April 23rd, 2017 is Tax Freedom Day, the day when Americans, on the whole, have earned enough to pay for the nation’s tax burden. This year Tax Freedom Day fell on the 113th day of the year, meaning that it has taken almost a third of the year to pay the total tax burden once Federal, State, Local, Corporate, Property and Estate Taxes are taken into account. To put the total tax burden into perspective, Americans will pay more in taxes than we will pay for food, housing, and clothing combined.
In 1900, the total tax burden was 5.9% of income and therefore Tax Freedom Day was January 22nd. Over the course of the last century, the overall tax burden has generally risen, though not in a straight line, to the level we have today. In fact, 2017 is still better than the year 2000, which still holds the record for the latest Tax Freedom Day, May 1st.
Tax Freedom Day is a symbolic milestone as Congress begins considering tax reform. The market has been buoyed over the last few days by increased optimism that tax reform is the works. A failure on the part of Republicans to enact tax reform this year could result in a market pullback as market participants anticipate, and have already included the expected benefit of tax reform into earnings estimates, and stock prices in the market. We will be watching the progress of tax law changes closely and will keep you informed of how these changes may impact your portfolio.
Greenburg, Scott. “Tax Freedom Day 2017 is April 23rd” Tax Foundation. 4/18/2017 https://taxfoundation.org/tax-freedom-day-2017/