While the annual tax filing deadline is still five days off, West Virginians can mark a different tax-related milestone today.
April 10 is Tax Freedom Day in West Virginia, according to the annual study from nation nonpartisan think tank the Tax Foundation.
Tax Freedom Day is the day that state residents have finally worked enough to pay off their annual tax obligations at the federal, state and local level.
“Tax Freedom Day gives us a vivid representation of how much we pay for the goods and services provided by governments at all levels,” said Tax Foundation economist Kyle Pomerleau.
“Arguments can be made for why the collective tax bill is too high or too low, but in order to have an honest discussion, it’s important to understand where we stand,” he said.
West Virginia’s Tax Freedom Day falls earlier this year, despite the fact that the national average for Tax Freedom Day was pushed back three days to April 21 this year.
Last year, West Virginia’s Tax Freedom Day fell on April 19 — the 11th latest nationwide.
This year, the state’s April 10 date is the ninth earliest.
Louisiana scored the earliest Tax Freedom Day on March 30, followed by Mississippi (April 2) and South Dakota (April 4). New Jersey and Connecticut are tied for last at May 9.
The Tax Foundation said the national Tax Freedom Day fell three days later this year due to the continuing economic recovery, which is bolstering federal tax revenue collected through corporate, payroll and individual income taxes.
According to the foundation, the nation’s total tax bill this year is 30.2 percent of national income. That’s more than Americans will spend on food, clothing and housing combined.
It estimates Americans will pay $3 trillion in federal taxes this year and $1.5 trillion in state and local taxes. If you include annual federal borrowing from this year’s estimated budget deficit — a representation of future taxes owed — the national Tax Freedom Day would occur 15 days later on May 6.
The group estimates it takes the average taxpayer 33 days to earn enough income to pay their federal income tax bill. It takes another 27 days to work up the income to pay Social Security and Medicare taxes.
Add in other federal taxes that get passed on to consumers, and it takes taxpayers to March 15 to earn enough income to cover their total federal tax bill. After that, state and local tax contributions kick in.
Of West Virginia’s neighbors, Kentucky is the only one with an earlier Tax Freedom Day (April 8). Ohio’s falls on April 14, Pennsylvania’s falls on April 21, Virginia’s falls on April 24 and Maryland has the latest on April 28.
That might surprise some who say Ohio or Virginia have better tax structures than the Mountain State.
West Virginians benefit in-part because of the state’s low average property tax collections. The Tax Foundation ranks West Virginia with the seventh-lowest per capita property tax collections, at $770 a person.
Part of that has to do with relatively low property tax rates across the state.
But it also has to do with low median property values too — cheaper housing means cheaper property taxes.