Most people have no idea how much they pay in taxes. Tax Freedom Day, adjusted for the federal deficit, is almost up to June now. That means that on average, everything Americans make through May goes to the government. After that, they get to make money for their own families.
Taxes include Sales tax, property tax, business tax, gasoline tax, excise taxes, duties, fees, filings, income tax, federal, state, local, county, library tax, hospital tax, school tax, overrides, Medicare, etc. If it moves, breathes, or even dies, government taxes it. This next picture startled me:
For a period of time there at its worst, the marginal rate was over 90% for high earners. If you made $1,000,000, you gave $900,000 to the federal government. Just in income taxes. If you got it from a corporation, you paid corp taxes too. If you got it through investment, you paid capital gains as well. If you got it through a state with local income taxes you paid them too. If you paid after social security, you paid that too, both parts if you were your own boss. Then the money you kept… would be taxed when you bought something or invested it.
Here is what states added:
Then the federal government added Social Security and Medicare:
Then each year we pay property taxes of all kinds, we pay taxes to the state and feds on all petroleum. The state and federal government make more profit off of oil than everyone else combined. They don’t explore and find it, they don’t drill it, they don’t refine it, they don’t distribute it, they don’t sell it at retailers, but they make more than all those people. As much as half of the cost of your food is due to petroleum taxes to plow, seed, harvest, spray and take to market your food. You get on a plane and half your fare is aviation fuel and taxes at the airport authority.
I had a fellow employee who told me she didn’t pay taxes. I told her I should turn her in for a 10% reward – half joking. She said she always got a refund. I showed her on her own checkstub that she was paying 30% of each check in taxes and her refund was about 2% of that. She got mad and did not believe me.
Today, over half of Americans do not pay payroll taxes, such as income and social security. Many even pay negative taxes because they get earned income credit and get money back they never paid in. Our free welfare and healthcare systems are poised within the next year to have more recipients than we have taxpayers for the first time in history.
I was a former one percenter and I have dropped out. I can no longer afford to work that hard to support so many other people, only to be labeled as an evil person for my efforts. As an Economist, I don’t know how we have managed this long without an economic catastrophe. I wish we had no payroll deductions, no at the counter sales taxes, no property taxes paid in through escrow on our mortgages. I think if we all wrote a single check for our taxes for the year, and saw it was our entire income through the end of May – things would change.
But just like the live lobsters and crabs, we don’t jump out of the pan as the heat is constantly turned up, until it is too late for us.