

April 18
April 22
May 08
April 29
4

Colorado

April 20
April 22
May 01
April 21
11

Connecticut

April 22
May 05
May 19
May 09
1

Delaware

April 13
April 17
April 21
April 09
39

Florida

April 16
April 23
April 29
April 15
22

Georgia

April 19
April 22
April 27
April 16
19

Hawaii

April 26
April 20
April 26
April 13
31

Idaho

April 16
April 19
April 25
April 14
25

Illinois

April 23
April 25
May 01

April 20

12

Indiana

April 17
April 19
April 22
April 14
28

Iowa

April 21
April 23
April 22
April 11
35

Kansas

April 20
April 22
April 25
April 13
29

Kentucky

April 15
April 19
April 20
April 09
38

Louisiana

April 13
April 11
April 19
April 07
44

Maine

April 18
April 25
Mayl 04
April 22
9

Maryland

April 19
April 22
April 30
April 17
17

Massachusetts

April 19
April 27
May 11
May 02
2

Michigan

April 21
April 21
April 27
April 17
18

Minnesota

April 24
May 01
May 03
April 23
7

Mississippi

April 11
April 16
April 17
April 07
43

Missouri

April 14
April 18
April 22
April 12
34

Montana

April 17
April 19
April 21
April 09
37

Nebraska

April 18
April 23
April 25
April 12
33

Nevada

April 25
April 30
May 03
April 20
13

New Hampshire

April 15
April 21
April 29
April 15
23

New Jersey

April 25
April 01
May 10
April 27
5

New Mexico

April 18
April 18
April 17
April 03
49

New York

April 30
April 03
May 09
April 29
3

North Carolina

April 15
April 17
April 22
April 13
32

North Dakota

April 15
April 22
April 20
April 11
36

Ohio

April 14
April 19
April 24
April 14
24

Oklahoma

April 13
April 13
April 17
April 06
46

Oregon

April 23
April 21
April 25
April 14
27

Pennsylvania

April 15
April 20
April 25
April 14
26

Rhode Island

April 19
April 23
May 04
April 23
8

South Carolina

April 15
April 17
April 20
April 08
41

South Dakota

April 13
April 19
April 20
April 08
42

Tennessee

April 12
April 13
April 15
April 06
47

Texas

April 20
April 20
April 24
April 13
30

Utah

April 19
April 24
April 26
April 16
20

Vermont

April 23
April 26
May 01
April 17
15

Virginia

April 17
April 19
April 28
April 15
21

Washington

April 30
May 02
May 09
April 27
6

West Virginia

April 14
April 13
April 18
April 06
45

Wisconsin

April 25
April 29
May 02
April 19
14

Wyoming

April 25
April 26
May 09
April 21
10
District of Columbia
May 03
May 02
May 19
May 07
-

Comparing State/Local Tax Burdens

To facilitate comparisons of state/local tax burdens, Moody also presented tables that showed each state’s tax burden with federal taxes excluded for the last decade. In 2003, the nation’s average state/local tax burden is 9.6 percent of residents’ income, with the highest being Maine’s 12.2 percent and the lowest being Alaska’s 6.3 percent.

The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.


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