Each year the Tax Foundation reviews the state and federal taxes paid by Americans. Based on the total taxes, it determines a "Tax Freedom day." For the year 2011, the Tax Foundation calculates the Tax Freedom day to be April 12.
This Tax Freedom day is three days later than 2010, but it is nearly two weeks earlier than Tax Freedom day in 2007. According to the Tax Foundation, there are four factors that affect the 2011 date for Tax Freedom day.
1. The Great Recession – As America starts to recover from the recession, taxes paid are increasing more than incomes.
2. Tax Cuts Extended – In a compromise between President Obama and House and Senate leaders, the tax cuts enacted in 2001 and 2003 were extended.
3. Payroll Taxes – The "Make Work Pay" reduction was replaced with a 2% payroll tax cut for 2011.
4. Estate Tax – The estate tax was repealed in 2010, but it is reinstated in 2011 with a $5 million applicable exclusion amount and a tax rate of 35%.
The Tax Foundation also publishes a federal budget Tax Freedom day. If the total federal expenditures as reflected by both taxes and the deficits are considered, then Tax Freedom day is May 23. This is the latest Freedom day in the past six decades and reflects the total cost of government.
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