How long does it take to do taxes
By Blake Ellis , CNNMoney
More than three months of your hard-earned wages are going straight to your tax bill this year.
Americans will spend an average of 29% of their income on federal, state and local taxes in 2012, the Tax Foundation announced Monday. That's more than the average family spends on food, clothing and housing combined, the organization said.
And it means that the average American is going to be working 107 days into the year just to earn enough money to pay their taxes.
"Tax Freedom Day," as the Tax Foundation calls the date that the average American is finally free of its tax burdens, arrives on April 17 this year, coincidentally the same day taxes are due. That's four days later than last year.
The day has been arriving later in recent years, thanks to rising incomes -- and therefore higher tax liabilities and tax collection.
"As the economic recovery continues, the growth in individual incomes and corporate profits will increase tax revenues and push Tax Freedom Day ever later in the year," the Tax Foundation said in a statement.
This year's Tax Freedom Day is still a couple of weeks earlier than the latest one on record, which occurred on May 1, 2000. During that time, the economy was booming and Americans paid 33% of their total income in taxes.
The Tax Foundation, a research group that favors lower taxes, calculates Tax Freedom Day each year based on income, Social Security, sales, property and other taxes.
But not everyone agrees with the organization's methodology. The left-leaning Center on Budget and Policy Priorities, for example, argues every year that the report overstates the share of income that average households spend on taxes.
Chuck Marr, the Center on Budget and Policy Priorities' director of Federal Tax Policy, said in a statement that this year's Tax Freedom Day report "leaves a strikingly misleading impression of tax burdens."
He said the 29% share of income that the Tax Foundation cites as the 'average' tax burden is higher than what 80% of American families actually pay.
State by State
In addition to a national Tax Freedom Day, the Tax Foundation calculates a Tax Freedom Day for each state, based on individual state taxes.
The day has already arrived in Tennessee, Louisiana and Mississippi, where average incomes and state taxes are lower. Tennessee taxpayers celebrated Tax Freedom Day the earliest -- on March 31 -- and the holiday fell on April 1 in Louisiana and Mississippi.
South Carolina and South Dakota will celebrate soon afterward, on April 3 and April 4, respectively.
States with higher average incomes will be last to celebrate. Connecticut residents won't be free of their tax burdens until May 5, and those who live in New Jersey and New York won't welcome Tax Freedom Day until May 1.
Many folks think that Social Security shouldn't be counted in the federal budget at all, because they contribute to the retirement fund with each paycheck.
Actually, though, taxes paid in by today's workers aren't socked away for their future retirement, but are used for benefits for today's retirees -- an estimated $779 billion worth of them in fiscal year 2012.
What's more, the so-called trust fund -- where payroll taxes not needed for current payouts are stashed -- consists of $2.7 trillion in IOUs from the U.S. Treasury. The funds have been borrowed over the past
two decades to pay for other federal programs.
Nearly 18% of President Obama's proposed FY 2013 budget is for defense spending. It includes funds for military operations in Afghanistan, Iraq and South Korea as well as for 760 bases scattered across the U.S. and abroad.
The $716-billion tab also pays for research, construction, family housing and myriad defense-related items. About 25% of the total goes to personnel costs, and the figure doesn't include veterans' pensions and health care.
Combined, these two national health care programs rival defense and Social Security as Uncle Sam's biggest expenses. While the White House and Congress talk a lot about cutting these health care costs, lawmakers have avoided taking the tough -- and extremely unpopular -- actions needed.
In addition to Medicaid, about 9% of the total federal budget is dedicated to assistance for the needy. The total -- about $297 billion for FY 2012 -- includes funds for housing subsidies, food stamps, school lunch and other nutrition programs, aid to families with dependent children (welfare) and other aid, plus the earned income tax credit.
Next fiscal year, Uncle Sam is expected to shell out a whopping $224 billion in interest to the owners of U.S. Treasuries, here and abroad. For the past few years, low interest rates have helped keep a lid on this category. But interest rates won't remain at historical lows forever. Meanwhile, the debt accumulates.
The biggest five items in the federal budget -- Social Security, defense, Medicare, Medicaid, and net interest on the debt -- account for about two-thirds of the total.
Everything from transportation (3.3%), education (1.9%), federal employees' and military retirement (3.8%) to science and space (0.9%) and homeland security (1.3%) comes out of what's left.
International aid -- frequently mentioned as a potential source of savings -- accounts for just 1.7% of spending, and half of that is for humanitarian assistance. All environmental and natural resource programs -- 0.6%. Help for low-incomers, which we have already discussed, is an amalgam of programs whose total adds up to 9% of federal spending.
Only about a third of the federal budget actually falls under congressional control on an annual basis, and much of that is for defense spending -- mostly off-limits for political reasons.
About three-fifths of the budget is dedicated to programs such as Social Security, Medicare, Medicaid, food stamps, crop subsidies and other programs for which spending is automatic -- controlled by formulas. Add interest payments to the list of uncontrollables and untouchables, and the share of spending Washington can actually manipulate from year to year is about 16%.
If that entire 16% -- encompassing programs as diverse and as popular as medical and scientific research, space exploration, maintenance of national parks, repairing roads and bridges -- were eliminated, it would reduce the federal deficit only by less than half. Individually, these programs amount to crumbs on Washington's dinner table, where $38 billion is just 1% of the main course.
About 58% of all government spending consists of direct payments from Uncle Sam to individuals. Retirees get Social Security payments, veterans' pensions and Medicare benefits. Students get tuition assistance. Payments are made to farmers to idle erosion-prone land. Victims of natural disasters get a helping hand to rebuild their homes, businesses and lives.
Lobbies for many of these programs are immensely powerful and usually able to deflect attempts to trim spending. And while nearly everyone agrees that belt-tightening is needed, few are willing to cinch in their own waistlines.Source: www.dailyfinance.com