Today’s fastest-moving story on the Internet is the study that purports to show that we really aren’t paying the taxes we think we’re paying, we’re paying fewer taxes now than we have since 1950.
As with most swift-moving stories, there are some hard-to-fathom numbers, and truthiness depends on an individual’s particular situation.
It started on the personal finance column on USA Today’s Web site, citing a study from the Bureau of Economic Analysis:
Some conservative political movements such as the “Tea Party” have criticized federal spending as being out of control. While spending is up, taxes have fallen to exceptionally low levels.
Federal, state and local taxes — including income, property, sales and other taxes — consumed 9.2% of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis reports. That rate is far below the historic average of 12% for the last half-century. The overall tax burden hit bottom in December at 8.8.% of income before rising slightly in the first three months of 2010.
According to USA Today — there’s nothing on the Bureau of Economic Analysis Web site to refer to — the average household making the average income — $102,000 — paid over $3,000 less in taxes in 2009.
But the 9.2% figure is hard to swallow.
First, Social Security takes 6.2% of your income right off the top and you don’t get it back until you retire, if the system is solvent at that point. The fact you may not get it back for several decades doesn’t ease the bite.
That leaves 3% left to be consumed by all other taxes, if the report is to be believed, and we know that’s simply not true.
The Medicare tax alone is 1.45% (the employee’s share) of all wages, and it is soon to go up to 2.35%.
That leaves .75% to be consumed by all other taxes.
For an average family making $102,000. That’s $765.
Do you drive a car? That’s about $100, $35 of which you can deduct from your itemized deductions on your federal tax return (returning about $12 to you in all). And that doesn’t include the “fees” Minnesota imposes on top of the registration “tax.”
Even if we just take half of the average miles driven per year — 7,500 — and generously figure a car gets 30 miles per gallon. At a tax rate of 40.4 cents per gallon, that’s $101 in gas taxes.
And there’s still cigarette taxes, liquor taxes, homeland security taxes, and we haven’t even started our federal or state income tax returns yet.
The USA Today story says one reason the tax bite is low, is because of the federal stimulus package. But that’s part of the “we’re taxed too much” complaint; that it’s a bill that will come due in the future, not a handout without incurred debt. It also says we paid less sales tax in ’09 because of the downturn in the economy.
But as with many statistical exercises like this , it’s an average. A few weeks ago, we heard that over half of Americans don’t pay any income taxes. Is that you? Probably not. It probably isn’t the people who are complaining about high taxes, either.
As with every average, an individual’s “mileage may vary.”