In 1900, Americans paid 5.9% of their income in taxes.
Now, in 2017, 31% of the national income is paid in taxes. This includes federal, state, and local taxes. That adds up to about $5.1 trillion.
Additionally, Americans are expected to pay more in taxes than they will spend on food, housing, and clothing combined.
These are just a few of the details in this year’s Tax Freedom Day report, which was published in April by the Washington, D.C.-based Tax Foundation.
Tax Freedom Day is the day Americans, on average, have earned enough money to pay the total tax burden.
This year’s national Tax Freedom Day fell on April 23rd. This means the average American needed to work for 113 days in order to earn enough to pay their tax bill.
While Utah generally has lower taxes than the national average (see: How Utah Compares), our Tax Freedom Day lands only two days earlier, on April 21st.
When compared to our neighboring states, Utah is about the middle of the pack. Of our neighboring states, New Mexico’s Tax Freedom Day falls 12 days earlier than Utah’s, while Wyoming and Nevada tie, falling on April 23rd.
Take a look at the map to the right to see how other states places in Tax Freedom Day.
But it’s not just direct cost that make up our tax burden. The indirect cost of complying with federal, state, and local taxes is significant.
The National Taxpayers Union Foundation finds that based on current estimates, taxpayers will spend 6.89 billion hours complying with the current tax code. The cost adds up to nearly $263 billion, based on private sector worker average salary and the cost of tax preparation.
For comparison, this cost surpasses the GDP of 154 countries, including Chile, Finland, and Portugal.
But it gets worse, the Office of Management and Budget estimates that it takes the Internal Revenue Service over 8 billion hours to process the paperwork.
Federally, the tax code as currently written is nearly 11,000 pages, and is 4 million words long. Since 2000, there have been revisions to 6,896 sections of the Internal Revenue Code – an average of 406 each year, more than one per day.
While the current 1040 tax form, which account for 69% of 1040 returns, hasn’t changed from 2 pages since 1945, the instruction booklet has grown 237 since that time.