According to The Tax Foundation, a Washington, D.C. based non-partisan research group, it takes the average Delawarean one hundred and seven days of work to pay off their total tax bill for the year. That means that today employees and employers in Delaware will start working to put money into their own pocket.
The Tax Foundation calculates Tax Freedom Day annually for each state and the nation as a whole using income and tax data reported by government agencies. The tax burden placed on Delawareans is the 17th highest in the nation, tied with Idaho and Utah, and four spots higher than last year’s ranking.
Delaware’s Tax Freedom Day falls on the same day as Tax Freedom Day for the nation. “That is four days later than last year and a full week later than it was in 2009,”stated Tax Foundation economist Dr. William McBride.
However, Dr. McBride notes the national Tax Freedom Day is something of an illusion because of the federal government’s deficit spending. “In order to pay for all spending in the current year, the [federal] government would need to raise an additional $1.014 trillion in taxes, pushing Tax Freedom Day to May 14th,” he said.
Overall, Dr. McBride says Americans will pay $2.62 trillion in federal taxes and $1.42 trillion in state and local taxes out of $13.86 trillion in income, for a combined tax rate of 29.2 percent.
A member of the Delaware Financial Advisory Council, which is responsible for estimating state revenue, State Representative Deborah Hudson noted that state spending continues to increase while major revenue sources, like the corporate franchise tax and slot machine proceeds, are falling or flat.
“If you were to add up all the tax obligations of our residents, all the money they’ve earned since the start of the year into [today] would be needed to satisfy that burden,” stated Representative Hudson. “The good news is that Delaware’s Tax Freedom Day is Tuesday. At some point on the 17th, our citizens will stop working for government and start working for themselves.”
Delaware ranks 12th in the Tax Foundation’s 2012 State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. The ranks of neighboring states are as follows: Pennsylvania (19th), New Jersey (50th), and Maryland (42nd).
Although the 2011 Federal Taxes Return is due Tuesday, April 17, the 2011 State of Delaware Personal Income Tax is not due until Monday, April 30, 2012. For more information about Delaware Personal Income Tax and the Delaware Division of Revenue visit http://revenue.delaware.gov/.