A lively debate with my friends tonight involved this question. I won’t sully this OP with our conclusions (however pathetically cited they were). So involved are the likes of; Income tax, Sales tax, Liquor tax, import tax, cigarette tax, capital gains tax, property tax, and many many more.
The question of this: Take your average middle class American, what percentage does he spend a net dollar he earns on tax of any kind?
This has been covered in several threads recently. Overall, the average is about 29%. The Tax Foundation calculates Tax Freedom Day each year to figure when the average American has stopped earning money for his/her tax bill and starts earning money for himself. The day is typically in April, about 105 days or 29% through the year.
I’m not just talking about taxes you pay on income, but taxes you pay per dollar earned and spent in total. You think that’s 29%?
Do you have a cite for that?
I hate it when I pay taxes and all the money gets spent on other people. Well aside from roads, the soldiers defending us, the FAA keeping flights safe, the FDA keeping the food supply safe, the SEC trying to keep Wall Street in line, the Justice department, Customs and Border security, the Coast Guard, …
Don’t shit in my thread. Your contribution is irrelevant, you can go away.
Well, Wikipedia tells me that the total US tax revenue (including federal, state and local taxes of every kind) as a percentage of GDP is either 26.9% or 24.0%, depending on whether you believe the Heritage Foundation or the OECD.
That, of course, includes taxes which are not (immediately) paid by individuals (like corporation tax), and GDP is the value of all goods and services produced in the US, including goods and services produced by corporations. But if you accept that corporations are fictional entities, and that their earnings eventually get back to individuals (if not snaffled by governments along the way) and if you overlook the fact that some stockholders in US corporations reside abroad, and if you also overlook the fact that some US resident individuals receive income derived ultimately from goods and services produced abroad, and if you smooth another few corners the fact remains: Governments in the US take about 24% (lets go with the OECD) of the value of what is produced in the US. And we average that across all US residents, then they take 24% of what the “average” US resident produces.
Yes, it includes all taxes paid by anyone to all levels of government. Cite. And I did my math wrong, it’s just a hair under 28%.
Keep in mind that the 28% is not the average tax bill for the average American whose household income is about $50,000, owns a house, has 1.8 kids and so on. It is calculated by taking the total amount of taxes paid at all levels of government and dividing that by total income.
Since wealthy people pay substantially more in taxes than middle or lower income people, it skews the data to make the average tax paid over the population higher than the taxes paid by the average person.
To illustrate, look at table 1 of this report, on page 6. This report looks only at Federal taxes, but see the column that says “Average Tax Rate – All Households?” It’s 20.4% in Federal taxes. That’s a higher tax rate than is paid by the 1st through 4th quintiles of income (the lower 80% of earners). So, the average tax rate on a person appears to be 20.4% due to the higher tax rates paid by the very wealthy, but the average American (in the middle quintile) actually tends to pay at a rate of 14.3%.
That’s a long way of stating that the average tax for all Americans is calculated on Tax Freedom Day to be 28% for all levels of taxes, but the average American almost certainly pays less than that.
Let’s not forget that things like property, gasoline, and water are not taxed according to how much one makes. So you can’t really say “spent from a net dollar he earns.”
Thanks** Ravenman**.
It appears to only cover Federal Taxes though.
Actually, it does cover state and local taxes, too, if you read the whole page. When they compute “Tax Freedom Day”, there’s a breakdown of how it varies by state as well as the national average.
For example, Texas reaches it on April 7 (versus April 12 nationally) which puts it midway as the 25th state to reach it and represents an average total rate of about 26.6%.
On the other hand, Connecticut has the heaviest average burden and pays an average of 33.4%.
And Missisippi ends up last (or first?) with an average of 23.3%, mainly due to low state taxes and low income (hence low federal taxes).
I can think of no statistically sound use of the word “average” that could apply in that way. I certainly wouldn’t care one bit for the mean tax bill. The median federal taxes due might be a somewhat interesting statistic, but only if that also happened to be the median income earner and my guess is it isn’t even close. (Even if they weren’t exactly the same person they could be “almost” the same person.) And if you start chucking other taxes on, this task seems so impossible as to be quite meaningless.
But if you look at how the OP phrased the question, that isn’t the answer. First, you have to find the average, middle class American. Then compute his taxes.
But the OP is going to have to define what he means by average.
Got Ravenman’s cites mixed up, you’re right.
For the sake of the thread I wanted to avoid quibbling about who Average Joe is.
Last night our debate was about what constitutes Socialism and how close we are to it. Given that my opponent’s position was a 60% tax rate is Socialism Ravenman’s cite is good enough for me.