Happy Tax Freedom Day, Pennsylvania! If you are looking for a reason to celebrate, you need look no further than Tax Freedom Day.
What is Tax Freedom Day? Imagine that instead of having your taxes deducted from your paycheck every week, you must pay all of your taxes at once. Now, imagine that before spending any of your income on housing, food, clothes, or paying bills, you must first save enough to pay all of your taxes for the year. If you had begun saving on January 1st, placing every penny you earned into a savings account from which to pay your taxes, then Tax Freedom Day would be the first day you had saved enough to pay them and could begin spending on you and your family again.
And, guess what – that day is today! According to the Tax Foundation, Pennsylvania’s Tax Freedom Day 2006 is April 24. This year, it took 114 days for Pennsylvania taxpayers to earn enough income to pay all the federal, state, and local taxes collected by government. Nearly one-third of the year has passed, and we have just reached the point where taxpayers have started earning money for themselves.
The national Tax Freedom Day is April 26 – and state celebrations run from April 11 (Alabama) to May 12 (Connecticut). Pennsylvania shares its Tax Freedom Day with Michigan, Florida, Hawaii, and Virginia – 29 states have already celebrated their tax freedom.
Naturally, it doesn’t seem nearly as painful to have a percentage of your paycheck taken out for income, Social Security, and Medicare taxes. Nor do we feel overly inconvenienced when paying a small tax on purchases, or a property tax through a mortgage payment, or higher prices on goods and services to pay for business taxes, or a host of other small taxes throughout the year. That is why the concept of Tax Freedom Day is so important – to remind us how much we really pay for big government.
Would you be willing to work sixteen weeks without pay? Very few people would. Nonetheless, this is exactly what Tax Freedom Day represents. Put another way, out of every eight hour workday, three hours go towards paying your taxes.
Now, it isn’t true that we’ve received absolutely nothing from our tax dollars. Government certainly provides a number of core services and public goods (national defense, public education, and a few trillion dollars here and there). But the question remains, are we satisfied with what we are getting for our taxes? Every year, the income of every Pennsylvanian over a three-and-a-half month period is consumed by all levels of government, and what do we have to show for it?
We spend more money in federal, state, and local taxes than on housing and health care expenditures combined. The Department of Housing and Urban Development defines housing to be “affordable” when it takes less than 30% of household income. Yet taxes will consume over 31% of our personal income this year, and government isn’t rushing in to declare a standard for “affordable government.”
Every time Governor Rendell hands an oversized multi-million dollar check to a big corporation, that represents a little more time Pennsylvanians have to work to pay for it. Every time Congress passes a bill funding a “bridge to nowhere” in Alaska, that takes away from the time you spend paying for healthcare or education.
Nonetheless, lawmakers in Washington and Harrisburg don’t feel this is enough, so they continue to borrow money, hoping that you (or you children) will start earning enough income to pay those debts off. Thus, Tax Freedom Day continues to occur later and later in the year for Americans. As of 1900, it was a January “holiday.” By 1920, it had been pushed back into February. In 1950, it took place in March. In fact, Tax Freedom Day occurs 10 days later than it did only two years ago.
We cannot continue to expect hard working Pennsylvanians to labor for over three months to pay for bloated federal, state, and local government operations. Pennsylvania’s workers, not politicians in Harrisburg and Washington, have a better sense of how to spend their well-earned money. It is well past time we made Tax Freedom Day a March “holiday” once again.
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Nathan A. Benefield is a policy analyst with the Commonwealth Foundation (www.CommonwealthFoundation.org), an independent, nonprofit public policy research and educational institute based in Harrisburg.