Founded in 1937 by businessmen reacting to the rising federal spending of Franklin D. Roosevelt’s New Deal, the Tax Foundation says it favors a tax system that “should consume as small a portion of national income as possible, and should not interfere with economic growth, trade or capital flows.” The group does not disclose its donors, but a spokesman says “the majority [of funds] is from the tax departments of major corporations,” with some money also coming from individuals and foundations. Foundation President Scott A. Hodge formerly worked at the Heritage Foundation, a conservative think tank, and at Citizens for a Sound Economy, another pro-business group.
The Tax Foundation is best known for its annual (and legally trademarked) “
Tax Freedom Day.” This attempts to pinpoint “the day when Americans will finally have earned enough money to pay off their total tax bill for the year.” Within its analysis of
state taxes, the group also issues an annual study attempting to calculate how much each state pays in federal taxes and receives in federal spending.
The "Tax Freedom Day" report is easily misinterpreted, and can mislead the unwary user into thinking that the tax burden is bigger than it really is for low- and middle-income Americans. For the large majority of Americans, their personal "tax freedom day" comes earlier. For those at the top, it comes later.
However, the foundation’s methods have been consistent since it began issuing the annual release in 1970, so its calculations do give a good indication of whether the nation's overall tax burden is going up or down from year to year. Other information should be evaluated with the group’s pro-business leanings in mind.
Domestic Policy; Economy & Jobs; Taxes