Income tax time again

[David S]

Recently I helped someone with their taxes so I saw how much someone with a roughly median income has to pay.
His situation was like this.
Income from all sources - $50,000.
Federal income tax -    $7000
Social Security - $3000
State tax   -   $1800
Medicare   -$300
Total            $12300.

In other words this person paid almost 25% of his income in taxes, and that doesn't count the 6% state sales tax or the 38 cent per gallon gas tax.
Also he recently bought a house, so next year he will pay an additional $3000 in property tax. That will bring the total to 30% of income.

Does this sound like too much for someone making only $50,000 per year?

[David S]

Too much, but that's because of some of the regressive use taxes, not the progressive income tax.

Exactly.

I'd like to see most regressive taxes like the gas tax, sales tax, and property taxes either be greatly reduced or eliminated. Income tax is okay since it's progressive.

But the income tax took by far the largest chunk.

[David S]

What do you mean only $50,000?

O/c not possible to answer the question as I don't know what sort of job this guy does.

I don't know what wages are like in the UK but around here 50k is not much. An unskilled worker on an automotive assembly line would make more and get better benefits.

[David S]

I would say that at $50,000, 25% is about right. 

Looks like we need to run this one by the OHT. (Opebo hypocrisy test).
My efforts to contact your tax attorney have been fruitless so I'll have to calculate your taxes myself. First since you are not a resident of any state you probably owe zero state tax. You have no wages so you don't pay Social Security or Medicare tax. That just leaves federal income tax. As I recall you have stated your income as somewhere in the 35-40 k range, but just for comparison's sake lets assume your income was the same as this individual. Using the standard deduction your tax would be $7000 too. However as I recall your money comes from a trust fund which was set up as a result of an inheritance. If that is the case then you may owe no taxes at all! So while you are quite happy with someone else paying 25% of their hard earned income to taxes, you pay somewhere between zero and 14% and that's on income you didn't have to work for. Shame on you. This one flunks the OHT test.

[David S]

I think that you have to consider what you are getting for all your tax money.
Schools- Free Education for your children K-12
Roads- You couldn't get to work to make your money without them
Police protection- The cops suck when they're handing you a speeding ticket but you'd better thank Jesus they're there.
Fire Protection- Just might come in handy
Military Protection- There's a lot of pork here but it's a worthy cause
Parks- Making life more pleasant
Social Security- Keeping you from having to support your elderly parents/grandparents.
Medical research- Hopefully, we can kick cancer before I'm old
College Aid-Most Americans wouldn't make it past high school without it.

I'm not here to argue that everything the government does is efficient or wise, but you have to consider all the good things you're getting before you bitch about taxes.  Federal Budget for 2006 is 2.6 trillion dollars, which comes to about $9,000 for each man, woman, and child. If you're not paying that much for each member of your family, you're getting a bargain.

Another way to look at it is if you're getting a bargain then someone else is getting ripped off.

Some other things you might want to consider:
Despite the huge amount the government takes from us they still run a $500 billion deficit per year which increases the national debt. That's a problem we are passing on to future generations.
You may like social security and medicare but those programs are way underfunded. In fact over the long term they are underfunded by about $80 trillion in today's dollars as Bruce Bartlett points out in this article http://www.ncpa.org/edo/bb/2005/20050427bb.htm The $80 trillion is about 6 or 7 times our current GDP. That's in addition to all the taxes that government expects to collect over that time period. And it is the result of a government that absolutely will not behave responsibly. Rather than cutting out pork projects and trying to streamline medicare, government just adds on more pork and adds a drug program to medicare.
Politicians know the big problems will show up in the distant future, long after they are out of office, so they don't care about it. In the short term they look good to their constituents because of all the free goodies they're handing out.

In the mean time government grows bigger and bigger and America becomes more and more socialist. The big programs like social security, medicare and medicaid just keep growing never getting smaller. Eventually they could consume the entire GDP, except that economic collapse will occur before that happens.

[David S]

I think that you have to consider what you are getting for all your tax money.
Schools- Free Education for your children K-12
Roads- You couldn't get to work to make your money without them
Police protection- The cops suck when they're handing you a speeding ticket but you'd better thank Jesus they're there.
Fire Protection- Just might come in handy
Military Protection- There's a lot of pork here but it's a worthy cause
Parks- Making life more pleasant
Social Security- Keeping you from having to support your elderly parents/grandparents.
Medical research- Hopefully, we can kick cancer before I'm old
College Aid-Most Americans wouldn't make it past high school without it.

I'm not here to argue that everything the government does is efficient or wise, but you have to consider all the good things you're getting before you bitch about taxes.  Federal Budget for 2006 is 2.6 trillion dollars, which comes to about $9,000 for each man, woman, and child. If you're not paying that much for each member of your family, you're getting a bargain.

What frustrates many is that except for military protection and social security, little of the large federal portion goes to any of the items on the list. The services like schools, parks, police and fire are the ones that affect more people in their daily lives, yet they are funded by the smaller state and local tax portion. Roads are paid for mostly by state and local dollars with some federal dollars. But those federal dollars are from the gas tax, not the income tax.

I'm not a big fan of any taxes, but I think state gas taxes and license fees are the fairest way to fund road construction and repair. It doesn't make sense that someone in say Oregon should pay income taxes to fund roads in Michigan or vice versa. In addition it makes sense that the people and legislators of Michigan have a better idea of what roadwork is required in Michigan than the U.S. congress. It makes sense to keep the funding and planning local rather than national. Also the gasoline tax tends to put the biggest burden on those who put the most wear and tear on the roads. So people who drive more and people with large heavy vehicles buy more gas and consequently pay more gas tax than others. That seems reasonable, almost like a user fee.