While most of us are scrambling to get our tax returns in by Wednesday, we might miss out on the first tax milestone of the year: the Tax Foundation says that today is 2009's Tax Freedom Day. That's the day that the average American has earned enough to pay his or her taxes for the year. Each year, the Tax Foundation calculates how many days of work it takes to meet the nation's tax obligations, and apparently it's a rare event for the day to fall before taxes are due.
To sum up: After today, you can finally start earning money for yourself. Each day of 2009 before today, you were just working for the government.
That's a depressing thought for many small-business owners. What's more depressing is that this burden will likely go up next year at the top rates. But does that tax burden actually make people less likely to start businesses? I'll point to one recent piece of evidence taking the negative answer to that question: A Washington Post editorial from yesterday points to a 2006 study that finds that "the top income tax rate has no economically significant effect" on entrepreneurship.
I don't think that study has the final word on the matter. But one thing is for sure: with the financial crisis pushing government to spend and spend, Tax Freedom Day will be much later in the year in 2010. Read Doug Bandow for more on that point.