Tax Freedom Day is the day in the year when we have earned enough income to pay our total tax bill for the year. It is a simple way to illustrate the cost of government and can be applied to countries around the world.

In the U.S., according to the Tax Foundation, Tax Freedom Day was April 13 this year. That means it took all Americans from January 1 to April 13 to earn enough income to pay taxes in 2009.

The Fraser Institute in Canada calculates Tax Freedom Day for Canada. They found that Canadians will work until June 6 to pay their tax bill for 2009.

Canada’s Tax Freedom Day is so much later than ours because their government spends more. A big part of that additional spending is for nationalized healthcare. To pay for larger government, Canada has a value-added tax (VAT) that substantially increases the taxes of all Canadians.

A VAT is national sales tax that would raise the prices of all the goods and services we buy. Unfortunately for U.S. taxpayers it is now being discussed as a way to raise more revenue here in the U.S. to close massive budget deficits. A much better solution would be to cut spending.[youtube][/youtube]

A VAT, or another broad-based tax that raises substantial revenue, might be inevitable if nationalized healthcare is passed and Congress needs trillions of dollars of new revenue to pay for it.

To celebrate their impending freedom, the Fraser Institute released the amusing video below. Although it is for a Canadian audience, many of the same principles apply.

Here in the U.S., just as in Canada, we pay taxes each and every day on a variety of products and activities. And just as in Canada, we pay more for taxes than we do on clothing, food, and housing combined.