CA “Tax Freedom Day” Later Than Most States, But Hope on the Horizon

taxesAccording to the newly released report from the Tax Foundation, California’s Tax Freedom Day is April 28—the day taxpayers of the state have collectively earned enough money to pay their federal, state and local taxes for the year. While that date places the Golden State 46th on the list of state taxpayers claiming tax freedom, there is a chance that California could move up dramatically. It all depends on November’s election.

California is grouped in the back of the pack with other high tax-high income states. Only Massachusetts, New York, New Jersey and Connecticut residents pay off all their taxes after California. The national average of all states is April 24.

The good news for the Golden State is that Tax Freedom Day occurs three days earlier than last year.

Tax Freedom Day is calculated by dividing income into taxes paid in each state. Because California has seen stronger economic growth than the nation as a whole, taxes are paid off more quickly.

Taxes still take a large chunk of people’s income. The Tax Foundation report noted that Americans would spend more on taxes in 2016 than on food, clothing and housing combined.

Tax Freedom Day is always in flux depending on actions in a state. 2016 being an election year with potential state and local taxes facing voters, California taxpayers could see their taxpaying obligation rise or fall depending on election results.

One of the big items, of course, is the effort to extend Proposition 30’s income taxes. California has the top U.S. marginal income tax rate in the country. If voters reject the Prop. 30 tax extension what would that do to California’s Tax Freedom Day standing?

Joseph Henchman, Vice President of Legal & State Projects for the Tax Foundation gave me what he called a “back of the envelope” projection of Tax Freedom Day arriving “about a week” earlier if the Prop. 30 taxes expire on schedule.

If all else remains the same that means California taxpayers would jump from nearly last at 46th place in paying off taxes up to around 37th position among all the states.

This article was originally published by Fox and Hounds Daily