Garden State workers are well into the second quarter of the calendar year, but a new report says all those weeks of work amount to just enough to pay the tax man.
Americans for Prosperity and the Tax Foundation today held a press conference to mark "Tax Freedom Day" in New Jersey, which this year falls on Saturday.
Steve Lonegan, a senior fellow at AFP, said higher taxes force Americans to spend more time working to attain the same level of income. That lost time translates into a lower quality of life, he said.
"We have lost time, and time is our freedom," he said. "And that's something that's very measurable."
Americans pay 29.4 percent of their income in federal, state and local taxes each year, according to the Tax Foundation. That translates to $2.76 trillion in federal taxes and $1.46 trillion in state and local taxes. The foundation looked at how much income Americans are expected to make this year, and based on the number, found it would take 108 days — until April 18 — before Americans have earned enough to offset their tax bills.
But the story is worse in New Jersey. When the data are broken out by state, New Jersey's "tax freedom" doesn't arrive until May 4. That's due in part to things like the state's famously high property taxes, but it's also due to the higher average incomes in New Jersey, which means more people fit into higher tax brackets here than in states like Mississippi, Louisiana and Tennessee, the top-ranking states on the list.
New Jersey comes in 48th, just ahead of New York and Connecticut. Residents here pay about 12.4 percent of their income in state and local taxes, while the national average is 9.9 percent.
"We have to fund the government in some way, but there's a good way to do that and there's a bad way to do that," said Elizabeth Malm, an economist with the foundation's Center for State Tax Policy. "We want to do it in a way that doesn't discourage growth."
Malm said high income taxes discourage growth, and argues a flat tax system is one way to curb the problem.
Lonegan said the negative trend in New Jersey dates back to a sales tax implemented in the 1960s. At the time, he said, lawmakers argued that the new revenue source would help ease property taxes. Instead, he said, it launched the state government on a trajectory that over the years has led to massive increases in the size and spending of state government.
"New Jersey should be a model to other states of what not to do," he said.
If one adds together the state and federal corporate taxes paid by businesses here, Lonegan said New Jersey ranks unfavorably not just versus other states, but versus most countries. He said that severely hampers the Garden State's economic competitiveness.
This year's national Tax Freedom Day is occurring five days later this year than it did in 2012.
Kyle Pomerleau, an economist with the Tax Foundation's Center for Federal Tax Policy, said that's due to a number of things, such as the expiration of a payroll tax holiday, tax hikes included in the "fiscal cliff" deal and new fees associated with the federal health care reform legislation.
The latest national Tax Freedom Day ever occurred in 2000, he said, when Americans didn't work off their tax bills until May 1.