Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Tax Freedom Day

What it is:

Tax Freedom Day is the day of the year by which the average American has earned enough money to pay his or her tax bill for the year.

How it works (Example):

The average American spends about one-third of his or her income on federal, state, and local taxes. Accordingly, one can calculate the number of workdays required to pay this obligation.

For example, according to the Tax Foundation, the average American had to work from January 1 to April 12 -- over 100 days -- in order to pay his or her 2011 tax bill.

Why it Matters:

When tax obligations on the average American rise, Tax Freedom Day gets later in the year. According to the Tax Foundation, the latest-ever Tax Freedom Day was May 1, 2000.

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