Pardon me again, but I can’t imagine a single statistician that would use the term “average” as anything but the mean without immediately qualifying that he had done so.
Actually, AFAIK, statisticians pretty much avoid the word ‘average’ professionally, due to its ambiguous nature.
In a colloquial context, I’m personally going to use everyday words, rather than professional terms of art, wherever possible. But that’s just me.
But in the OP, I made sure to make it clear that I was talking about the median family.
This month’s bill hasn’t come yet, so I don’t have the numbers to put in front of you, but there’s several shekels worth of tax that I pay on my telephone bill each month, both the home bill and the calling card account I have at work (which, of course, I do ultimately get reimbursed for).
Sales tax here in Los Angeles County is 8.25%.
-Melin
Melin: I’ve been trying to remember to check my phone bills for the tax rate, and keep forgetting. I believe it’s a smaller tax than most sales taxes; if that’s so, then I’m giving the other side the BOD by assuming a ‘normal’ sales tax on the money spent on phone service.
As far as what state and local sales and income tax rates should be used - somewhere there must be tables comparing state tax rates; I haven’t gone out looking. I’m more or less guessing that 5% sales tax would be more or less in the middle, and that VA is a medium sort of state WRT state income tax (I may have read it somewhere too; not sure). But we can assume 5% sales, and VA income, for now, and figure out later what the difference would be for those of you living in CA, NY, MA, and other high-tax locales.
Well, that was my last bullet. If your going to insist on a reasonable and sober number like the median instead of the fwild and funloving average than you are right. THe median household doesn’t pay 40% assuming they are even close to median in everything else.
OK, let’s roll the numbers, for the family with median income - $38885/yr.
Assumptions, for this post: it’s 1998. Family has no kids, one income. Renting, not owning; rent $543/month. Electric bill, $54/month. Live in VA. Paying $1000/yr on gasoline; $500 of that is tax. Everything beyond that they spend (wastrels!); sales tax on purchases is 5%.
Some of these assumptions are to give the BOD to the argument that they pay more tax, not less: fewer kids = fewer exemptions; renting = no deductions; one income = no VA anti-‘marriage penalty’ tax break. Changing these assumptions lowers the tax bill. Rent and power look low to me; even in 1995, did average people pay that little? And if they saved anything, they would pay less sales tax.
Hopefully, that should make up for any assumptions I’ve inadvertently skewed in favor of lower taxes, and minor taxes (tobacco, liquor, personal property) I’ve left out. If you think I’m doing it wrong, feel free to post it the way you feel is right, and we can wrangle over the differences if they’re big enough.
Upfront taxes: Federal and VA income; payroll (SS/medicare).
Fed: $3956
VA: $1599
SS/M: $2975
Total $8530
Other costs that sales tax doesn’t apply to: rent, power bill, gasoline (taxed at higher rate).
Rent: 6516
Power: 648
Gas: $1000
Total: $8164
Total expenses not subject to sales tax:
$8530 + $8164 = $16694.
Total expenses subject to sales tax:
$38885 - $16694 = $22191.
5% sales tax on $22191 is $1110.
Taxes: income and payroll (totaled above), sales, gas.
I&P: $8530
Sales: 1110
Gas: 500
Total $10140
Overall tax percentage: 10140/38885, or 26%.
I think most cities also have a local income tax. Toledo’s is 2¼%.
I’m pretty sure I don’t have a city income tax. There is a state income tax of 2%, IIRC.
Here’s a couple more sources which have tried to calculate total tax burden. A couple of them have breakdowns by state and are estimations for 1999.
http://www.taxfoundation.org/totaltaxburden.html
http://www.taxfoundation.org/prstatelocal99table.html
http://www.senate.gov/~jec/taxburden.htm
Well, I just got today’s paystub. After my 401(k) deduction, since it’s not taxed, my total payroll deduction percentage is 26.3%.
Granted, I’ll get a bit of this back in next year’s tax refunds, but it isn’t much. And just FYI, I’m single and declare 1 standard deduction.
Unc - I think it may be one of those things that is fairly common in some regions, and is unheard of in others. 2 1/4%, huh? That’s pretty nasty.
Do you get to take deductions or exemptions before figuring the tax? Because if we include a local tax, that info has to be part of the picture. And if we can get some clue of the frequency and rates of local taxes, we’ll toss them in.
Scylla - just for the heckovit, what is the mean household income in the US? We can re-run the numbers based on that. I don’t think it’ll hit 40% that way, either, but it’s worth a peek.
Wait a sec - here, down near the bottom, we have a table that gives the mean income of each quintile of households. Since there’s the same number of households in each quintile, the mean of the quintile means should give us the population mean. If I got that right, the mean household income is $51,855. (Correct me if I’m wrong.)
I won’t run the numbers just yet; again, I’m away from my Federal tax info, and I’m too lazy to get it off the Web. Also, you might find out that I blew the calculation of mean income. 
But I will give them a mortgage; they make too much money not to have one.
We have no deductions or exemptions on our local (city) income tax. Yep, it’s pretty stiff. And although there are no deductions and they get their cash right off the top, you still have to file a return. Go figure.
Thanks for the additional links, Unc!
BTW, Unc, you single folks are hit harder, tax-wise; you get up to that 28% marginal rate really fast, compared to us marrieds.
“Find a girl, settle down, if you want you can marry; look at me, I am old, but I’m happy.” - Cat Stevens
Well, I am not "illegal aliens, children, college students, welfare recipients, retirees, or Amish. I live in suburban northern Virginia, and I have an income well within a standard deviation of the median for my age and race. My taxes were completed the first of February, and I have summed all the state, federal, property, and license fees auto taxes, tags, inspections, etcetera, for the year 1999. I added in 5.5 percent of the remainder of my income to cover sales tax on my ** entire ** income, and I also added in two numbers on my W-2 for which I cannot determine a meaning or purpose. The resultant “tax” total is 25.64% of my gross income.
I believe we should increase tax, rates and increase the standard deduction. The most affluent people in history should quit whining about the cost of living in the most concentrated pool of wealth ever amassed, and start trying to make the world a better place. I will agree to tax cuts after lunch. That is after every one has had lunch.
<P ALIGN=“CENTER”> Tris </P>
Ours is a world of nuclear giants and ethical infants. We know more about war than we know about peace, more about killing than we know about living. – **General Omar Bradley **
The Tax Foundation (see UncleBeer’s links at the end of p.1) has some mean tax numbers for the various states. FWIW, according to them, no state’s mean tax burden hits 40%, although DC comes close at 39.1%.
I’ve got no objection to mean figures, as long as that’s clear what they are. The important thing about them is that they represent the experience of the typical dollar earned, not of the typical earner. Since half the money is earned by the wealthiest 1/5 of the population (see link in post at top of this page), that gives one a skewed perspective of what’s going on if you don’t stop to think about it.
The Senate link Unc gave illustrates the misleading nature of such information. Relying on the Tax Foundation materials, the Joint Economic Committee chaired by Sen. Mack (FL) says:
Which is bullshit. The typical family, as I’ve been documenting, forks over more like 26%, give or take, of their income to the various taxmen. The typical dollar earned might have 38 cents taken out of it, but that dollar is in the pocket of someone making more money than 80% of Americans. So that’s not the experience for the normative family.
Unc, I’m not blaming any of this on you.
One thing that I did blow, according to the Tax Foundation tables, is that I was off considerably in using Virginia as my prototypical state; it’s way down the list in tax burden (they rank the states on one of their tables; I have no reason to believe they got them in the wrong order).
Now out of the 50 states and DC, falling right in the middle is my current home, Maryland. Since I have their stuff handy, I’ll update the figures using Maryland tax numbers, tonight or tomorrow.
Oh, good. I’d hate to have to call the IRS on you.
I’m with you, Tris - I don’t think we’re undertaxed at all. That’s another argument, of course, and I’ll join you in making that on another day.
For now, it’s a worthwhile exercise to expose the folks who want to make us believe that we’re more heavily taxed than we are. After all, ‘Straight Dopers’ is our name, fighting ignorance is our game.
Those per capita tables, I was looking very quickly, but if they don’t include social security taxes and property taxes, I can see how someone could arrive at the 40% number. I agree, it’s a misleading number, taking the total tax burden and dividing by the number of people… for instance, does that that include corporate taxes?
It is fairly easy for the higher paid to get to a 40% tax rate: the marginal rate at upper income is already 39% or so, and then those folks have big huge houses with very high property taxes, big huge cars with very high taxes, etc.
I have to say, that one of my fondest dreams is to have enough income to have to pay millions of dollars in taxes. You wouldn’t hear one word of complaint out of me.
Property taxes are a big bite, you can’t overlook 'em, and your example of someone paying rent for housing doesn’t represent the tax bit on someone who does pay them. I pay about four per cent of gross household income per year in property taxes on our home.
-Melin