Average Total Taxes?

Great Debates
21

Why is this a marvel? It’s your home and land. You took out a loan using a down payment as collateral and the physical property itself as a check on skipping out on it. The loan underwriters have a valid claim on it until they get their money
back, but the property is in your name, even if you don’t have any equity in it.

It’s like reverse mortgages. You can have negative equity in your home, but it’s still your responsibility.

If I choose to buy a 20 year old Toyota compact for $100,000, I’m not going to have much of an argument about getting taxed on the $100,000, even if the car isn’t worth $1000.

I guess you qualified this post with the fact that you aren’t (technically) bitching about it, but it’s like marveling at the fact that water is wet and that pouring water on something makes that thing wet.

I guess I can see this, but it still makes no sense.

If your wage/salary doesn’t go up, you’re taking a “loss” if there’s any inflation. Yet, this is considered a normal thing. Why should taxes on income (and interest is certainly income) be any different if the purchasing power changes?

By this view, if there’s deflation, you are getting “free” money that is effectively taxed lower (yet somehow, I think your POV wouldn’t put it this way).

Not really a hole. Some people advocate a wealth tax. It’s widely unpopular.

22

How about this simple method? What do you think? Ratios.

If 24% is 1.8T (both from above)
Then x% is 5.2T. What is x?

You are welcome to use any numbers you feel are correct.
How about it? Let’s see your try?

23

Tax Freedom Day

For the USA:


Year 	TFD 	        Percentage tax burden
2011 	April 12 	28.0%
24

Plus a state like Vermont will have very different tax amount than Nevada in terms of state income tax, excise taxes, sales taxes etc.

25

You’re getting slammed on this because you’re cherrypicking numbers with a variety of meanings and then slamming them all into one basket. That can’t work and it ruins any case you’re trying to make.

You’re not even reading your cites carefully.

The Washington Post article says:

That’s the answer you should be looking for. Average family 16.5% in federal tax. Add to that all state and local income taxes, sales taxes, excise taxes, “sin” taxes, and estate taxes and you probably get about 25% total tax, a number that has been given already, with cites.

That is also the number implied in the Investors Daily Bulletin editorial, not article, you cited. But IBD is not a trustworthy place for editorials. They are so right-wing that the Iowa caucusers would be hesitant to vote for them. The editorial writer then proceeds to make up a totally imaginary additional 25% of taxing equivalent as harm to the economy. He can’t defend this, because it’s not true, but he does do a lot of hand-waving so I’m sure he stays nice and thin with all that effort.

I still can’t imagine what point you are trying to make or why this is being allowed to sit in GQ, where facts rather than editorials are the norm. Stop telling us that we are ignorant and make a case for whatever you think you’re saying.

26

I don’t think you truely understand the genius at work here.

I can see a ‘property’ tax…basically if you own this particular land you will pay the community $x per year. This amount can even vary.

However, that’s not what it does. It counts all the buildings and improvements made and taxes on THAT.

Not genius you say?

Well, this is essentially a ‘wealth tax’/‘net worth’ tax…on net worth that the owner doesn’t have! In fact, there can be zero or negative net worth…and the taxpayer still pays as if he owns the entire thing!

Genius!

Ok, I can see where you don’t think there is genius there even though I do…

However, you still have to marvel at collecting tax on interest below inflation…person has $1000…makes $10 interest and pays taxes on that interest but if inflation ran at 2% that $1010 is now worth $990. Taxing losses…

GENIUS!

Come on…you have to marvel!

27

No, there’s nothing complicated about it. It’s property tax, not a net worth tax. “Property” doesn’t mean only plots of land, it also means things you have possession of. Some states have a property tax on cars; that doesn’t mean cars are land.

It isn’t a net worth tax because the tax is not on wealth, and there is no attempt to assess one’s assets (beyond the land and improvements thereon) or one’s liabilities.

It isn’t genius, it’s rather straightforward and boring.

28

There is no single answer to this question because it is both different for every individual and there is no consensus on exactly what to include as a tax.

For example, I have a client with income from three states and two countries. His rates are clearly not going to be anything like yours.

And I own 100% of a business taxed as an S Corporation. Is my earned income for this question defined only as what I call wages, or do we include the full net income of the company as well? Since I can assign how much money comes from wages and how much from the corporate earnings, this is a pretty arbitrary assignment. Do we include all of the taxes the company paid, since those ultimately come out of my net income?

And what about car tabs/licensing? In WA, part of our cost is considered a “personal property tax” according to federal definitions for itemized deductions, but if we exclude the rest of the license, that’s akin to saying that a flat fee isn’t really a tax.

Do you include tolls, ferries, public transportation? All of them, or only when the revenues are included in government funding?

In any event, I’m not playing a game where you clearly have an agenda that you’re not willing to state up front. If there’s a “correct answer” please share it so that we can discuss it.

29

For someone who has spent hundreds of hours studying this, I would think the OP could ask a specific intelligent question, rather than shotgun out a dozen inane questions.

Perhaps he took ‘General Questions’ a bit too literally.

30

The taxpayer DOES own the entire thing.

The mortgage company might be able to take the property in recompense for the loan if it isn’t paid back, but it’s still the taxpayer’s property until the legal proceedings declare that the property is being taken as recompense.

If the taxpayer didn’t own the entire thing, it also couldn’t be sold. And any capital improvements would need the bank’s permission. And the bank would technically be on the hook for any repairs or upkeep needed.

I don’t think you understand how it actually works.

Take a different example. Let’s say I borrow $1000 from you to buy a TV. I agree to give you $100 for 12 months (the total of $1200 represents the interest). Further, I agree that if I stop paying, you have a right to take the TV from me. Further, I agree that if I sell it in the next 12 months, you get your cut from the proceeds before I get my money. Also, you get to approve the sale, should I sell it for less than the outstanding amount left on the loan.

I am still the one who owns the TV. It’s not yours. Yes, due to the terms of the loan, there are conditions on my use of my own property. But it’s not YOUR property. You can’t use it as you please. You can’t come over and watch it whenever you want. And the TV can be taken from me, but only because I agreed it is no longer my property if I can’t pay back the loan.

Likewise, it’s not the bank’s house. It’s the taxpayer’s house. Due to the terms of the loan, the bank can take the house in lieu of repayment of the loan. But the bank cannot do whatever it pleases with the property - because it’s NOT the bank’s property. If they foreclose and sell the house, anything beyond what is owed to the bank goes to the taxpayer. So, yes, the house is actually the property of the taxpayer.

If, at some point, the home is worth less than the outstanding loan amount, it sucks for the property owner. But that’s the agreement made to get money to buy the property. You are on the hook for the loan, but that doesn’t mean the bank partially owns the property. It simply has certain rights associated with the money you borrowed to pay for it.
And you never addressed the deflation aspect.

What if there was 5% deflation. By your reasoning, you suddenly have a tax break on interest income. Yet this is somehow supposed to be a ‘loophole’ by your reasoning.

31

^^^ This

32

I would agree with this. If you get 5% interest and there is 5% deflation…you should be taxed at 10% because that is what your money worth has increased by. Governments don’t have to worry about this for tax collection purposes, however. I also imagine if we ever hit a prolonged period of deflation, governments WOULD start doing this.

33

@leaffen - OK every tax is included in your 28%. But how about the other “Taxes”. Will do some reading and reply later. Can we agree that earned income is most of our personal income, as a nation?

I’m not trying to make a point. I’m asking a question! You can choose the numbers. I’m not cherrypicking, I’m not even picking them. 3% is an example of a number I’m not using. I may question your method, but I will not doubt your sources for numbers. I would simply use my own offline if I disagree.

The correct 24% that was cited above has absolutely nothing to do with the estimate of 25% you came up with. His 24% was including federal income tax only. Not any of the others you mentioned, nor payroll tax of *** 15% *** (not 7.5% as you said).

The 9% you mentioned is the AVERAGE including the rich people. The 3% I quoted is the average of the middle 1/5th. Sorta like a Median, but it was used in a misleading way. I mentioned it as an example of a correct number that misleads. It does this by ignoring the slope in that part of the graph, and the shape of the graph. It’s not even mentioned in the article.

It’s not an editorial. I want the facts. And a method to calculate the total tax.

I’m not interested in discussing my IBD editorial. It was in response to Chessic, and it is not central to my question or method of calculating it. So please let it go.

34

Nope. Historically, it hasn’t happened.

The biggest example in the US would be the Great Depression. There was an attempt at increased sales taxes in 1936 (long after deflation abated and the economy was very slightly inflationary), but popular outcry turned it into increased income taxes at top income brackets. And the tax increases were in response to decreased revenue, rather than changes in interest rates.

Japan is currently deflationary, yet there’s not much sign of increasing taxes.

Some European countries are near (but not quite at) deflation. There are tax increases but not due to deflation. They (rightly or wrongly) are actually worried about inflation, instead.

35

I think I can speak for most Americans when I say, “Huh?”

36

I think you can also speak for some Canadians.

ETA: 28% average for the US looks pretty good to me, based on the ~ 43% given in the Tax Freedom Day link for Canada, and the ~ 52% for Germany.

37

No more shotgun. I don’t have an agenda. Let’s stick to the main question. What is the total tax, including all the categories mentioned above? How do we calculate it? How about my ratio method? Using your numbers. A specific person? A group of people? The median for all people? Whatever you want. I’m listening, not editorializing.

38

I was replying to Exapno. All the property tax stuff got in the middle while I was typing. So it does look confusing. Sorry.

39

Clearly Tax Freedom day does not include all the taxes. I’d like to see a list of what it does include. It’s not much more (28) than the Federal income tax of 24%. Ad-Valorem taxes are nearly again as large as income tax. There is more besides that. Should we guess 48%? I think we can be more exact.

40

Just look at the Tax Foundation’s web pages. It estimates the average state and local tax burdens which include ALL state and local taxes. Their estimates for 2009 is around 9.8%, which makes the previously cited figures of an overall Federal, state and local tax burden in the high 20s a pretty reasonable figure.

Seriously, did you actually spend hundreds of hours researching this?