I’m trying to figure out all the taxes that the citizenry has to pay. I’m sure I’ll miss most of the taxes so help is appreciated.
There’s the FICA/Medicare tax, which is over 15 percent of income. If you work for an employer, you pay half and the employer pays half (which means you make more money than you think you do, but that extra money is all federal tax).
There’s the federal income tax, which is anywhere from 0 to 35 percent of income. Actually that is inaccurate on multiple levels. If you’re a part-time minimum-wage employee (or likely even a full-time minimum-wage employee), you will get more back than you put in, so your tax is in the negative range (you get money from your neighbor and the person living 5000 miles away from you just for working). But you are still giving the federal government an interest-free loan; money that could gain you interest if you just stuck it in the bank. While the FICA/Medicare tax has a top limit on income taxed, it is above the bottom limit of the top federal income tax bracket.
There’s the state income tax, which varies state to state (and several states don’t have income taxes).
Mt Vernon, OH has a city income tax of 1.5 percent while Columbus, OH has a city income tax of 2 percent (and it’s not a sliding scale). I’ve had jobs in both locales. And my state income taxes have always been higher than my city income taxes (I’ve never had greater than 36k income in a single year, and usually under 28k).
Using a conservative estimate of 5 percent state income tax, so far this means those lowest of the top federal bracket working in Columbus, OH are paying a whopping 57 percent of their income in taxes!
Let’s not forget that those living in certain school districts pay an additional 1 percent income tax for the schools, whether they have children in school or not.
Then we have the 46-cent-per-gallon gasoline tax. That means someone living in Mt Vernon and working in Columbus and driving a 33 mpg car pays $1.40 in taxes just to commute to work every day. If that person only works 200 days a year (and it’s likely much closer to 250 days), that adds up to $280 in taxes just to be able to work, on top of the other income taxes.
Add to that the 6 percent sales tax on any non-food item bought in Ohio (and carbonated beverages are not considered food). And some states tax food as well.
And there are the railroad taxes tied to phone bills. And other “temporary” taxes tied to phone bills that have never expired, after 100 years. And there are special taxes tied to electric bills and natural gas bills and garbage-collection bills and city-water bills.
Then we have corporate profits taxes, which not only affect corporations (where they add the tax burden to the price of their goods) but also anyone who has an IRA or 401(k) or any other stocks in their retirement investment plans.
Then we have corporate inventory taxes. (See corporate profits taxes for impact.)
Then we have corporate property taxes on buildings and land. (See corporate profits taxes for impact.)
Then we have personal property taxes on homes and land.
Then we have corporate property taxes on machinery bought many years prior where the corporations paid the taxes on buying the machinery. (See corporate profits taxes for impact.)
Then we have the death tax, which can be as much as 60 percent of a decedent’s worth, already taxed multiple times. (The Bush moratorium on the death tax is about to expire, thanks to the Democrats who refused to make it permanent.)
We also have tobacco and alcohol taxes on top of the sales tax (but not everyone buys either of these items).
Understand if a corporation has to pay a total of 20 percent of its gross profits in taxes (profits tax, inventory tax, and both property taxes), the price of their goods must be increased enough to cover those taxes, which could increase the cost of a good by 2 or 3 percent. And you get to pay sales tax on the tax-inflated cost of the item.
And if you’re a renter, don’t think you don’t have to pay property taxes for the home you’re living in. It’s figured into the price of rent.
With all these taxes, hidden or otherwise, I cannot come up with a way for someone in middle-class income levels to pay less than half of their income in taxes.
(Oh, I worked for a PA company while never leaving the Columbus, OH metroplex. But I had to pay the PA tax of $15 a year for the, get this, for the privilege of working in PA!)