So who could use a little dose of tax freedom? I know I could! And speaking of taxes, if you ever wanted to leverage those suckers to your REAL ESTATE INVESTING ADVANTAGE, then I’ve got a little video you’re not going to want to miss. Check out this free presentation at www.rei.today/bestinvest right now. It’ll make you think of taxes in a far more positive light…
Now, back to tax freedom day (yes, that’s actually what it’s called). Did you know that your state has an official day, determined by the Tax Foundation, known as Tax Freedom Day? Nationwide, it’s April 24. That is the day that the United States, as a body, has earned enough to pay its $4.99 TRILLION tax bill for 2016 (that’s 31 percent of our national income, by the way). But that’s on a national level. When will you, personally, see your taxes “paid off,” as it were? Well, it differs dramatically by state. Here’s what I mean:
If you live in the South, then you’re probably actually going to hit Tax Freedom Day before your taxes are due! Pretty exciting, right? In 2016, Mississippi’s tax freedom day was April 5, Tennessee’s was April 6, and Louisiana’s was April 7.
On the other hand, it probably won’t surprise you that northeastern states have a much, much later freedom date. Connecticut’s tax freedom day is not until May 21, while New Jersey residents hit it may 12, and Massachusetts doesn’t make it until May 5. It will likely surprise many listeners to learn that California actually does not have the latest tax freedom this year: residents will “earn” their tax freedom day April 30.
So what is the earliest tax freedom day ever? Well, nationally it was January 22, 1990. That year, Americans paid 5.9 percent of their income in taxes. The latest (since the Tax Foundation started this report) was May 1, 2000, when we paid a full third of our income in taxes.
So what does tax freedom day really mean, because I suspect you’re starting to realize it doesn’t mean freedom from taxes. What it ACTUALLY MEANS is that you’re working the first four to five months of the entire year JUST TO PAY THE GOVERNMENT FOR THE OTHER SIX TO SEVEN MONTHS! You are basically earning just to pay it back, and regardless of how you personally feel about taxation, that’s gotta hurt just a little. Furthermore, as real estate investors, you’re probably also paying additional property taxes and possibly higher income taxes than a lot of your peers, so take a minute to review your taxes and your business structures to make sure that you are actually set up in a way that best suits your needs and minimizes your tax outlay. As my father, who is a very conscientious taxpayer, always said: You want to pay every penny you owe, but you don’t want to pay one penny more. I dispute the notion that I want to pay taxes ever, but we all know that’s the system today and it’s a terrible idea to run afoul of the IRS.
Didn’t hear your state mentioned in today’s episode? Don’t worry! The entire list is waiting for you in the REI Today Vault at www.rei.today/vault. If you’re not yet a member, just text REITODAY no spaces, no periods, to 33444 and I’ll provide you with fast, immediate access to all sorts of great trainings, news coverage, interviews, and lot more timely information that will help make your investing safer, faster, and more profitable.
And remember, when you do that, you’ll also be able to GROW YOUR NETWORK by interacting with me and your fellow listeners to REI Today… so stop by to ask questions, make comments and network with other investors across the country. Text REITODAY no spaces no periods to 33444 or head over to www.rei.today/vault right now.
REI Nation, thanks for listening in and always remember this:
Your best investment is your own education.
Carole Ellis is the host of Real Estate Investing Today, a popular 9-minute daily podcast focused on educating real estate investors about the important topics that will make their investing SAFER, FASTER, and MORE PROFITABLE. She's also the editor of the Bryan Ellis Investing Letter. She has more than a decade's worth of experience in and reporting on the real estate industry and, additionally, has written dozens of courses on the topic. Carole lives in Kennesaw with her husband, Bryan, and four children. She believes wholeheartedly that your best investment is always your OWN education.