Tax Freedom Day is a measure of when the average person stops paying tax and starts putting their earnings into their own pocket. In 2015, every penny the average person earned for working up to and including May 30th went to the taxman—from May 31st onwards they are paying themselves.
Really, it’s a bit more complicated than that. Firstly there is no average person—the UK does not have a perfectly proportional tax system so each individual’s tax freedom day will be different—with higher income people typically being freed later. But this is not strictly accurate because the Treasury does not just tax income; it taxes property, transactions, consumption, investment, capital gains and so on as well.
Secondly, we measure the entire tax take, including those taxes that don’t come directly out of earners’ pockets. The incidence (a fancy economist’s word for ‘burden’) of every tax eventually falls on households. Corporations cannot pay—they are legal constructs—only their shareholders, employees and customers. VAT raises consumer prices. Stamp duty land tax comes out of house prices, and so on. Households eventually pay every tax, even the ones they don’t notice.
Thirdly, we take into account depreciation and foreign investment earnings, as is standard around the world, measuring total taxes over net national income, not gross domestic product, so as to more closely approximate net wealth creation rather than economic activity.
Many of these figures are not available up-to-date for calendar years so they are proxied from government and OBR forecasts and financial year numbers. They are then revised when exact numbers become available. This means the Tax Freedom Day for a given year in the past may well have changed. However, the changes are usually very small, and the overall picture tends to be robust to these alterations.
Tax Freedom Day (and its sister, Cost of Government day, which measures total spending over national income) is not meant as anything but an illustration—an indication of the size of the state. As the complexities detailed above suggest, it does not correspond exactly to any individual’s experience. And yet many people do find it shocking to see how large the state really is, expressed in an intuitive way.
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As the graph above, and the table below show, Tax Freedom Day in the UK fell steadily later in the year until the mid-1980s, hitting nearly 180 days (i.e. half way through the year) before steadily trending down in the earl 1990s, and finally bumping around mid-to-late May, or 150 odd days through the year.
Tax Freedom Day
Cost of Govt Day
|1963||116||28th April||145||26th May|
|1964||115||27th April||141||22nd May|
|1965||119||1st May||142||23rd May|
|1966||125||6th May||150||31st May|
|1967||138||19th May||155||5th June|
|1968||144||25th May||165||15th June|
|1969||151||1st June||165||15th June|
|1970||154||4th June||157||7th June|
|1971||146||27th May||156||6th June|
|1972||138||19th May||156||6th June|
|1973||134||15th May||151||1st June|
|1974||149||30th May||155||5th June|
|1975||155||5th Jun||159||9th June|
|1976||152||2nd June||178||28th June|
|1977||153||3rd June||182||2nd July|
|1978||149||30th May||171||21st June|
|1979||153||3rd June||166||16th June|
|1980||164||14th June||168||18th June|
|1981||173||23rd June||187||7th July|
|1982||172||22nd June||193||13th July|
|1983||167||17th June||193||13th July|
|1984||165||15th June||197||17th July|
|1985||164||14th June||192||12th July|
|1986||160||10th June||188||8th July|
|1987||147||28th May||162||12th June|
|1988||145||26th May||152||2nd June|
|1989||143||24th May||143||24th May|
|1990||142||23rd May||144||25th May|
|1991||142||23rd May||151||1st June|
|1992||138||19th May||157||7th June|
|1993||133||14th May||163||13th June|
|1994||134||15th May||161||11th June|
|1995||138||19th May||160||10th June|
|1996||136||17th May||157||7th June|
|1997||143||24th May||155||5th June|
|1998||145||26th May||147||28th May|
|1999||153||3rd June||149||30th May|
|2000||151||1st June||143||24th May|
|2001||154||4th June||145||26th May|
|2002||147||28th May||146||27th May|
|2003||142||23rd May||147||28th May|
|2004||145||26th May||152||2nd June|
|2005||145||26th May||154||4th June|
|2006||150||31st May||159||9th June|
|2007||149||30th May||158||8th June|
|2008||150||31st May||164||14th June|
|2009||144||25th May||189||9th July|
|2010||144||25th May||192||12th July|
|2011||146||27th May||190||10th July|
|2012||147||28th May||190||10th July|
|2013||148||29th May||189||9th July|
|2014||149||30th May||182||2nd July|
|2015||150||31st May||179||29th June|