Sunday, Fun-day, Tax Freedom Day

I may be in the minority here, but taxes are not bad (or good) but merely necessary. Granted owing is bad and getting a refund is good, but overall the tax system is simply essential to the American way. Our tax dollars are used to finance things like defense, Social Security, Medicare and Medicaid, benefits to veterans, education, protecting the environment, and basic infrastructure. Whether you agree with the spending or not, many people use and rely on those services. For fiscal year 2015, of the $3.7 trillion the federal government spent on those items - $3.2 trillion came from federal revenues. And I know I'm in the minority when I admit that I find things like Tax Freedom Day® interesting.

Sunday, April 24, 2016 is Tax Freedom Day or the day when we have earned enough money to pay the 31% of national income that funds all those things I mentioned above. That's another reason to celebrate Sunday Fun-day this weekend. During my thirty plus years in the tax industry, other than May 3, 2000, which may have been caused by all the "partying like it was 1999" - it was after all, Tax Freedom Day has typically occurred between tax day and the end of April. The latest ever Tax Freedom Day taking into account the deficit occurred during World War II on May 25, 1945. Thus far, 1950 marked the last time Tax Freedom Day came in March.

Tax Freedom Day was created and copyrighted by Dallas Hostetler, a Florida businessman, in 1948. He did the calculations himself until he retired in 1971. Hostetler then deeded the intellectual property to The Tax Foundation, which has continued his work. Using historical data, The Tax Foundation even went back and calculated when Tax Freedom Day might have occurred for every year beginning in 1900.

It is estimated that Americans will collectively spend more on taxes in 2016 than they will on food, clothing, and housing combined. Regardless of who wins the Presidential election, and what tax plan we adopt, if history is any indication, there won't be a huge change to our taxes or when we get to "celebrate" Tax Freedom Day next year.

For now, if you recently filed your taxes, watch for that tax refund (if you are getting one), after that, get a jump-start with planning for next year. Grab a calendar and make notes of what has already happened this year that may change your tax situation come next April.