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On April 21, 2014, the United States celebrated Tax Freedom Day. This is the day when Americans have finally earned enough income to pay off Uncle Sam.

Hard-working Americans and libertarians alike bemoan the burden of government, which makes us slave away for almost a third of the entire year just to pay the taxman.

Except theres just one problem. From an economics point of view, Tax Freedom Day is hogwash.

Suppose your pretax salary is $100,000 a year and your total tax rate is 30 percent. According to the math of Tax Freedom Day, that means that you pay $30,000 in taxes. But, according to Econ 101, this isnt actually what you pay because that $100,000 wasnt all yours to begin with.

To see this, take the above example and imagine that all taxes dropped to zero. In that case, your pretax salary would be the same as your after-tax salary. Would your employer then pay you $100,000 a year?

Not likely.

Because, remember, when there were taxes, you were willing to work for $70,000 in take-home pay. If taxes suddenly vanished, you wouldnt suddenly start demanding $100,000 in take-home pay. Your salary would rise, but not all the way to $100,000.

This is what is known in economics as tax incidence and its one of the very first things they teach you about taxes in Econ 101.

The burden of taxes is split between employers and employees between buyers and sellers of labor. You may think you pay $30,000 in income tax, but actually your employer pays some chunk of that and you pay the rest.

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According to Econ 101, Tax Freedom Day is just a silly myth