Taxing My Patience
Posted by PintofStout on February 24, 2006
I had written earlier about the actual tax rate as reflected on your pay stub, mentioning that to be accurate you’d have to include Social Security withholdings and Medicare withholdings. Well, that only included the withheld taxes. I will now begin to try and uncover the rest of the taxes we pay without much realizing it. I’ll start with gasoline.
The price we see on the sign at the gas station is an all-inclusive price of gas and various fees and taxes. But how much is the actual gas and how much is the taxes tacked on by the leaches in our legislatures? Well, here is a table I compiled from GasPriceWatch.com: [Table was lost in the transfer, but is still available here]
If you follow the link, you’ll see there are other taxes and fees added on to most states that aren’t included in the number on the above table. I will use the gas where I’m at now (2-24-06) in Ohio for illustration purposes, and show how much of the price is tax and what that means.When I filled up yesterday I paid $2.279/gal and pumped, let’s say, 13 gallons. My total bill was $29.627. Consulting the chart and the extra comment from the webpage – assuming no county or local gas taxes and no sales tax incorporated – $0.444/gal was tax (Ohio has no extra add-ons listed); that’s 19.4% of the cost of the gas or $5.772 worth of my purchase.These numbers may not seem too large when looking at one fill-up, but let’s extrapolate that number over time. I fill up my tank about six times a month, on average, the example shown above being typical (maybe a lower price than I’m used to). So every month I pay $34.632 in gas taxes; roughly $415.584 over the course of a year. That is slightly less than I pay in property taxes per year! But we don’t view it as paying taxes, we view it as buying gas. Now, we can say we are buying about 80% gas and about 20% government largess.
This isn’t even the sum total of taxes we are essentially paying for. The numbers above are the taxes we are directly paying (perhaps even anywhere from 5-7%, more or less, in sales tax, also). The indirect taxes we pay would be the hike in price to cover the cost of the various taxes and tariffs imposed upon probably every step of the production, transportation, and sale of this gas. I couldn’t begin to try and calculate that number. With any product or service we purchase, we are paying the taxes imposed upon the producer, transporter and seller through a higher price. Didn’t we ever notice such theft on such a grand scale?
Then, of course, there are taxes on all of your utilities and fees to drive and taxes on the fees; just about every aspect of our spending is taxed – this after they’ve taken a big cut right off the top! If the 20% figure holds through most of our transactions (that’s more than even church asks for, and at least they are offering to save your soul) our more accurate tax rate would be about 36%! I’ll give that a minute to sink in.
A person earning $50K/year gross would take home (assuming a 20% tax rate across the board) $40K. With the $40K left this person would buy stuff (assuming they spend 100% of their money, which wouldn’t be far off from true in a lot of cases and I don’t want to figure for the debt of spending 100+%) and pay tax on all of that. If I take off the twenty percent for taxes on this $40K, this person would be spending $32K on stuff and $8K on taxes. So from making $50,000, after taxes are figured they are making $32,000; a 36% tax rate! Ouch.
My estimates are likely high in some places, but the effect I was looking for was shock and awareness. Consider where the taxes are that we don’t usually think about, and then realize we are being taken for much more than we thought and certainly more than we’ll ever be told.