Americans will spend more this year on taxes than food, clothing and housing combined
It's Tax Freedom Day in Michigan.
That's the day people have to work to in the year to cover tax bills for the state and federal government. Americans will spend $4.5 trillion on federal, state and local taxes, which is 30 percent of total income. The figures are in a yearly study done by the Tax Foundation.
"Tax Freedom Day, which comes on April 21st nationally and April 17th for Michigan, is the day when America (or Michigan) as a whole has earned enough to pay its total tax bill for the year," said Lyman Stone, an economist who co-wrote the study. "That bill includes all federal, state, and local taxes."
Total tax burden differs by state due to policies. Michigan is about in the middle of the pack for overall taxation.
"States land where they do in the Tax Freedom Day lineup for essentially two reasons: state tax policies (lower taxes meaning earlier tax freedom days) and state income," Stone said. "States with high incomes pay significantly more federal taxes, so lower-income states tend to have earlier tax freedom days. As Michigan is a roughly middle-income state with about average state taxes, the result is a tax freedom day close to the national average. With Gov. Snyder's reforms in the last few years, the state tax component may gradually fall, although one would hope that incomes (and thus federal tax liability) would rise."
According to government figures cited in the report, Americans will spend more money this year on taxes than they will on food, clothing, and housing combined.
The study tracks overall taxation back to 1900 and notes in that year, "Americans paid only 5.9 percent of their income in taxes, meaning Tax Freedom Day came on January 22."
The latest day was in the year 2000 when it fell on May 1 as Americans paid 33 percent of their total income in taxes. Including federal borrowing would move the event back 15 days.
The states with the latest Tax Freedom Day are Connecticut, New Jersey and New York. The states with the earliest day are Louisiana, Mississippi and South Dakota.