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How much do we really pay in taxes?

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  • How much do we really pay in taxes?

    My question is a simple one, but I'm afraid the answer is bound to be complex. What percentage of my salary winds up in government coffers whether it be federal state or local?

    Of course I can look at my pay stub and see federal and state income tax, FICA, Medicaid etc. I can look at my property tax bill. I have no sales tax here in Oregon, but I can roughly guess at gasoline taxes. I can see the taxes on my cell phone bill, utility bills and so forth.

    But what about all the indirect taxes we pay? I bought a new car last year, a Toyota. What percentage of that 17,000 went to tariffs and the like? I bought a house a few years ago. What percentage went to inspection fees, system development fees, fee this and fee that. When I buy a box of cereal, everything from the grain that makes it, the box it comes to and the transportation network to get it to the store are all taxed.

    I know that many of these taxes I pay are added on to the price of goods, but are actually physically paid to the government by the corporations that make the goods. But though corporations are legal entities, much like people, they are not really people. They aren't saving for retirement or trying to put kids through school. So even though they are paying them, I am really paying them.

    So how much am I really paying. What would a loaf of bread cost if there were no taxes at any stage of its production or distribution? I can't wrap my head around it. Do you just divide the total cost of all government in the US and divide it by the number of people? That seems sloppy though, too many people in that equation who are children for example, or are on the government dole already in some form or another.

    I would love for someone to point me in the direction of where to get facts and figures so the next time one of my uber liberal friends starts talking about how we don't pay enough taxes (they only seem to look at income taxes), I could counter with what we actually pay.

    Thank you in advance.

  • #2
    Re: How much do we really pay in taxes?

    I can't answer your question completely, but here's a start, for the highest tax bracket in California:

    Federal income tax: 35%
    Sales tax in California: 8.25%
    State income tax: 9%
    FICA: 6.2%
    E-FICA: 6.2% (paid by your employer on your behalf)
    Medicare: 1.45%

    Total = 66.1% (59.9% not including E-FICA)

    In terms of taxes on the overall stream of production, I would estimate that it's at least another 10% of your income. Energy/fuel taxes are particularly invasive.

    Comment


    • #3
      Re: How much do we really pay in taxes?

      35% assuming the amount you made that is taxed at the highest level completely dominates the amount taxed at the lower tax brackets.

      35% kicks in on dollars at $372,951, after deductions. If you did make 372,951, your actual federal tax rate would be 29% due to the first 372,950 dollars being taxed at a lower rate. Yes, I'm sure you know this stuff but never know who is reading.

      http://www.moneychimp.com/features/tax_brackets.htm has a simple calculator to see what the effective tax rate would be for different amounts of money.

      Comment


      • #4
        Re: How much do we really pay in taxes?

        Originally posted by BrianL View Post
        35% assuming the amount you made that is taxed at the highest level completely dominates the amount taxed at the lower tax brackets.

        35% kicks in on dollars at $372,951, after deductions. If you did make 372,951, your actual federal tax rate would be 29% due to the first 372,950 dollars being taxed at a lower rate. Yes, I'm sure you know this stuff but never know who is reading.

        http://www.moneychimp.com/features/tax_brackets.htm has a simple calculator to see what the effective tax rate would be for different amounts of money.
        thanks for the link - this nicely breaks down the progressive tax system that we have here in the US.

        yes taxes are high and the true % of income is obscene,...but further to your point:

        a)deductions further decrease your %
        b)simply adding the state sales tax to your total tax burden is incorrect. this assumes that you spend all of your disposable income and everythign you spend it on is susceptible to the sales tax (here in MA, there are a lot of exemptions)
        c)fica phases out at 97,500. therefore if you earned more that 97500 the effective % of income decreases for every dollar earned over that phase out amount.

        on the flip side, adding to your list of taxes:

        a) federal and state gasoline taxes
        b) real estate taxes
        c) car excise taxes
        d) car registration, license renewal fees
        e) fcc and other regulatory fees for phone, cable, internet services
        f) highway tolls
        g) meal, hotel, etc taxes on hotels, restaurants, car rental facilities
        h) faa taxes and fees for flights
        i) cigarette and alcohol taxes

        Comment


        • #5
          Re: How much do we really pay in taxes?

          Don't get me started on cigarette and alcohol taxes. I'm like Starving Steve in that regard.

          Comment


          • #6
            Re: How much do we really pay in taxes?

            From an email I received some time ago, author unknown:


            Tax his land,
            Tax his bed,
            Tax the table
            At which he's fed.

            Tax his tractor,
            Tax his mule,
            Teach him taxes
            Are the rule.

            Tax his cow,
            Tax his goat,
            Tax his pants,
            Tax his coat.

            Tax his ties,
            Tax his shirt,
            Tax his work,
            Tax his dirt.

            Tax his tobacco,
            Tax his drink,
            Tax him if he
            Tries to think.

            Tax his cigars,
            Tax his beers,
            If he cries, then
            Tax his tears.

            Tax his car,
            Tax his gas,
            Find other ways
            To tax his ass.

            Tax all he has,
            Then let him know
            That you won't be done
            Till he has no dough.

            When he screams and hollers,
            Then tax him some more,
            Tax him till
            He's good and sore.

            Then tax his coffin ,
            Tax his grave,
            Tax the sod in
            Which he's laid.

            Put these words upon his tomb,
            "Taxes drove me to my doom..."

            When he's gone,
            Do not relax,
            Its time to apply
            The inheritance tax.


            And, if that's not enough, we now pay:

            Accounts Receivable Tax
            Alcohol Tax
            Building Permit Tax
            CDL license Tax
            Cigarette Tax
            Consumption Tax
            Corporate Income Tax
            Dog License Tax
            Excise Taxes
            Fair Trade Tax
            Federal Income Tax
            Federal Unemployment Tax (FUTA)
            Fishing License Tax
            Food License Tax
            Fuel Permit Tax
            Garbage Tax
            Gasoline Tax (42 cents per gallon)
            Gross Receipts Tax
            Hotel Room Tax
            Hunting License Tax
            Inheritance Tax
            Inventory Tax
            IRS Interest Charges IRS Penalties (tax on top of tax)
            Liquor Tax
            Luxury Taxes
            Marriage License Tax
            Medicare Tax
            Personal Property Tax
            Property Tax
            Real Estate Tax
            Re-cycling Tax
            Service Charge Tax
            Social Security Tax (FICA)
            Road Usage Tax
            Sales Tax
            Recreational Vehicle Tax
            School Tax
            State Income Tax
            State Unemployment Tax (SUTA)
            Telephone Federal Excise Tax
            Telephone Federal Universal Service Fee Tax
            Telephone Federal, State and Local Surcharge Taxes
            Telephone Minimum Usage Surcharge Tax
            Telephone Recurring and Non-recurring Charges Tax
            Telephone State and Local Tax
            Telephone Usage Charge Tax
            Utility Taxes
            Vehicle License Registration Tax
            Vehicle Sales Tax
            Watercraft Registration Tax
            Well Permit Tax
            Workers Compensation Tax


            Plus untold other taxes.

            Not one of these taxes existed 100 years ago, and our nation was the most prosperous in the world. We had absolutely no national debt, had the largest middle class in the world, and Mom stayed home to raise the kids.

            What the hell happened?

            Comment


            • #7
              Re: How much do we really pay in taxes?

              I did some significant research way back in late 2005 trying to answer that very question, and the results are on my taxes page - but the bottom line is that the answer was 46-48%.

              I estimated estate tax, fees, licenses, inflation losses, inheritance, deficit allowance, gift, and others too numerous to mention as about 5% which is very likely much lower than it actually is.
              http://www.NowAndTheFuture.com

              Comment


              • #8
                Re: How much do we really pay in taxes?

                Of course income tax rates are progressive. However, the tax rate paid on the last dollar earned has a big effect on things like consumer spending, investment, and even the motivation to contribute to the economy by earning another dollar vs. just taking time off.

                Also, let's not forget one of the more insidious effects of inflation: it pushes people into higher tax brackets.

                Comment


                • #9
                  Re: How much do we really pay in taxes?

                  Originally posted by cjppjc View Post
                  Don't get me started on cigarette and alcohol taxes. I'm like Starving Steve in that regard.
                  Yeah, tax the potheads!

                  Comment


                  • #10
                    Re: How much do we really pay in taxes?

                    Well, someone was nice enough to make a poster of it:

                    Comment


                    • #11
                      Re: How much do we really pay in taxes?

                      Originally posted by Sharky View Post

                      Also, let's not forget one of the more insidious effects of inflation: it pushes people into higher tax brackets.
                      Which also plays right into the idea of why the government wants some inflation. Helps pay off the debt while "not raising taxes".

                      Comment

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