For years I’ve been saying that we Americans pay among the highest amount of taxes in the entire world. Invariably, whenever I say that, a few folks get upset and tell me I’m wrong because of some article they read once. Or something.
Today I’m going to lay out specifically why Americans pay among the highest taxes in the world, with specific breakdowns of the taxes I’m talking about, and with links to my sources.
When I say Americans pay among the highest taxes in the world, I’m talking about the total amount of taxes the typical American pays as a percentage of his income. I’m not talking about anything else.
- I am not talking about taxes as an amount of government revenue.
- I am not talking about taxes collected as percentage of GDP.
- I am not talking about taxes collected per captia.
- I am not talking about taxes billionaires pay. I’m talking about the typical working American.
- I’m not talking about tax rates. The federal income tax of 25% (or whatever) doesn’t fucking matter at all because the typical American pays a crap-ton more taxes than just federal income tax, as I’m about to demonstrate.
None of that stuff above matters. If you’re paying 40% of your total income in taxes, who gives a shit what your GDP is or how much total federal receipts are going to be this year? I certainly don’t, and you shouldn’t either.
I also did not say Americans pay the highest taxes in the world. I said they pay among the highest. There are a few areas in Europe, particularly in Scandinavia, where those crazy socialists pay even more taxes than we do. We’re still up there though. Out of the 196 countries on the planet, Americans are easily in the top ten highest taxed people on Earth. Not number one, but definitely in the top 5%.
I also didn’t say that every American pays a lot in taxes. I’m talking about the typical American. I will be more specific as I go along.
The typical American pays these types of taxes on a regular basis:
Federal Income Tax: This is a flat income tax rate of 10%, 15%, 25%, 28%, 33%, 35%, or 39.6%, depending on how much money you make. America stupidly uses the Marxist concept of progressive taxation, in that the more you make, the more you get taxed. Since the US government loves to make things needlessly complicated, the rate is actually staggered, so if you make a little over $37,650 per year, the amount under that is taxed at 15%, and the amount over that is taxed at 25%.
Let’s look at the typical American. According to the Census Bureau, annual median personal income is $31,099. Such a person is going to annually pay $925 on the first $9,275, and 15% on the remainder ($21,824) which is $3,273, for a total tax bill of $4,198, which is 13.4%
Remember, if he makes more than $31K per year, he’s going to pay a lot more than 13.4% in federal tax, but I’m being very nice here.
Payroll Taxes: This is another income tax Americans pay that covers our bankrupt welfare services; Medicare and Social Security. Pretty much every working American pays these taxes, since everyone who makes under $118,500 a year are forced at gunpoint to pay them.
(And before you say we aren’t “forced at gunpoint” to pay our taxes, yes we are. Stop paying your federal taxes, wait a few years, and watch what happens. Guys with guns will come to your house.)
Social Security is 12.2%, Medicare is 2.9%, for a total of 15.1%. However, half of this is paid by your employer (7.5%, and the other 7.5% is paid by you), but that’s not really relevant because if your employer didn’t have to pay that 7.5%, he’d just give that money to you and your pay would increase accordingly. If you’re a left-winger, I suppose you could ague that Employers Are All Evil™ and that they would instead just tell you to fuck off and keep this money for themselves, but that’s unlikely to occur across the board. You have to admit that some of that money would come back to the employee, anywhere from 1% to 7.5%.
Therefore, payroll taxes is 7.5% plus an additional 1% – 7.5% for a total of 8.5% – 15.1%
UI Tax: Another income tax Americans are forced to pay is for unemployment insurance. The federal government charges you 6% of your first $7,000, then your state charges you an additional amount listed here based on your state. We could use an average of all 50 states for an average UI tax, but that wouldn’t be accurate since the vast majority of Americans live in a much smaller number of states, and as usual, the bigger the state, the higher the taxes.
Since the majority of Americans live in the top 27 states, the average UI tax rate for those 27 is 4.1. If you’re a nitpicker or math nerd, I realize this isn’t 100% accurate since it’s not a weighted average, but it’s close enough. (I know that drives you guys insane.) If anything, it’s going to push this average down, not up, so again, I’m being very generous here. I won’t even include the federal UI tax into any of these calculations, just the state UI tax. Therefore, the typical American pays around 4.1% in UI tax.
State Income Taxes: Another tax most Americans pay is yet another income tax, this time to their state government. This is in addition to taxes collected by federal government, an important point I’ll circle back to in a minute. Not all states have an income tax, but 43 out of the 51 do in some way (I’m including Washington DC in there), so the typical American does indeed pay this tax.
The list of all the states and their tax rates are here. There are such huge differences that getting an accurate average for the typical American is going to be difficult. To get a workable estimate, I took the 27 most populous states and calculated a median average for a guy making around $31K per year. That resulted in 4.6% the typical American pays in state income taxes. (If you want to get more accurate figures, feel free to do your own math.)
In addition to state income taxes, some Americans pay yet another income tax which is levied by the city in which they live. This is in addition to the federal and state income tax(!). New York City residents pay this, for example. However, most cities in the US don’t do this, so I’ll be nice and just keep a city income tax out of this discussion. Just remember that millions of Americans pay this tax on top of everything else I’m listing here.
Okay, those are all the income taxes Americans pay, but they’re still not done paying! Once they get paid, they continue to pay a shitload more taxes. Let’s continue…
Property Taxes: Every American pays property taxes. Even if they rent, they still pay this since property taxes are charged to the renter of a property. Even if you purchase your own home and pay off the mortgage, you still must pay property taxes every year or the government takes your house away. This is why it’s often said that Americans don’t actually own anything; they just rent it from the government. Even worse, property taxes increase just about every year.
Every state charges its own rate of property taxes, listed here. According to the U.S. Census Bureau, the typical household spends $2,127. Since the typical American makes about $31K per year, that’s an estimated effective tax of 6.8%.
Corporate Taxes: America has among the highest corporate tax rates in the entire world. “But wait a minute,” you say, “The typical American doesn’t own a company, so he pays no corporate tax!” Wrong. At least some of the cost of corporate taxes are passed down to the consumer. It’s standard business practice, and I’ve done it myself. If I’m a business owner and I want to make X in take-home profit, but the government is going to take Y in corporate taxes, that’s an expense I have to cover in order to make my X. Therefore, I’m going to charge the customer more than X in order to make up the Y. I’m not just going to eat the Y.
I may not charge exactly Y extra on my prices, but I am going to charge at least some extra to make up that expense. That’s what an effective business owner does. Thus, yes, you as the customer are indeed paying corporate taxes, at least indirectly.
America’s corporate tax rates, again among the highest in the world, range from 15% to 35%. As many left-wingers point out, there are lots of loopholes that big corporations take advantage of that can reduce this corporate tax rate. This is true. The Department of the Treasury estimates that the “real” average corporate tax rate is around 22%.
Some of this is passed onto the consumer as a hidden sales tax, of anywhere from 5% to about 20%.
And speaking of sales tax…
Sales Taxes: 46 of America’s 51 states (again I include DC) charge people sales taxes on everything they purchase, with the occasional exception of some groceries. On top of the state, most counties and/or cities impose yet another sales tax on top of the state’s sales tax. Isn’t that nice? A table that combines both of these taxes per state is here.
Again, using the top 27 most populated states, the median average state and local total sales tax on Americans is a whopping 7%.
Excise Taxes and other Hidden Taxes: On top of all that crap, Americans pay numerous excise taxes and other “hidden” taxes on things they purchase. Every time you pay your cell phone bill, pay your electric bill, stay in a hotel, or put gas in your car, you’re paying an often huge hidden tax that is sometimes reflected on your bill, and sometimes not. For example, 50 cents per gallon of gas you put into your car is actually nothing but taxes to big government. It’s fucking ridiculous.
This is yet another sales tax Americans pay. I’m going to be very nice and estimate that these hidden taxes are just 2% extra on all purchases (on average) Americans make, but I’m quite positive its higher.
Add It All Up
If you add all the above taxes up, this means that the typical American who makes just $31K per year pays a total income tax of 30.6% to 37.2% (depending on how you factor payroll taxes) then turns around and pays another 20.8% to 35.8% in aggregate taxes on everything he purchases, which is pretty much all of his after-tax income since a guy who makes only $31K isn’t going to be saving or investing very much.
If you add those two numbers together, you get 51.4% to 73% of his income (sort of) that is sucked up by taxes in some way.
Are you getting the picture here? Do you see how much taxes Americans really pay?
That’s just the guy who makes $31K per year. He’s kinda poor. What about a truly middle class American? Then the numbers get even worse. While hard to estimate with averages, again if we take the top 27 most populated states in the US and look at average “middle class” incomes we get an average income of $48,510 per year. That places this person in higher tax brackets for federal and state income tax. That middle class guy is going to get whacked with a total income tax expense of 41.6% to 48.2% if you add everything up, and he’s still going to pay another 20.8% to 35.8% on everything he spends his money on. Plus, I haven’t even covered capital gains taxes in this conversation, which is yet another fucking tax most middle class Americans pay.
Other Tax Analyses Leave All This Stuff Out
Every time, and I mean every time someone sends me a link to an article or chart about how Americans don’t pay as much taxes as compared to other first world countries, that article or chart only accounts for federal income tax and payroll taxes. That’s it! It doesn’t account for state income taxes, sales taxes, pass-through corporate and excises taxes, and all the other taxes I listed above.
If you want to say that other countries pay more taxes than Americans, then you need to compare apples to apples. You need to compare ALL taxes Americans pay to ALL taxes citizens in other countries pay, not just the two taxes that are easy to look up and calculate. It’s a completely unfair and inaccurate comparison to just compare those two taxes and leave everything else out.
What About Deductions?
It’s true that typical Americans can get some deductions off some of their taxes for things like having children in the house. The problem is that these deductions usually only affect federal income tax. All the other taxes I listed are completely unaffected, so these deductions, if any, barely make a dent in the total numbers I’m describing. (It’s true that business owners get more deductions, but again, I’m talking about the typical American here, and the typical American does not own a business.)
But Other Countries Pay All These Taxes Too! (Right?)
When people try to point out all these other countries that supposedly charge more taxes than the USA, they’re usually talking about Europe. They say that European countries have sales taxes too (VAT) and various other taxes.
Yes, they do, to some degree, but the majority of European countries don’t charge the amount of taxes with regards to these other taxation methods. For example, people seem to conveniently forget that countries in Europe don’t have states. European countries are small; they don’t need states. Sure, they have provinces, but most European countries don’t levy a “province tax” against their citizens as an income tax. Therefore, most Americans pay a state income tax and most Europeans don’t. (Remember I said most Europeans, I didn’t say all Europeans. I know some Europeans do pay an equivalent to state income tax.)
What about property taxes? Most Europeans do pay a property tax of some kind, but while Europe is hard to generalize, most European property tax rates are lower than the US due to reforms starting in 1997, and there are numerous exemptions for citizens’ property taxes in Europe while in the US, there are none.
I agree that Europeans get hit with high sales taxes often, called VAT, so I’ll give you that one.
European corporate tax rates are also lower than America’s 22%. Go here and check it out for yourself, and note those under 22% tax rates are the gross tax rates, before deductions, which make them even lower. This means less pass-through charging to the typical European.
And so on. Yes, Europeans pay a lot of taxes. Everyone in the Western world does. But that doesn’t mean they pay more than Americans if you add everything up side-by-side.
In summation, here is what I’m saying: The USA is in the top ten highest taxed nations in the world if you add up all the taxes I listed above. If you include and add up all those taxes, you will not be able to find more than ten other countries whose typical citizens pay more in taxes than typical Americans. You can find a few, but not ten. I am happy to change my opinion on this if any of you can provide real evidence, with links to sources, that prove that above statement wrong.
I will completely ignore any comments from math nerds / nitpickers who try to nitpick my math. I’m not saying my numbers are 100% accurate. I’m saying they’re close enough to demonstrate that Americans pay among the highest taxes in the world. Even if my numbers are off a little, they still demonstrate the point.
Americans pay among the highest taxes in the world. Period.
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Very nice! One further comment I would add is that VAT is at the same time a sales tax AND a corporate tax, given that it is applied at business-to-business trasanctions too. So in the end the picture in Europe is practically the same in the consumer/business side.
It’s so funny, we tax “Value added” and then tax the profits. Uh? Isn’t that what “Value added” means? 🙂
I’ve been a long time reader and purchaser of your books. I agree taxation in the USA is rediculous, but I’m not planning on moving anytime soon.
Can you recommend any books or resources on minimizing taxes in the USA? The one book I did read on this basically said (1) own a business and (2) have rental property. I’m not quite there yet so wondering if there’s anything else a man in a higher income bracket, but still employee, can do.
Downright horrifying how much taxes we pay. I always ask my aqaintances if high taxes concerns them. They always get this confused look in their eyes as if they had never even considered it before. Then they sheepishly say – oh well I guess so. Most people are so unaware.
Fucking insane. Yet they can’t even spend all that tax revenue on shit that really matters.
Do you know which states are the most tax friendly out of the 51?
Also if I don’t get taxes taken out of my income during the year how much should I save to account for it come tax season?
Finally someone lays it all out. I’ve been saying this for years. People don’t even realize how much they are paying overall when you add it all together. It’s insane and the feds want even more. It’s truly a death by 1000 cuts.
I will use this post as reference next time some lefty tells me I’m full of shit about us all paying way too much in taxes.
I am starting to come around to VAT tax.
I would gladly take a zero income tax for a heftier VAT tax.
I think you should be taxed on your consumption of goods, not on what you create/produce (income).
Is that across the board or just certain countries?
Do an Amazon search for “Lower Your Taxes Sandy Botkin” and make sure you find the most current book. Really good stuff.
Yeah, those two things are pretty much required for most other techniques to work, especially starting your own business (even if the business doesn’t make very much money).
THAT is exactly why some people get defensive or confused when I say Americans pay more taxes than just about anyone else. They’ve been paying such high taxes their entire lives, and have never lived in a country where they would pay much less, so they have no real idea how badly they’re getting raped. They’re just used to it. It’s the classic boiling frog.
No state in the USA is tax friendly. The ones that are least bad are the seven with no state income tax:
If you live in the US, you’ve got to get creative. For example, I live in Washington (with no state income tax) near the boarder of Oregon (which has no sales tax), so I pay no state income tax and usually pay no income tax either, and I have my own business so I can deduct a lot of stuff. Thus my tax situation is still bad, but not nearly as bad as most Americans.
Ask your accountant.
So will I. 🙂
Not if a VAT tax is charged business-to-business like Shura is saying. But a consumer-level-only sales tax, yes, that is one of the few ways a government can collect taxes without raping its citizens.
Having an income tax of any kind literally makes no sense unless your goal is to become socialist. Same goes with capital gains taxes and property taxes.
Hey there, I have just calculated all of your points for my income in Germany:
45.500€ p.a. Gross Income
– 427,92 € solidarity surcharge
– 7.780,92 € income tax
– 4.254,25 € pension Insurance
– 682,50 € unemployment insurance
– 3.822,00 € health insurance
– 693,88 € care insurance
27.838,54€ p.a. “Net Income”
– 208 € public TV tax
– 3.420€ VAT on my life cost (18.000€ * 0.19 = 3.420€)
– 900€ hidden taxes on my life cost (18.000€ * 0.05 = 900€)
– 315€ property tax my landlord hands over to me
22.995,54€ p.a. Real Net Income
Yes my employer is taxed too, and could pay me more:
45.500€ p.a. Gross Income after Taxes for my employer
+ 1.820€ (I work for a big corporation that payed 4% total taxes last year = 4% of my income)
+ 4.254,25 € pension Insurance (employer)
+ 682,50 € unemployment insurance (employer)
+ 3.822,00 € health insurance (employer)
+ 693,88 € care insurance (employer)
= 56.772,63€ p.a. Gross Income before Taxes for my employer
(1 – 22.995,54€/56.772,63€) * 100% = 59,50% total taxes on me
So bottom line: we are half-slaves.
Incorrect. You calculated your American-equivalent taxes and then added some other items. Remove all of your taxes having to do with health insurance and care insurance, and then get a new total. Americans pay for health insurance too (a hell of a lot) but I didn’t include that in my above numbers, so you can’t include it in yours if you want to make a comparison.
Remember to always compare apples to apples.
(I also would like to know where you magically came up with a 5% hidden tax, which is more than double the estimate I used.)
Everyone except Alpha 2.0’s…
Wow, this is a fantastic article!
Between the government taking a huge chunk, plus so many people spending any residual income to buy the shiniest new bobble to keep up with the Joneses, it’s no wonder so many are drowning in debt and have nothing saved up. Sad state of affairs indeed.
Also, noticed this in the article…
Based on your Blackdragon business, I imagine you “eat the Y” quite often.
Keep up the great work, Caleb.
Not if a VAT tax is charged business-to-business like Shura is saying. But a consumer-level-only sales tax, yes, that is one of the few ways a government can collect taxes without raping its citizens.
VAT is not called sales tax because it’s quite different. Everything in an invoice has VAT applied to it. The idea is that a business is incentivized to ask for an invoice when purchasing from a provider, so he can deduct that VAT from the VAT he has charged his customers (final consumers or other businesses). This way, VAT, as its name implies, is spread all over the “value chain” and fraud is minimized (whereas sales tax has a single “point of failure”, the sale to the consumer, and doesn’t include service AFAIK). So in practice it acts as a consumer tax and a corporate tax (but THEN you have to pay the actual corporate tax after all this, ridiculous).
Go read the Wikipedia, you’ll love this sentence: A 2017 study found that the adoption of VAT is strongly linked to countries with corporatist institutions
Is this long term care insurance?
I have long held the opinion that we get roughly 30% of our income after taxes.
Nice to see your math proves me fairly accurate. Most of my friends see it as well.
Great article man!
Cuz I totally want the government to own everything around me lol. That’s the “shit that really matters” to most. If the tax revenue was spent on things that really matter, citizens would have next to zero freedom, there would be curfews, internet would be capped, school days would last 14 hours, and these tax rates would skyrocket to probably 90% at least. I actually want to do things with the money I make.
This article makes me wonder: Is it better off to be really poor in the west? I mean if we’re using the system of taxes where the more you make the more you pay, wouldn’t it be better off in the long term to make very little money, but save up a whole bunch of it and retire early?
I’ve been living really poor for the last 6 or so years, making just under $20000 a year but able to save up a good third of my income by living well below my means (which I enjoy way more than when I was living above my means). If I want something nice, I’ll just use a credit card (which they will give to anyone nowadays) and pay it off. Not that difficult if you aren’t making payments on a car or a house.
Anyone have any input on this?
And about half of it goes to the military. More than half if you include hidden military expenditure like the energy department, whose job it is to breed plutonium.
I’m considering it. I’m wary of the idea of creating multiple independent businesses; at the moment it really doesn’t seem like something I can enjoy doing long term – which one’s job should be for the most part, if lt happiness is the goal – , though I should actually sit down for it and seriously brainstorm the possibilities before I call it quits.
If I don’t leave France, making just under the current limit for 14% income tax (26800 euros) could be very livable, as I’m currently doing okay with way less than that from my thesis scholarship.
The next income slice is about 27k to 72k with a 30% taxation. Bear in mind that those are the rates you’re taxed for what you’re making within that specific slice, so there isn’t the problem of “making less than people with lower income than me because they’re just under my slice”. Based on CJ’s recommendation of $75000 I should be shooting for the upper range of that next bracket of 27k-72k euros, but I don’t see myself doing that right now.
I also need to do more serious research on whether Western Europe is really gonna collapse. Not that I’m taking them at face value, but newspapers in here actually seem pretty optimistic about european economy for the near term future, with high growth projections for 2017 and 2018. I’m already more or less convinced the place is fucked culturally/politically, which is why I’ll probably move at some point, but in order to start seriously planning to move within 15 years I need convincing that it’s also fucked financially. If “fucked” only means that countries currently in the top40 gdp per capita are gonna drop to the levels of middling countries like Uruguay or Latvia, then I honestly don’t give a shit.
Great article. I’m going to be sending this to my friends. It drives me bananas when people don’t add in sales taxes, property taxes, and the employer’s portion of payroll taxes.
One possible hole (I’m not nit picking, just imagining myself arguing with liberal friends) – is to account for the government subsidies that go into gasoline, oil and gas exploration, agriculture, etc.
I think these subsidies are insane, but I can imagine people saying “See LOOK – Things like gas are CHEAPER because the government subsidizes it, so they shouldn’t count!”
I doubt that accounting for subsidies would make that big of a difference, just trying to make the argument as sound as possible.
It is never better off to be poor if you seek long-term happiness (if you don’t care about happiness then of course do whatever you want). I address that here and here.
And you say you’re not a MGTOW…
Well you are right we have a difference there, because I live in a socialist country that forces me at gunpoint to pay for this stuff. All of that is deducted directly from my paycheck. I have calculated my available income => money I can use to buy stuff or invest it. Wouldn’t it be interesting to compare that with different countrys?
For example how much money could someone in America with an income of $55.000 p.a. use to buy Apples (or Apple stocks)?
(I also would like to know where you magically came up with a 5% hidden tax, which is more than double the estimate I used.)
Taxation in Germany is really complicated. I do not have the time to make an exact calculation how much of my live cost my be taxed how much through duties, trade taxes, energy taxes, electric taxes, ect. ect. but this report proves, that there are plenty of taxes on this junk.
Is this long term care insurance?
Yes it is.
Switzerland has this also, but in Switzerland the taxes are relatively small it seems you do get a lot back for it. Also in Switzerland if you are very rich you can just move to a town which has lower tax rate and if you are very very rich and its a small town you can negotiate the tax with the local government and quite often they will accept because they want you to pay the taxes there and not somewhere else. To me this is a good example how to handle taxation well in a developed country.
The thing is: For a normal employee who just has one job its completely irrelevant what the actual tax is. They only care about how much money they get in their bank account at the end of the month and how much the stuff in the shop costs. The taxes on both are not relevant to them, its between the company/shop and the government, because if they need higher salary / lower prices they can just go somewhere else and those companies will be burdened more… In other words taxation is almost exclusively a burden for companies. That is why the most effective solution to this problem would be some kind of company allience who just band together and completely refuse to pay taxes. If enough companies do this the government won’t be able to do anything about it. Of course that requires collaboration between companies. In normal case the government would just march the police to the company premises and confiscate stuff, but in this case it would not be possible. Large companies already do this at least to some extent, now its time for small companies to join forces and start doing it too.
Dude, how do you start a business and then deuct various expenses? What’s a good book/resource on this?
I think whats important to note is that Americans “don’t get much” for their high taxes, compared to the Europeans.
(Don’t get me wrong. My Scandinavian taxes are insane, and most of the spending is completely unnecessary.)
In western/northern Europe, you pay loads of taxes, but then you have a very large social security net and never have to worry about health care costs (while getting some of the best care in the world), short-term unemployment, schooling for your kids, paying for education (if you so choose) and so on.
I’m not saying that it’s great, or that this could work without America taking the military load, or without natural resources, or that it will last forever (or even a few decades). I’m saying that at least you get those benefits as part of your taxes, whereas the average American gets “nothing” for his high cumulated taxes.
So, if you are a responsible American adult, you not only have to pay a high cumulative tax, you also have to spend a great share on necessities such as health care etc. that will most likely put you above most average western European expenditures.
I think what you mean to say is that they don’t care or don’t notice. It’s actually extremely relevant, they just don’t realize that it is.
That’s why taxes should never be withheld from a paycheck. Instead, even normal employees should be required to pay it every month manually like it’s an electric bill. Then they’d “feel” how raped they’re actually getting.
Withholding taxes at the paycheck level was a genius move by the elites. Jacking taxes way up without people “noticing”, it worked perfectly on the sheeple.
Or individuals. I’ve said before that if one-third of all men refused to show up for work on Monday and refused to go in unless income taxes were cut by 50%, taxes would indeed be cut by 50% by the end of the week.
But again, modern-day Westerners are far too docile and beta to do such a thing. (“I can’t not show up for work! My wife would scream at me! And my Comcast would get shut off!”)
That book I mentioned above. And you must work with a good accountant.
That is also true. That is because, as has been correctly pointed out above, America’s massive, stupid, warmongering empire. This makes it even worse to be an American (sky-high taxes, lower benefits). Sucks all around.
I mean it is literally not relevant for most people. It matters to the company not the individual. As an individual I want to get paid X so I go to company who pays me X. As a company when you need good people you see they demand X but then it costs you XX because of the taxes and that is on top of the corporate taxes you are already paying.
Good idea, should start some kind of movement. Its funny that there are all kinds of strikes and unions for better pay but never for lowering taxes. Interestingly French are good at making such strikes but also there the income tax people have to pay themselves (or maybe its changed now). I remember living there for a time and it was so confusing for foreigners and resulted in many of them not paying taxes and not even knowing they did not pay taxes.
That’s factually incorrect. If the individual is taxed at 40% that’s worse than if the individual is taxed at 30%.
Incorrect. In the real world, companies don’t take on 100% of an individual’s tax burden in an effrot to get better employees. I’ve personally worked with hundreds of business owners. Not once of them has ever said, “Okay, Americans pay around 50% in total taxes, so I need to make sure I pay my employees double to compensate for that, because I want good employees.”
Exactly my point. Such a protest I mentioned above would literally never happen today. The economic Overton Window has shifted too far to the left, i.e. that it’s all my company’s fault I don’t make enough money, and government has little or nothing to do with it.
I still disagree. They might not see it that way so directly but the bottom line is the good people can request what they want and will go to places that satisfy it.
Yes because this is between the government and the company. As an employee I only care what I get at the end of the month. These details like how it costs extra on taxes to my employer does not concern me. I request certain salary and that is what I get. The extra costs are the problem of my employer.
Of course as soon as I start to have my own business then it completely matters but then there are numerous ways to avoid taxes like you often describe.
Again, you are wrong, those taxes are taken from your paycheck, not your employer’s profit margins. But you’re just repeating yourself at this point so I’m done here.
I don’t know what country you live in, but this rarely happens in the USA. There are very few employees who are so valuable that they can demand a certain wage. Superstar, special ones, maybe. But most employees are interchangeable and are in no position to demand anything. And no employee thinks their salary is some secret negotiation between the company and the govt.
There’s a fundamental error with your math here. You begin working out proportions of one’s income that is taken in tax. Then you move onto the proportion of sales that is taken tax. The error occurs at the end when you simply add up all the percentages and make the incorrect assumption they are all proportions of the same thing. Income.
Assuming that all your tax rate estimates are accurate and that our hypothetical man indeed does spend all his take-home money, rather than saving it, then the correct calculation would be as follows.
He pays 30.6-37.2% in income tax, therefore he has 62.8-69.4% of his earnings remaining to spend. He then pays 20.8-35.8% of this money he takes home in excise taxes which leaves him with 40.3-55.0% of his original earnings.
Therefore, he has paid a total of 45.0-59.7% of his earnings to the government in one form or another. I agree this figure is still terrible, buts not quite as bad as originally made out by BD.
Hope this is useful.
You forgot to mention that US citizens have to pay SEPERATELY for healthcare costs, and I’m about 99% sure that any of the other countries in the world who are paying as much or more than we are in taxes have their healthcare costs paid for by their taxes. So if you were to add the cost of healthcare coverage to the amount we pay in taxes, USA would probably be #1 in the world in total taxes+healthcare costs.
Just how they want it in the land of corporate greed and the home of the morons! Fool all the right wingers into thinking that having a national healthcare plan paid for by our taxes is somehow bad, and then get them to vote for the people who increase their low-income taxes and decrease taxes for their billionaire buddies. And they are too dumb to even realize it. Okkkk…. Thanks right wingers! Really smart!
All we get for our taxes is a huge military killer death squad and supporting tax cuts for billionaires. They can’t even afford to fix the roads. Yay ‘Murica.
Many years ago you could have multiple LLCs or corporations in Nevada.
Relatively inexpensive to set up and you can run your multiple businesses through those. The reasons to have more than one is to stay below a higher tax bracket.
And you had privacy and protection under the veil but that is probably more limited now.
Nevada has no state and no corporate tax. Apple is a Nevada corporation.