Iowans will need to work four more days this year than they did in 2013 to collectively earn enough income to pay off their total federal, state, and local tax bill.
Iowa "Tax Freedom Day" falls on Sunday, April 13, according to the nonpartisan Tax Foundation, making it the 18th state to reach the annual milestone. National Tax Freedom Day falls on April 21, three days later than last year.
The national Tax Freedom Day is three days later than last year primarily due to the continuing economic recovery, which will increase federal tax revenue collected through the corporate, payroll, and individual income tax.
Tax Foundation Economist Kyle Pomerleau said Tax Freedom Day is a significant date for taxpayers because it represents how long Americans as a whole have to work in order to pay the nationís tax burden.
"Arguments can be made for why the collective tax bill is too high or too low, but in order to have an honest discussion, itís important to understand where we stand," Pomerleau said. "Tax Freedom Day gives us a vivid representation of how much we pay for the goods and services provided by governments at all levels."
Pomerleau said the total tax burden borne by residents of different states varies considerably due to differing state tax policies and the progressive federal tax system. States with a combination of higher income and higher taxes†mark Tax Freedom Day later.
The Tax Foundation calculated that Americans will spend more on taxes in 2014 than they will on food, clothing, and housing. To pay off their income taxes, Americans will work for 42 days and property taxes will require 11 days of work.
Americans will pay $3 trillion in federal taxes and $1.5 trillion in state and local taxes, for a total bill of more than $4.5 trillion, or 30.2 percent of the nationís income.
If you include annual federal borrowing, which represents future taxes owed, Tax Freedom Day would occur on May 6. The latest ever Tax Freedom Day that included the federal defici occurred during World War II on May 21, 1945.Since 2002, federal expenses have exceeded federal revenues, with the budget deficit exceeding $1 trillion annually from 2009 to 2012 and over $800 billion in 2013. In 2014, the deficit will continue to decline to $636 billion.