As people scramble to beat the tax deadline this year, they might, in a moment of existential fancy, wonder how much they actually pay in taxes. Not only income taxes, mind you, but all taxes. It is often difficult to tell because so many taxes (e.g., sales and utilities) are paid out in small amounts, over time, and because few people bother to save the receipts.
I am now one of the few. To get a better idea just how much an individual pays in taxes, I conducted an experiment during 2003. I collected everything that listed a tax on it. This included my paycheck stubs, sales receipts, and phone, utility and cable bills. Keep in mind that I’m in my early thirties, earned just under $40,000 last year, am not married, and have no children. I rent an apartment, so I do not pay property taxes directly.
The table below displays the total amount I paid in taxes, broken down by type. Income taxes take the biggest bite, with FICA (Social Security and Medicare) taxes running a not too distant second. In total, I paid $9,434.72 for 2003, or 23.9 percent of my income. That’s more than one dollar in five sent to state, local, or federal governments. Here’s a breakdown of the taxes I paid in 2003:p>Federal Income……$4,333.40 br> State Income………$1,606.00 br> Social Security….……$2,406.40 br> Medicare……….…..……$562.79 br> Sales……………………..$193.72 br> Utility……………….……..$59.03 br> Phone……………………..$176.39 br> Cable……………..………..$61.49 br> Car………………………….$35.50 /p>
The total of $9,434.72 is a low ball estimate because it excludes some very important taxes. The gasoline tax is not listed on gasoline receipts, and was thus excluded from this study. The price of regulations does not appear on any receipt, yet a study by researchers W. Mark Crain and Thomas D. Hopkins shows that the burden regulations impose on American households is quite high. If those two were included, my real tax burden could easily be as high as 30 percent.
It’s also illuminating to break down the individual tax bills, and see just how many levels of government have their hands in the till. For utilities I pay a state, local, and school tax on both the electric and gas portions of my bill. On my cable bill I pay a sales tax, franchise fee, and regulatory fee. On my long-distance telephone bill I pay a city sales tax, a county sales tax, a state sales tax, a carrier universal service charge, a carrier property tax, and federal excise tax.
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