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The experiment: how much tax do we really pay?
Charting Course ^ | 8/22/14 | Steve Berman

Posted on 08/22/2014 5:32:51 AM PDT by lifeofgrace

crazy-experiment

My wife and I decided to do a bit of downsizing this summer.  We went through our budget, line by line, and set up new limits for what we spend.  I am blessed with a good job, and we are not really hurting to make ends meet.  But we noticed that our spending started to spiral up, up and away.  Really, we have better things to do with our hard earned money than throw it away on stuff that doesn’t matter.

It took us several years to get from the financial Thelma and Louise I was when we were first married to some level of discipline.  At this point, everything we own is either debt free, or equity positive. The only loans we have are on the house and cars, and they’re all worth more than what we owe.  Tomorrow I could sell everything we owe on and have money left over (for what?  I don’t know).  We cut things until it hurt.  I sold my Subaru STI rally car for a more, well, gentlemanly sedan that cost half as much.  My wife gave up some of her favorite essential oils, and we all decided to eat out less.

One thing we didn’t cut is our giving.  We actually increased that (you know, that thing about better use of money and all).  Another thing we didn’t cut, and likely can’t cut, is our taxes.  I know exactly, to the penny, how much we spend on groceries, clothing, fuel, household items, eating out, and a whole raft of other budget items.  I am absolutely anal retentive about using budgeting and tracking software to classify every penny.  My wife even breaks down Wal-Mart receipts into categories so we know what we bought.

I decided to find out exactly what we pay in taxes.  So for the month of September, I am going to track taxes in my budget software.  Every single penny.  That means the tax on groceries, restaurant taxes, ad valorem taxes, withholding from my gross pay, and even the gas tax per gallon when we fill up.  I’ve heard it said that we work at least one day a week just to pay the government.  I want to see if that holds true, or are paying more?

At the end of September, I’ll report on the results.  I might even throw in a mid-month update.  And yes, I am going to look at the sales tax on our vehicles and spread it out over the loan and allocate that.  Like a good accountant, I know how to accrue.  As a matter of fact, if any of you readers know of some obscure tax that I might miss, let me know in the comments.  I want to capture everything.  I’m not, however, going to take it overboard.  I only want to capture the taxes we directly pay or are included for specific items (like gas) in the final price.  I don’t want to go back five levels into corporate taxes and dividend taxes and factor that in.  First it would be ridiculously complex to calculate.  Second, it would be irrelevant to the results.

One more question for readers who are willing to make some gentleman’s bets.  Do you think my tax will turn out to be more than one day’s work, less than one day’s work, and if so, by how much?  Give me a percentage number.  The person who nails it closest to the actual will win…um, something, whatever I find that’s worthy of such an honor to give to the winner.

Good luck, my friends, and let’s see together how this tax experiment works out.  Check back on sgberman.com for the results.


TOPICS: Business/Economy; Government; Science
KEYWORDS: experiment; tax
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To: lifeofgrace
Is Health Insurance a tax? I know that SCOTUS doesn't think so, but the gov't requires us to have it - and in fact, requires specific coverages that may not be needed.

How about Car Insurance? Technically, we don't need to have it, but it's legally required, with mandatory minimum coverages (and enforced by the gov't) if we want to drive anywhere.

I'd think that just making a list of all the taxes we pay on a daily basis would be a daunting task. And, I think 40% (2 out of 5 working days) is probably a little low.

21 posted on 08/22/2014 7:06:31 AM PDT by wbill
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To: lifeofgrace

That should be a good experiment. I concur that it will probably be around 1.75 days/week spent paying the piper, as studies have shown that across all income brackets the total average tax burden is 35-41%.


22 posted on 08/22/2014 7:13:13 AM PDT by ready2brd
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To: lifeofgrace

Can’t track the built in taxes on services and commodities that make up the services and products you pay the taxes on.


23 posted on 08/22/2014 7:18:54 AM PDT by <1/1,000,000th%
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To: wbill

Insurance is a hedge against catastrophic disaster to your finances and family, which is very different than the money given to the government.

You can usually bypass car insurance by having a an untouchable COD that would cover your legal limits in most states.


24 posted on 08/22/2014 7:19:38 AM PDT by ready2brd
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To: lifeofgrace
I decided to find out exactly what we pay in taxes.

But, but...what about roads, bridges and police departments???

25 posted on 08/22/2014 7:21:08 AM PDT by Lou L (Health "insurance" is NOT the same as health "care")
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To: driftdiver; Paladin2

You’re right! I used all the days in my calculation, not just work days! I’ll go with 7, instead of 9.25


26 posted on 08/22/2014 7:24:08 AM PDT by knittnmom (Save the earth! It's the only planet with chocolate!)
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To: ready2brd
I think if all the hidden taxes were accounted for you would find taxes take up more than half the wages of the American worker.

Just consider that in my own case Social Security taxes are several times what they were when I started work, that my state had no sales tax but 50 years later it is 7% ,that the plate fees on cars have increased,that the state gets BOTH sales and excise(plate fees) on a new car then large and slowly decreasing plate fees as the car ages;that although government automatically gets more $ as our incomes rise they also demand additional percentage increases,etc.

In my case 24% of my pay is deducted before I receive it(and don't forget the employer pays an the same SS tax amount -money that could have been on one’s check. So even the supposed rate is a lie most Americans don't know about.That easily boosts the effective payroll taxes to over 25% .Then the state takes 7% of any money I spend.Which is effectively another 5.5% of my gross income.So we are at the 31% level without even allowing for property taxes which you pay either directly or though rent if you don't “own” your home or business.Add in all the little taxes on your phone and electric and water and sewerage and trash that are billed separately from property taxes.NOW try to guess how much tax is in the price of every item .

27 posted on 08/22/2014 7:55:03 AM PDT by hoosierham (Freedom isn't free)
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To: lifeofgrace
Don't forget your utilities. Taxes, fees, and assorted obfuscations amount to 9% of my electric and phone/internet/communications bills in Florida.
28 posted on 08/22/2014 7:56:36 AM PDT by Jacquerie (Article V. If not now, when?)
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To: lifeofgrace

If you capture fed, state, and local (taxes on the utility bills: phone, water, sewer, gas, electric)I’d guess at least 2-2 1/2 days.


29 posted on 08/22/2014 8:02:04 AM PDT by reed13k (For evil to triumph it is only necessary for good men to do nothings)
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To: lifeofgrace
I'll guess 2.45 days. (2.45 days = 7 days * 35%.)
30 posted on 08/22/2014 8:03:32 AM PDT by OneWingedShark (Q: Why am I here? A: To do Justly, to love mercy, and to walk humbly with my God.)
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To: lifeofgrace

Based on your replies, I take it you’re the author of the blog. First off, excellent project that many will find of value for many reasons.

You asked for taxes not to forget so here’s one for you. Check out the taxes on your phone bill(s), especially that one that’s still paying off the Spanish-American War.


31 posted on 08/22/2014 8:05:23 AM PDT by T-Bird45 (It feels like the seventies, and it shouldn't.)
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To: lifeofgrace

It definitely depends upon his tax bracket. If he and his wife make over 160k, I would guess somewhere between 3 and 4 days if you’re counting week as seven days, if you’re counting it as 5 days, then I’d say a little less than 3.


32 posted on 08/22/2014 8:11:00 AM PDT by old and tired
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To: lifeofgrace; All

don’t forget these:

http://www.thepowerhour.com/news2/tax_list.htm

http://www.newrochelletalk.com/node/2103


33 posted on 08/22/2014 8:18:38 AM PDT by Fithal the Wise
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bookmark


34 posted on 08/22/2014 8:28:17 AM PDT by freds6girlies (many that are first shall be last; and the last shall be first. Mt. 19:30. R.I.P. G & J)
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To: lifeofgrace
After I did my taxes last year I added up my FICA, property taxes, calculated sales tax deduction, gas taxes based on mileage and the income tax I paid and 27% of my gross income went to feed the beast.

God gets 10%

35 posted on 08/22/2014 10:09:06 AM PDT by tx_eggman (Liberalism is only possible in that moment when a man chooses Barabas over Christ.)
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To: ready2brd

Can you post some more information or links about a “untouchable COD”? not familiar with that. Thanks.


36 posted on 08/22/2014 10:34:47 AM PDT by LivingNet
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To: T-Bird45

Good points. I used to be in telecom so I realize how ridiculous those tariffs are and the myriad taxes and “universal service fees”...


37 posted on 08/22/2014 1:44:11 PM PDT by lifeofgrace (Follow me on Twitter @lifeofgrace224)
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To: ready2brd

Georgia is a mandatory liability coverage state. There’s no provision for financial responsibility. You MUST carry coverage in order to register your vehicle. I suppose we can look at that as a tax, but for my purposes I won’t. Although I might be able to work out the premium tax on my policy...not sure if that’s going back up the chain further than I want to.


38 posted on 08/22/2014 1:47:38 PM PDT by lifeofgrace (Follow me on Twitter @lifeofgrace224)
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To: lifeofgrace

If you work for someone else, don’t forget to include the Employers contribution to Social Security.


39 posted on 08/22/2014 1:52:52 PM PDT by So Cal Rocket (Task 1: Accomplished, Task 2: Hold them Accountable!)
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To: tx_eggman

Some time ago my 22 year old son and I sat down and together calculated how much he pays in taxes on his gross income working in a sawmill where he makes $23,000 per year.

Keep in mind, his income is so modest that he only pays, I think it was $1200 in federal income tax. Nevertheless, after adding up every tax we could think of, like gas tax, cigarette tax, McDonald’s food tax, excise, sales, etc., etc, etc., we reached a total taxes paid for the year of around $8500. More than 30% of his gross income goes straight back to the government.

And you just know that it only goes up from there.


40 posted on 08/22/2014 2:09:33 PM PDT by ladyrustic
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