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Friday, May 6, 2011

Over 27% of Your Workday Goes Towards Taxes

Below is a very useful article and chart to put in perspective exactyly how much of your work day goes towards paying taxes.

From The Tax Foundation --
In 2011, Americans will devote 2 hours and 13 minutes of every eight-hour workday, or over a quarter of their working hours (27.7%), to paying taxes. In a nine-to-five workday, it takes until 11:13 a.m. to earn enough to pay that day's share of taxes at the federal, state and local level.

If we add the federal deficit to the picture—that is, if the federal government were planning to col­lect enough in taxes during 2011 to finance all of its spending—Americans would work until lunchtime, 12:07 p.m., for the government, before keeping any of their earnings for themselves.

The Tax Bite in the Eight-Hour Day, which measures the nation's tax burden in hours and minutes, is an offshoot of the Tax Foundation's annual Tax Freedom Day calculation, which measures the tax burden in months, weeks, and days. These calendar- and clock-based illustrations are a useful way to explain how much the nation as a whole spends on government. Both Tax Freedom Day and the Tax Bite in the Eight-Hour Day illustrate, in similar ways, what portion of their income Americans keep for themselves and what percentage they spend on government.

How Long Do Americans Work for Each Type of Tax?

Figure 1 shows how long the nation must work in the average workday to earn enough to pay each type of tax:
  • Individual income taxes require the most work. All but seven states, and some localities, levy an income tax. When these are added to the federal income tax burden, income taxes are projected to amount to an average of 46 minutes of work in an eight-hour workday.
  • Social insurance taxes (taxes dedicated to funding social insurance programs such as Social Security and Medicare) require 29 minutes of work.
  • Sales and excise taxes require 20 minutes of work.
  • Property taxes require 16 minutes of work.
  • Corporate income taxes require 16 minutes of work.
Figure 1: How Much of Each Eight-Hour Workday Goes to Paying the Nation's Tax Bills in 2011?

To read the whole article, please click here.

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