From: stvjas@meteor.wisc.edu (Stephen Jascourt)
Subject: taxes. (Was: Re: A Simple Thought Experiment)
Organization: University of Wisconsin, Meteorology and Space Science
Distribution: na
Date: Thu, 27 Aug 92 07:23:15 GMT

In article <1992Aug27.021557.11240@ke4zv.uucp> gary@ke4zv.UUCP (Gary Coffman) writes:
>In article <1992Aug26.035138.1468@vexcel.com> dean@vexcel.com (Dean Myerson) writes:
>>If 3/4 of your income is paid in taxes, you need a new accountant.  Income
>>taxes are higher in Europe.  Value added taxes more than make up for
>>sales taxes.  The big unknown to me is what comparison they have to
>>property taxes?  Anyone else know?
>
>Well, let's see if I can get close to the Taxpayer's Union number.
>
>Federal Income Tax		33.0%
>Social Security Tax		 7.5%
>Ga Income Tax			 6.0%
>Ga Sales Tax			 5.0%
>County Sales Tax		 1.0%
>Subtotal percentage taxes	52.5%

STOP! Let's do the math more reasonably:
State income tax usually allows you to subtract fed tax so the 6% is more like
4%.
Sales tax (5%+1%) is a % of what? Not total income! And not even most
expenses. Your mortgage or rent isn't sales taxed. Much of your grocery bill
isn't sales taxed. And that accounts for a large fraction of your 
after-income-tax income. So this 6% is more like 2%. 
So far we knocked off 6%, so the subtotal is at 46.5%.

>Ad Valorum Tax (real and intangible)	0.8% of assessed value
>
>This is a bigger tax than it looks like because it's on the assessed
>value of all real and intangible property. Converted to percentage of
>income, it's about 10%.

Let's assume this is a reasonable estimate. We're up to 56.5% now.

>User taxes. This is a miscillaneous category that includes things like
>excise taxes, motor fuel tax, Price-Robertson tax, hotel-motel tax, 
>liquor tax, tobacco tax, occupation tax, business license fees, etc. 
>It's hard to put an exact figure to this, but it's likely around 15%.

15% of what? Total income? You must be drinking and smoking up a storm in
a hotel room every weekend! As most of these taxes are avoidable (don't smoke,
commute less by living closer to work, etc), the principle expenses are
licensing fees. Generously assuming this is 3.5% of TOTAL GROSS income,
we have a grand tax total of 60%, not quite the 75% Gary wanted to reach.
Nonetheless, this is much higher than most people probably realize, and most
of it comes from income tax, soc sec, and property tax.

Of course, if social security works properly, we get all the money we put into
that 7.5% back later in life. (key word: if) So, instead of considering it a
tax, we should consider it a kind of pooled IRA system over which we have
hardly any control. Say we get back around only 2/3 of what we put in (after
adjusting for inflation). Then, we could consider it to be a 2.5% tax
contribution (and a 5% ira-like arrangement), resulting in a total tax from
all sources of 55%, leaving us with nearly 1/4 more of our income than Gary
figures.

>Adding this up we get about 77.5% of income goes to taxes. That's close
>to the Taxpayer's Union number of 75%.
>
>Gary

Stephen Jascourt   stvjas@meteor.wisc.edu
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