|Where Does Your Money Go? Taxes
by Terry J. Rigg
Trying to stay within the theme of Budget
Stretcher, I thought a series of articles on knowing where your money is going
may help some of you understand just how much you pay on certain
I've decided to start this series of articles with information
about the amount and type of taxes you pay. I won't be able to cover all of the
types of taxes that are paid by Americans because that would turn this article
into a book. I'm just going to list a few of the most common taxes that most of
us have to pay.
How much do you pay in taxes every year? I can bet many
of you don't have any idea. You may think you can just look at your tax forms
for last year and have the answer. I guarantee that would be just the
Just take a look at the below list of various taxes and do
the math yourself:
Federal Income Taxes - Uncle Sam is currently taking
between 15% and 39% of our Adjusted Gross Income to pay for what ever it is
that they spend money on in Washington. The main point I want to make here is
that many people feel that because they received a refund, they didn't pay any
taxes. For some people, this is true. However, the vast majority of people that
receivea refund are just getting back the money they already paid in through
withholding, minus the taxes they owed. HOW MUCH DID YOU PAY LAST
Income Tax Preparation - Yes, I consider the cost of having our
taxes prepared by a professional as a tax. If the federal tax code was
published in english, maybe more of us could prepare our own
Social Security - 15.3% of your income goes directly to the
federal government for social security and medicare and is conveniently
deducted from your paycheck. The myth about your employer paying half is just
that. If you weren't required to pay social security, that is another 7.65%
that your employer could pay you.
Sales Taxes - Unless you live in a
state that doesn't have a state sales tax, this costs you around 6% to 7% of
every penny you spend. Wouldn't it be nice to buy something for $99.95, hand
the clerk a $100 bill and get a nickle back.
Property Taxes and Real
Estate Taxes - These taxes can run into the thousands of dollars a year. I
know, there are some places you aren't required to pay these taxes either,
however, you can bet they get this money in other ways. Before you renters
start smiling, remember that your landlord has to pay these taxes.
guess where he gets the money?
The Other Guys Taxes - What do you mean
"The Other Guys Taxes"?
He can pay his own. For each item you buy, the
manufacturers and distributors have expenses like the cost of production,
packaging, shipping, etc. They also have to pay taxes. Who do you think
actually winds up paying these expenses? If you buy it, you do. I have seen
estimates that between 20% and 25% of the cost of most items is for taxes that
they have to pay. To make a profit, all companies must pass all expenses they
have along to the consumer.
Gas Tax - With federal gasoline taxes over
18 cents per gallon and state gasoline taxes as high as 35 cents per gallon it
isn't hard to see that, with the price of gas currently under a dollar in most
places, over half of the cost of your gas could be going for taxes.
Employment Taxes - This is simply the way a self employed person pays their
Social Security and Medicare. They are required to pay 15.3% of their gross
income to cover these expenses. These are the people that really know how much
taxes they pay. This is because they are required to write a check for them
four times a year and, if they underpaid throughout the year, they may have to
write another check on April 15th.
When you look at your budget and
wonder where all of your money is going, you may want to consider what you are
paying in taxes. There are taxpayers in this country that are paying over 50%
of their income in one tax or another.
Here are links to a couple of
other articles I've written on taxes:
I Love That Big Tax Refund
23% Federal Sales Tax!! But Wait!
not trying to make a political statement here. I just believe that everybody
should be aware of where their money goes. If you take a few minutes to think
about it, I think you will realize that a good percentage goes to the federal,
state and local governments.
"It's How Much You Keep That Counts! Not How Much
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