Tax Freedom Day is the day when a nation as a whole has earned enough money to pay its total tax bill for the year. It is a useful way of representing how large a nation’s tax burden is compared to the size of its economy.
For any given year, the date of Tax Freedom Day can be calculated in three steps:
- Add up all taxes paid to federal and sub-national governments in that year.
- Divide the total by net national product in that year.
- Multiply the resulting fraction by 365, and round downward, to yield the number of days before Tax Freedom Day.