Effective tax rate

[rooskers]

I paid 14% and am very happy with that. I personally wouldn't be very proud of myself if I was only paying 5% or less. Tax money is not necessarily a bad thing. That soldier who got his leg blown off in the war and now needs medical help gets that help through tax money. The roads you guys drive on everyday guess what that is done using tax money. Now don't get me wrong I don't want to become some socialist state where almost all of my money is going to taxes and I will be stuck in the same situation the rest of my life. All I am saying is people should pay their fair share and someone making $100,000 plus thousand should not be bragging about paying less than 5% of their income to taxes. This is not geared toward anyone here but more towards some friends of ours that make well over 150k and brag about only paying 2% in taxes. In the same breath he compains about the roads, lack of funding for schools, and not enough police patrols to watch his house (his Christmas lights got vandalized). Meanwhile I live in what I consider a nice house (3 bedroom, 3 bath, 1500sqft), contribute almost the max to my 403b, contribute to my daughters college fund, get couple vacations a year usually one big one, can save money, can go out to movies occasionally, own (yes own) two cars, go out to eat once in awhile, etc..., and yet still pay my taxes while making 90,000 a year. I guess he needs the tax breaks more than me so he can pay for his Boat, Rhino, 4600sqft house (he is family of 3 like us), vacation house, 3 vacations (DisneyWorld, Mexico, Hawaii), 3 vehicles (big truck for hauling toys, bmw wifes, GM Yukon for his child. I could go on but I just have to say thank god he only pays 2% in taxes or he might have to cut out one of those must haves from his life.

[sweeps]

rooskers: An interesting post -- I respect your opinion. But remember we're just talking about federal taxes. We've not discussed property taxes, state income taxes, and sales taxes. Your schools, your roads, etc. come from these taxes. I pay almost $10k/yr in property taxes alone. I'd definitely consider that my fair share.

[LivingAlmostLarge]

Me too. And if you live a in a state with high income taxes, you pay through the eye teeth. I might add I owe big on my state this year! Ugh.

[jIM_Ohio]

Originally Posted by rooskers

I paid 14% and am very happy with that. I personally wouldn't be very proud of myself if I was only paying 5% or less. Tax money is not necessarily a bad thing. That soldier who got his leg blown off in the war and now needs medical help gets that help through tax money. The roads you guys drive on everyday guess what that is done using tax money. Now don't get me wrong I don't want to become some socialist state where almost all of my money is going to taxes and I will be stuck in the same situation the rest of my life. All I am saying is people should pay their fair share and someone making $100,000 plus thousand should not be bragging about paying less than 5% of their income to taxes. This is not geared toward anyone here but more towards some friends of ours that make well over 150k and brag about only paying 2% in taxes. In the same breath he compains about the roads, lack of funding for schools, and not enough police patrols to watch his house (his Christmas lights got vandalized). Meanwhile I live in what I consider a nice house (3 bedroom, 3 bath, 1500sqft), contribute almost the max to my 403b, contribute to my daughters college fund, get couple vacations a year usually one big one, can save money, can go out to movies occasionally, own (yes own) two cars, go out to eat once in awhile, etc..., and yet still pay my taxes while making 90,000 a year. I guess he needs the tax breaks more than me so he can pay for his Boat, Rhino, 4600sqft house (he is family of 3 like us), vacation house, 3 vacations (DisneyWorld, Mexico, Hawaii), 3 vehicles (big truck for hauling toys, bmw wifes, GM Yukon for his child. I could go on but I just have to say thank god he only pays 2% in taxes or he might have to cut out one of those must haves from his life.

Paying 7% federal tax is not the only tax I pay.

I pay state taxes too. Around 4k.
I pay property taxes too. More then 5k.
I pay sales taxes (6.5%) on everything I buy in Ohio.
I pay taxes on my satellite bill, phone bill, cell phone bill, electric bill, gas bill and sewer bill.
I also pay taxes when I register my car.

Tell me again why I don't pay enough in taxes already?

[Joan.of.the.Arch]

Uh, yeah, rooskers, don't forget that the tax pile-up goes well beyond federal taxes.

I have 8 percent of anything I spend tacked on in sales tax (If you think about it, everything I ever earn will be spent and thus 8% of my income will have been taxed in this way.) Plus there's a 1% city income tax with no deductions nor exemptions,in addition to a state income tax. Most of us also have property tax, plus federal taxes on phone, tires, airline trips. I have a local "personal property tax," (not just on the house), and city business licenses just to be able to do any business. Then there are special taxes on energy including gasoline, natural gas, and electricity. Plus sewer tax. Plus all kinds of user fees for toll roads & bridges, parks, access to certain public records, to have a parade, approval of building or demolition plans, to license of boat to go on public waters, to fish in public waters, to hunt, etc. Others have even more taxes, like maybe special tax districts set up to help fund things like zoos, museums, special schools, historic architecture preservation, public transportation, bike paths, old railroad bed restoration to hiking trails, etc. All this yet I am living in an area that pays slightly fewer taxes than average in the USA. The 7.77% of income I pay in federal income tax is only part of the picture; I assume the same for everyone else here.

[jc3900]

Wow, I am looking at some of these tax percentages and am actually getting inspired to live in the United States. However, I don't know if you guys are telling the entire story. Are you guys dividing state, federal, social security, medicare, property taxes, and sales taxes by your gross income. Also, it would be helpful if you told what major deductions you had such as children. If you guys look at all the taxes, I seriously doubt you will average between 10-12 percent like it appears. I would guess the appropriate average should at the very least be in the high teens. I would guess like 25% actually.

[sweeps]

Originally Posted by jc3900

Wow, I am looking at some of these tax percentages and am actually getting inspired to live in the United States. However, I don't know if you guys are telling the entire story. Are you guys dividing state, federal, social security, medicare, property taxes, and sales taxes by your gross income. Also, it would be helpful if you told what major deductions you had such as children. If you guys look at all the taxes, I seriously doubt you will average between 10-12 percent like it appears. I would guess the appropriate average should at the very least be in the high teens. I would guess like 25% actually.

Right. Take a look at the 4 posts prior to yours.

[jc3900]

So does anyone have any REAL percentages that actually mean something.

[Joan.of.the.Arch]

Oh, yeah how did I forget social security and medicare taxes?! Those are biggies! Thanks for the reminder jc3900. Errrg. One of these days I will sit and try to figure now much tax I really pay. There must be at least rough estimates out there --somewhere-- for various income levels and states. Google, anyone?

[Joan.of.the.Arch]

34% goes to all levels of government says "The Tax Foundation."

The Tax Foundation - America Celebrates Tax Freedom Day®

I really don't think that includes user fees.

[jc3900]

So, since the average rate is about 34%. That means anyone who is doing really well is paying 40+%. How in the world has our government come to this? Taking 40% of what someone makes year after year is just wrong. Just think if the average rate was 25%. That would mean you would have 9% more to save/invest. If you were making a 60,000 that would mean 5400 dollars more a year. Using an online investment calculator, investing 5400 dollars a year with a 9% return and 3% inflation would be 613,000$ (net of inflation) over 35 years. To bad people are to stupid to realize this and will continue voting for idiot politicians. Maybe someday someone from savingadvice will run for office.

[DebbieL]

In Canada there is a day in July (or maybe it's August) where they say that if you are the "average" earner, then from that point on your money is now yours (in other words, between income taxes, sales taxes, etc. over 50% of our income is going to taxes - yikes).

[jIM_Ohio]

Keep in mind the United States was formed by a bunch of englishman which were sick of paying their taxes.

Being taxed by your government, then finding a way to not pay it is the real American way since 1776.

[LivingAlmostLarge]

Our effective tax rate is like 6% for federal. It's crazy we had so many deductions this year it was wild! Our AGI was $110kish.

Gee paying $30k in tuition really seems to help. That and a large mortgage :P

[zetta]

AGI $168k
Federal: 12.5%
CA state: 4.8%

If I had stayed a SAHM instead of working part-time for six months:
AGI: $151k
Federal: 8.7%
CA state: 4.3%

Just goes to show what life is like in the phase-out zone!

[LivingAlmostLarge]

If it makes you feel better, we paid 5.3% state income taxes.

[srblanco7]

AGI $151,000
Federal Tax $19,600

Effective Tax Rate 13%

But we also paid over $8k in NYS income tax. Ugh.

[DebbieL]

We also don't get any deductions for mortgages here in Canada (not that I have one with the ridiculous prices in my city right now).

[Aleta]

This also doesn't include what some of us pay for private health insurance. No one mentioned the gas taxes. I wonder what we really pay when you add it all together including the health insurance which some countries have included in their tax base?

[jc3900]

Please, look at some of the posts above. The "effective" rates that you guys are using don't include all of the taxes that you are paying. What about sales, property, state, medicare, and social security. The average rate that is paid by americans is 34%. That means if you are on the wealthy side, you are most likely paying higher than 34%. These numbers in the teens actually make me want to live in the United States, to bad they are false.