Tax Freedom Day shows just how long the UK taxpayers spend working for the UK Treasury, rather than themselves.
The concept was developed by the Adam Smith Institute in the UK at http://www.adamsmith.org and shows that the UK residents work 5 months out of 12 for the Government.The Institute says that overall, the government takes more than 40% of national income in the UK. This amount is significantly lower that the EU average. In the USA, however, the government excises are lower, and this may be understandable historically by the strong opposition to governmental pressure.
The reality is that most UK residents have to work a full five months of the year solely to pay that tax bill. In 2006, that meant working from 1 January to 1 June – just to pay taxes! And the March 2007 budget did nothing to change that. Tax Freedom Day 2007 once again falls on 1 June. What will happen in 2008? I can not foresee taxation going any lower, and you?
For much of the last few years, however, Tax Freedom Day has been coming later and later. In fact, it falls a full week later now than it did back in 2002. That is an extra week of working for the Chancellor. At this rate, it will not be long until we spend longer working for the government than we do working for ourselves, which brings to the table some interesting historical reflections.
An interesting Book "Coffee planters, workers and wives: class conflict and gender relations on Sao Paulo plantations, 1850-1980" Macmillan Press, 1988, the evolution from slavery (room and board) toward share croppers concepts (50:50 after expenses) is discussed. An interesting reflection on tax and slavery is available at http://www.press.uchicago.edu/Misc/Chicago/194876.html
Tax Freedom Day is calculated by taking the UK's net national income and calculating how much of that is taken away in taxes. These taxes include not just income tax, but VAT, inheritance tax, stamp duty, car and fuel taxes, excise taxes on alcohol and cigarettes, taxes on companies and employment, and many more. For technical stuff about how Tax Freedom Day is calculated, click here. Tax Freedom Day varies around the country for a description of why and how much, click here.
The Adam Smith Institute has been calculating Tax Freedom Day since 1991 and has figures for it going back to 1963 – when Tax Freedom Day was more than a whole month earlier, falling on 24 April. There are also some international comparisons.
I do not endorse this approach to taxation as a political weapon, however it is an interesting tool to be able to reflect and discuss how much we contribute to the government and how they are using our funds.
The information posted here was taken from the Adam Smith Institute at http://www.adamsmith.org/tax-freedom-day/
