From: fischer@li.serum.kodak.com (Chris Fischer (x39613))
Subject: Re: taxes. (Was: Re: A Simple Thought Experiment)
Organization: Clinical Products Division, Eastman Kodak Company
Distribution: na
Date: Mon, 31 Aug 1992 18:00:37 GMT

In article <1992Aug28.171741.7029@colorado.edu> perlman@qso.Colorado.EDU (Eric S. Perlman) writes:
>In article <1992Aug28.161759.12965@mcnc.org> ekp@mcnc.org (Edward Pavelchek) writes:
>>Because of different needs for housing, purchasing patterns, graduated
>>rates, etc, a % tax rate number cannot be achieved.   A better way of
>>approximating one is to look at total government expenditures.  Roughly,
>>the Federal Budget is 25% of GDP, and the sum of state and local
>>spending is ~60% of the Federal, so that the total gov spending is
>>40% of GDP.  But due to the deficit, tax load is 35%.  Whether this is
>>sales tax, property, cigarette or FICA, it has to come out of somebody's
>>income. 
>
>Very true.  To be fair, are school districts included in this?
>
>>All you have to do is figure out how much of your income is exempt from
>>taxation, and how much of the national income is exempt.  Not that much
>>of either for the average person, as it turns out.
>>
>>A study of some 40 cities came up with the highest non-federal 
>>tax rate of 14.7%. (Milwaukee, 1988)
>>
>>The highest marginal tax rate?  Including the FICA your employer pays?
>>
>>FICA         15%
>>FED          33%

With the phase-out of deductions, this is equivalent to 35% for
many people.

>>State (HI)   10%
>>Property (1) 10.7%
>
>First of all, this is deceptive, since you only get 15% FICA if you
>count the matching amounts paid by the employer (the employee only pays
>7.51%)  

Old data.  Currently 7.65% employee, 7.65% employer.  For the self
employed, they have to cover both.

>Second, we should also recall that income above $48,000 is not

Old data.  This year it is close to $55,000 for OASDI (social security).  
For medicaid it is $125,000 (medicaid is 1.45%, Social security is 6.20%).

>subject to FICA - and that is lower than the low end of the 33% bracket.
>Third, as others have already pointed out, every state in the union
>allows you to deduct the amount of federal income tax paid from your
>state taxable income.  

Not in New York State.

>All of these reduce the amount quoted above
>significantly.
>
>Finally, it would be useful to re-iterate the fact that Social Security
>is currently not only paying its way with no deficit, but also *making*
>money for the government.  Indeed, this is seen in the current deficit

This doesn't effect that fact that I will probably not see a penny
of SS.  Therefore it goes into the great government spending machine as
far as I am concerned.

>rates, which are about $80B/yr lower than actual because of the fact
>that FICA tax collected is counted in with *general revenues* instead of
>being counted as the trust fund and insurance policy that it is in fact.
>
>>Sum .687/1.075= 64% (to normalize for FICA you never see, paid directly)

Nothing needs normalizing.  If the govt. did not take 7.65% from my
employer, I could be getting that money.  It is a stealth pay cut.

>>
>>Now out of the last dollar you earn, you are going to go out and buy
>>cigarettes, or whiskey, or gasoline.  Of course, you only have $.36 left
>>of the last dollar you earned, but you buy some dirt cheap rum 
>>(~70% BATF tax(2), and 8% sales tax) - value of rum received was equal
>>to (.36/(1+.08))*.3 = $0.10
>>That means your marginal tax rate was just 90%.
>
>Of course, in most states, food is not subject to sales tax, and in many
>people's case, a lot of what they spend goes for rent and food - which
>are not taxable.  In fact, in a number of states, the deposit a renter
>pays on his apartment must be treated as if it were a bank deposit -
>e.g. you get interest back on it comparable to the going passbook
>savings rate.

But most of what I buy also covers the taxes paid by the companys
I buy from, and the parts that they buy also has taxes built into 
them.

>     Eric S. Perlman 				 <perlman@qso.colorado.edu> 


-- 
Chris Fischer (fischer@serum.clpd.KODAK.com)
They never even listen to my opinion, why would they make it policy?
"The healthy gum tissue of our liberties are being eaten away by the 
 periodontal disease of government regulation." - D.Barry
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