For the one-earner family, state and local taxes make up an even larger share of the total tax burden and have been growing even faster. Payroll taxes have also climbed sharply. Although the rate has not increased since 1990, the amount of income subject to the tax has increased so rapidly that the median family's growing wages have not been able to catch up to the cap. As for the one-earner median family, payroll taxes took 9.7 percent of its income in 1975, and that grew to 12.4 percent in 1998. To a large extent, as seen in the two pie charts, the growth in tax burdens has crowded out other important parts of the family budget, such as saving.
Taxpayers pay such a wide variety of taxes at the federal, state, and local levels.
Some are easy to detect, like a personal income tax or a sales tax, but many taxes go unseen. For example, employers pay half of all payroll taxes, and these taxes diminish salaries. Also, when corporations pay their own taxes, they pass that cost on. Unfortunately, taxpayers are mostly unaware of these hidden taxes even though they make up a significant fraction of the family's real tax burden. This lack of transparency in the national tax system is a great flaw that this study helps to remedy.