Happy Tax Freedom Day for Pennsylvania

Today is Tax Freedom Day for Pennsylvania. This day, calculated annually by the Tax Foundation, puts into easily understandable terms how much residents pay in taxes.

Federal, state, and local taxes consume about 28% of the income earned by Pennsylvania residents, in the aggregate. This represents 103 days – meaning Pennsylvanians worked from January 1 until today, April 13, to earn enough money to pay their tax bill. Pennsylvania has the 11th latest Tax Freedom Day in the country.

Tax Freedom Day actually falls about two weeks earlier this year than compared to 2007 (though adding the federal deficit – which is really deferred taxes – would add 38 days to Tax Freedom Day), as the Tax Foundation explains:

The shift toward a lower tax burden since 2007 has been driven by three factors: (1) The recession has reduced tax collections even faster than it has reduced income; (2) President Obama and the Congress have enacted large but temporary income tax cuts for 2009 and 2010, just as President Bush did in 2008; and (3) Two significant taxes were repealed for 2010 as part of previous legislation, the estate tax and the so-called PEP and Pease provisions of the income tax.

Despite all these tax reductions, Americans will pay more taxes in 2010 than they will spend on food, clothing and shelter combined.

Of course, this doesn’t bode well for the future – the temporary tax rebates in the 2008 and 2009 stimulus will disappear. The tax cuts passed in 2001 and 2003 will expire and the end of this year, which means higher federal marginal tax rates, higher capital gains taxes, and then reintroduction of the estate tax. The numerous taxes in the health care bill will begin to go into effect over the next few years as well.

Furthermore, Gov. Rendell has a slew of new tax proposals at the state level, taxing natural gas, cigars, extracting more for businesses, growing the sales tax by $1 billion.

Of course the real question is, “are taxes too high?”

A recent Rasmussen poll finds that 66% of voters think Americans are overtaxed. Likewise, a 2009 NFIB-commissioned poll indicates 62% of Pennsylvanians think taxes are too high (only 1% say too low), and 60% say state spending is too high (compared to 5% who think it is too low).

The latest Franklin & Marshall College Poll also indicates opposition to all of Rendell’s tax proposals:


Tax Proposal Support Oppose Don’t Know
Natural Gas Tax 35% 49% 16%
I-80 Tolling 49% 44% 7%
Cigar/Tobacco Tax 64% 33% 3%
Sales Tax Expansion 33% 54% 13%
Progressive Income Tax 44% 49% 7%

This dissatisfaction with high taxes is certainly linked to how government spends our money. Just looking at some of the recent handouts from the state, and it is pretty clear why elected officials will have a tough time justify another tax increase. And with numerous ways to reduce spending, there is ample opportunity to reduce the tax burden.

EDITOR’S NOTE: Scott Hodge of the Tax Foundation will be speaking at a Commonwealth Foundation luncheon in Harrisburg on April 20, discussing Tax Freedom Day and Gov. Rendell’s tax proposals.  Click here for details.

Click here for More Research on Taxes from the Commonwealth Foundation, and check out our campaign, Please, No More Taxes!