Posted on 09/13/2010 3:12:59 AM PDT by Daffynition
Part of a series on tax policy
When it comes to taxes in the U.S., it's the income tax — and the annual April 15 deadline for filing returns — that gets most of our attention. But that's only part of the picture — there are property taxes and sales taxes, even taxes built into every cell phone bill. In the name of documenting how much of a family's income goes to taxes, one couple in Connecticut agreed to open their books.
The Milkove family of Stratford, Conn., pays about one-quarter of their income in various taxes. Sales and gasoline taxes make up just a small share of the family's overall tax burden.
Figures are based on the family's careful estimates of spending.
Auto taxes include auto property tax and auto registration. Travel taxes include tax on 2 round-trip flights, 6 nights hotel and 3 days car rental.
Source: Milkove family
Credit: Alyson Hurt / NPR
A gas station near their home offers the first glimpse at their tax picture: Harlan Milkove pulls his car in to fill up the tank, and 12 1/2 gallons later, his receipt says he spent $44.91.
"They don't break out the taxes from that," he says. Connecticut residents pay 60.3 cents per gallon in state and federal gas taxes. For the Milkoves, who use about 1,200 gallons a year, that adds up to just over $700.
But that's a small piece of the big picture; there are many more taxes to tally. At home, Milkove spreads tax returns, receipts and various bills on the dining room table. He pulls out his laptop, where he tracks the family's spending.
"This looks scary, but it's very organized," he says. The table is buried. Tess flees to the living room.
We tally up state and federal income tax, Social Security and Medicare taxes using data from their 2009 returns. These taxes, taken out of their paychecks each month, account for more than three-quarters of the Milkoves' tax burden.
The property tax on their home comes to just under $5,000. And in Connecticut, they also have to pay property tax on their two cars.
"Car tax due is $433.84, and Tess' is $395.52," Milkove says, reading from the bills. "It's like an extra car payment for each car — comes out pretty close."
Milkove is one of those people who carefully track just about every dollar spent, so we're able to get a good picture of how much sales tax they pay in a year. We look at spending for the first six months of 2010 and double it. Aside from groceries and clothing, most purchases are taxed at 6 percent. The sales tax grand total for the year is $400.
They don't smoke, but if they did, they'd pay more than $4 a pack in taxes. They do drink, a little. We figure they pay about $65 a year in alcohol excise taxes.
The Milkoves are going on a couple of short vacations, so we add in hotel taxes, rental car taxes and about $85 worth of taxes on just two round-trip plane tickets. Then we dig into their phone bills and find yet more taxes.
"There's a public safety communications surcharge, county sales tax, state telecom excise tax," Milkove says, reading from his phone bill. The cell phone and home phone bills both are about 20 percent tax.
"That's kind of disgusting," he says after doing the math. But an entire year's worth of telecom taxes doesn't even add up to 1 percent of the family's tax total.
"People get very frustrated at taxes that are relatively small compared to big taxes," says Gerald Prante, an economist at the Tax Foundation, a Washington-based tax-tracking think tank.
"I mean, if you look at this list," he says, looking at the tax tally that Milkove came up with, "everything is chump change compared to the federal income tax.
"Taxes he's bearing directly, this is a pretty comprehensive list," Prante says. But there are other taxes that people pay indirectly.
When the Tax Foundation looks at this larger picture, it finds that Americans on average pay 28 percent of their income to taxes — though it varies widely by income.
The Milkoves, it turns out, are paying just over 24 percent.
After doing all of the math, Harlan Milkove seems more tired than anything else. "It's not fun. I wouldn't recommend it," he says. "You wasted an evening, and it just ticks you off."
They’re paying 24% in taxes? Would they support the Fair Tax? They’d pay less.
I added up my own tax liabilities several years ago and came up with closer to 56%......
I would tend to agree with you on that too.
Not shown on any retail purchases are the tax liabilities built in buy the seller, to cover the cost of doing business.
No-one objects to paying a fair share of taxes to cover the cost of defending this nation other Constitutionally mandated ‘general welfare’ expenses.......but we are at the end of the ‘slippery slope’ with no escape.
Really? Right now I also pay more than 50%. 24% actually sounds pretty good to me. Families in the 200k to 500k or 600k in earnings (i.e. many families in the urbanized northeast) are paying the freight for a lot of the country. The really rich can hide their income. But the HENRY's (High Earners - Not Rich Yet) are slammed by the AMT and property taxes.
“But there are other taxes that people pay indirectly.”
Pay no attention to the taxes behind the mirror Dorothy...
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Yea it's nearing 60% for some. Makes you sick to think of it. And there's much more on the way.
We are stuck with trillions in lost equity combined with trillions more in debt. Either we reverse this or we are the last generation of Americans. The elections in November are surely our last hope to force the federal beast back into its cage.
I guess those kinds of car payments are possible for a family in the lower tax brackets, providing they own their home outright. But generally, folks who've troubled themselves to pay off their mortgages don't take out assinine car loans.
Bull if you add in the Tax cost in every product you buy it is well over 50% of your income. Probably over 60% and going up. There ate Taxes upon Taxes upon Taxes. Now they are yapping about ‘Tax Cuts’. Bull there are not Tax Cuts. The Tax will either remain the same or go up. A lie on its face.
Their taxes vs. income bar graph is quite deceptive visually. In the first bar graph the width for “other taxes” is way too small compared to the width for “payroll taxes”, given the percentages of each.
There are likely other issues with this presentation (it *is* NPR, after all), but that one just jumped out at me.
Increased taxes is a result of not knowing what else to do.
Exactly. We probably paid 24% when we were their age.
In 2011:
Federal - 39.6%
State - 5%
SSI & Medicare 7.6%
Sales Tax - 6%
Gas - 50 cents/gal
Property - $3100
That’s somewhere North of 65% paid out to gov’t!
I also think that over-regulation is a tax.
24% ?
BS. Its much closer to 50% if not more
This is horse feathers. We own a small business and our taxes are over 50%, just with a quick tally. We live in a state with no income tax and very low property taxes.
Let’s not forget the tax of inflation. When the government just prints money w/o backing, the value of everything you have denominated in dollars just got cheaper.
SSI of your employer is a cost incurred by them on your behalf. I don’t know how you’d add that to the mix, but it is a consideration when it comes to hiring and costs.
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