Skip to comments.The Real-World Middle Class Tax Rate: 75%
Posted on 07/05/2012 10:36:01 AM PDT by TigerClaws
If we include all taxes, the real-world tax rate is much higher than the "official" income tax rate. For those Americans earning between $34,500 and $106,000, the real-world middle class tax burden in high-tax locales is 15% + 25% + 5% + 15% + 15% = 75%. Yes, 75%.
Before you start listing the innumerable caveats and quibbles raised by any discussion of taxes, please hear me out first. Let's start by defining "taxes" as any fee that is mandated by law or legal necessity. In other words, taxes are what is not optional.
If we include all taxes, the real-world tax rate is much higher than the "official" income tax rate. These "other taxes" vary from nation to nation. France, for example, has a "television tax." It is mandatory, and since virtually every household has a TV this operates as a universal tax. The argument that this is "optional" is specious.
(Excerpt) Read more at oftwominds.com ...
Somewhere between 65 and 75 percent, anyway. Herd to pin down.
Somewhat arguable since some of the FICA and Medicare are paid by the employer and not directly out of the wages of the employee denominator. The fact remains that the taxes are paid on his behalf and theoretically, very theoretically, if the employer did not pay the taxes it could be available for income to the employee.
Bottom line, total taxes well north of 50%. Welcome to Amerika comrade. How do you like them apples?
An acquaintance living in Norway once argued, convincingly, that he paid the similar taxes there and got more for it than we do here... he was right.
The "employer paid" part of the payroll tax is considered a component of the total compensation package for a given employee, so the employee is actually paying that portion, they just never see it. Remember, businesses don't pay taxes, they just collect them.
.................An acquaintance living in Norway once argued, convincingly, that he paid the similar taxes there and got more for it than we do here................
Sure he does - partly because we pay to defend him with our military might, and we pick up 1/2 the tab for the useless UN.
Imagine you make $100k
You pay directly $10k in federal income taxes
Another $7500 in FICA
Perhaps $5k in state income tax
That is 22.5%, right off the top...
But wait - do you own a car? A house?
My property taxes, for houses, cars, etc, last year totaled $20,000
Now, imagine you spend the meager 57.5 % the government allows you to keep ...
It gets taxed. Fuel taxes, sin taxes, taxes on the business you by from, taxes, taxes, taxes,
And GE don’t pay those taxes - you do. Actually, GE pays no taxes at all.
So we get somewhere between 60 and 75 %.
Health insurance is no longer optional. It IS a Tax. Just ask Roberts.
Some part of medical insurance pays for better technology and thus life extension. However, most/many hospitals have to pay for care of illegals.
Some part of most other insurance policies for cars, houses, etc. should be considered a tax because they are needed to protect against lawsuits inflicted by myriad laws. Million dollar awards for pain and suffering are caused by liberal judges attempting to extract money for favored constituents, actions which needlessly drive up costs for insurance.
And then there’s INFLATION, which is clearly a STEALTH TAX. Adjustment needs to be added for the inflation on consumption goods. If consumption is 70 percent of the economy as many say, the effect of government induced inflation (through largely hidden increases in the money supply that is increasing at 9 percent per year) is HUGE.
Someone questioned the employer’s MANDATORY “Contribution” to Social Security (and even optional medical packages). When management determines how many people to layoff, all benefits are included. The cost of an employee is a sum of all the costs and accruals.
Also, road tolls (now becoming popular in Texas) need to be added.
75% is a bogus number for many reasons. One is that you can’t directly add marginal tax rates. Another is that some of these taxes are offset on the federal tax base, e.g., you can deduct certain state taxes from your income for the purpose of determining adjusted gross income.
A more useful measure is the ratio or percentage of total taxes (state, federal and local) to total income.
According to the Statistical Abstract of the USA http://www.census.gov/compendia/statab/2012/tables/12s0678.pdf total income in the USA for 2011 was $12.5 trillion.
According to http://www.usgovernmentrevenue.com/total_revenue_2011USrn total state, federal and local taxes came to $4.9 trillion.
Thus, of every dollar of income, on average 39.1% is consumed in various taxes.
If you factor in health insurance, then it’s entirely possible to get this average figure close to 50% on average.
But 75%, not true.
this doesn’t even consider the cost of regulations.
There is no way you pay $12,000 for property tax in CA.
Base tax is 1% of the assessed value. $12,000 is 1% of $1.2 million.
Isn’t $1.2M the cost of any modest house within commuting distance of a technology company?
That is how I see it. The final number of 40% or 50% or 75% (75 is stretching it a little) depends on many things but if you have cable tv,a landline, a cell,internet, a car or two and a house you are paying one hell of a lot of taxes.
Throw in all the other things you do every day that are taxed its easily 40%.
In other words we are real close to paying half our wages to the kind so he can wage war across the globe slaughtering tens of thousands if not hundreds, murder babies in the womb support entire families that refuse to work a day in their lives and hire state workers whoes lifestyles are the envy of tens of millions of public workers.
Oh yeah the majority of the state workers and welfare bums hate us with a passion
First thing I thought when I started reading the post. Thanks for pointing this out.
“....you can’t directly add marginal tax rates.”
Actually, you can, but what you get is the total marginal tax rate, not the average rate paid on all your income.
Saying that health insurance is a tax is like saying homeowner’s insurance or auto insurance is a tax. Presumably no rational person is going to go completely without at least some minimal amount of coverage. It’s certainly true that government drives up the cost of health insurance: that is, the tax exclusion encourages much more comprehensive coverage than one would observe in a completely free market. Thus, I could buy that perhaps one third of insurance coverage is a tax/regulatory burden, but not the entire amount.
“Thus, of every dollar of income, on average 39.1% is consumed in various taxes.”
Yours is a more sensible way of arriving at the average tax burden. HOWEVER, we borrow 40 cents of every dollar of federal spending. A more accurate measure of the burden would be to compare total government spending to total GDP since every dollar borrowed eventually will have to be repaid in taxes etc.