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I am clearly sympathetic to the many Tea Parties that are happening around the country today. But these are all focusing on how serious the federal income tax burden is. But for most people, I would argue that their federal income tax burden is nowhere near the most serious tax they face.

For example, if you make $100,000, after the relevent exemptions and deductions, you probably pay something like $8,000. If you have a $250,000 house in a nice school district in New York, you are looking at $8,000 per year in property taxes alone. Your portion of the payroll tax is $7,650 alone … and the real effect is something closer to $14,000 for payroll taxes. If you consume 80% of your after-tax income in New York (supposing you have $70,000 of after tax income and save 20% of it), you are paying 8.25% on $56,000 of purchases – for a total of $4,620 of sales taxes. And all of this excludes all of the fees, fines, and other charges you are nailed with as you go through your life (for example, my wife and I have to pay $400 to remove empty metal oil tanks from our house before we are “allowed” to sell it).

Ignoring future taxes, and your share of the federal debt, and the inflation tax, and the inheritance tax, and capital gains taxes, you would be paying around $26,620 of taxes ASIDE from your federal income tax burden. Oh wait! I forgot the roughly $5,000 I would have to pay in state income taxes too! So make it $31,120.

So when will the sales tax Tea Party day be? When will the payroll tax Tea Party be? When will the property tax Tea Party be? When will the oil tank removal Tea Party be? I would urge folks to make this point more loudly and to be more vigiliant throughout the year. By the way, what kind of a protest could you have when half the country pays no federal income taxes anyway? That is not exactly going to rally those troops, is it?

One Response to “Missing the Point on Tax Day”

  1. Harry says:

    Exactly correct, Wintercow.

    Let’s not forget the excise taxes we pay for the privelege of having telecommunications services, or boarding an airplane. How about hotel taxes?

    Today I paid my federal tax bill, and my state tax bill exceeded it, because Pennsylvania does not allow any negative numbers in one category to offset positive numbers in another category. I hesitate to criticize this system, since at least everybody is taxed at the same rate, except…

    When I started working for a living, Pennsylvania had no income tax. Milton Schapp, running for governor, promised that he would eliminate our 6% sales tax and exchange it for an income tax, which I recall was enacted at 2.2%. Under successive administrations, that was raised to 2.8%, where it remained until Ed Rendell came in and raised it, with the support of a Republican legislature, to 3.06%. This was effected along with a promise to bring in casino gambling, which was and still is supposed to reduce our property tax bills. The catch is they want to fund schools by sending this money to new super-school districts, as opposed to our relatively small school district.

    Hey, they need my money, so what’s wrong with that?

    Our sales tax remains. Clothing is not subject to sales tax, not even boxer shorts, but swimsuits! are taxed. So are cars, even ones with a small carbon footprint. If you die, the first dollar of your estate, should you be so stupid to have it in your name, is taxed at six percent if you are passing it on to lineal heirs; otherwise it’s 15%. Our gas taxes are high, but they are supposed to go to our roads. Some of the liquid fuels tax actually goes back per mile to our municipalities. The rest goes to the five guys watchin’ and the one guy workin’ for PennDot or the contractor who won the bid.

    Our property taxes (school district, county, and township) steadily rise, affected most by rising public school teachers’ salaries, but also by the voracious spending appetites of our county and local officials, who also want to consume the property rights of anyone who lives remotely near them.

    On top of this burden, our federal government proposes to increase taxes at the margin on capital gains, dividends, and returns on capital investment, which results in driving down the value of all capital, be it real property or ownership in a business. This happened not last month, but rather more than a year ago. It is merely being reinforced every time Barack Obama reads a speech drafted by Dave Axelrod.

    These tea parties are not going unnoticed. Arlen Specter is scared, as he should be, since he will be toast should he decide to go for six more years.

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