What Do You Pay In Taxes?

Quick, how much total do you pay in taxes? Perhaps the greatest innovation of bureacrats in the 20th century was the tax load shell game - the clever balkanization of the tax load that makes it nearly impossible for the average person to truly know how much they pay in taxes to the government.

Start with income taxes. April 15 is long gone for this year, but even so, how many people know how much they paid in income taxes last year? For many people, this is the single largest expense they have, but the total amount is disguised by the fact that most income taxes are taken out as direct payroll deduction. Governent employees everywhere in the US should get up in the morning and give thanks for direct payroll deduction -- without it, if every American had to write a single check once a year for the sum total of their annual income taxes, there would have long since been a revolution.

OK, so you don't know how much you paid in federal, state and local income taxes. But in addition to that, how much did you pay in social security and medicare (typically about 8% of salary)? Property taxes (typically 1-2% of your home value)? How about sales taxes (typically 6-9% of your purchases)? What about vehicle licensing fees and special taxes on hotels and airfare and rent carsand fuel? If you add all these up, the average American pays about 30% of his/her salary in taxes. The Tax Foundation has a great chart summarizing this shell game, with relative burdens expressed as days of work each year required to pay the tax. Note that on average, your federal income tax is only 1/3 of the total of what you are paying:

So those are the direct ones, but how much are you also paying in higher prices due to government import duties? What about the 8% FICA and medicare that employers pay on your behalf - how much higher might your salary be and how much lower the cost of the products you buy if they did not have to pay these? What about corporate taxes - you may not pay them directly, but they certainly get passed on to you in the form of higher prices and lower dividends on your 401k.

We won't even get into the confiscatory nature of "Death", "Property", and "Capital Gains" taxes. While certainly less hidden, they are perhaps the most insidious, since they are a tax savings and not income or spending.

- - - the Coyote