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Sunday, March 30, 2008

For Ohioans, 'Tax Freedom Day' Arrives April 17: It Comes 12 Days Earlier This Year

CINCINNATI (TDB) -- For the nation as a whole -- when all state, federal and local levies are bundled together -- Tax Freedom Day 2008 arrives April 23, according to the Tax Foundation. This year, the government take is about 30.8% of income. But there are state-by-state breakdowns. And for Ohioans, Tax Freedom Day comes on April 17, which is markedly sooner than last year when it was April 29. Although that sounds nice, the earlier date is not entirely good news. The Tax Foundation explains:

"Tax Freedom Day is early in low income states because the federal income tax hits most of these states at the lower rates, 10% and 15%."

In other words, the poorer the state, the less taxes paid, and the sooner Tax Freedom Day arrives. And states with high-paying jobs -- for example, Connecticut, New Jersey and New York -- get to Tax Freedom Day in May:

"Although they have high state-local taxes too, the main culprit is the progressive federal income tax. States with large metropolitan areas offer higher-paying jobs, and as a result, many of the citizens earn enough to pay income tax at the highest rates -- currently 25%, 28%, 33% and 35%.

The calculations seem to show that Ohio is losing wealth as its economy declines. Ohio is now in a tie with Indiana, and moving within striking range of its less prosperous sisters, West Virginia (April 8) and Kentucky (April 10). Last year, Ohio was 18th among the states on the tax freedom chart. This year, it has fallen to 28th, which means it has dropped into the second tier amont the 50 states. Data for 2007 data is available here. The Tax Foundation's president, Scott Hodge, says Americans spend more on taxes than food, clothing, and housing combined. The organization calculates:

"In 2008, Americans will work 74 days to afford their federal taxes and 39 more days to pay state and local taxes (a bit less for Ohioans). Meanwhile, buying food requires 35 days of work, clothing 13 days, and housing 60 days. Other major categories are health and medical care (50 days) transportation (29 days), and recreation (21 days)."

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