Head of Research Ben Southwood writes on Tax Freedom Day for CapX:
Tax Freedom Day is upon us again. In 2015 the average person stops paying tax, and starts paying themselves, on 31st May. Every penny they earned from 1st January to 30th May, inclusive, went to the taxman.
Well, not quite. Firstly, and quite obviously, people pay tax throughout the year, not in one big block at the start. Secondly, lots of the total tax take comes from sources people don’t believe or know they themselves are actually paying. Thirdly, there is no average person; practically every single person in the country will actually stop paying tax either sooner or later than 31st May. Tax Freedom Day is not supposed to represent some actual experience for households — it is a regular, timely reminder of how large the state really is.
The ASI calculates Tax Freedom Day by measuring local taxes, direct and indirect national taxes, and national insurance contributions as a proportion of the UK’s net national income (41.2% per cent in 2015), mapping that proportion onto the days of the year.
Tax Freedom Day 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.
Click here for more information on previous Tax Freedom Days and Cost of Government Days.