Let’s say you were determined, for whatever reason to pay the most you possibly could to the US government in taxes. Where would you have to live, what would you have to earn and what would you have to spend it on to make this happen? Assume for the purposes of argument that 100% of your income comes from a salary and not any other form of earnings.
If your income is in the highest bracket, I believe you would pay 39.6% in income taxes.
Then if you do your spending wherever the sales tax is highest (in Minnesota, it’s in Minneapolis, where we are paying for a couple of new stadiums an renovation for a previous one, so billionaire team owners won’t have to pay) – here it 7.75%, I think.
Then you can spend it all on items that have specific taxes on them, like ‘sin taxes’ on liquor & tobacco, or non-voter taxes on them like hotel rooms & rental cars.
You can give chunks of your income to friends or relatives, and pay the gift tax on that,
Finally, the US Government (and many state governments) accept donations toward paying off the national debt. You could take whatever money you have left and donate it toward that.
Thus, you could pay 100% of your income in taxes. What you will then live on is unclear.
DC has a 10% sales tax.
Don’t forget state (and possibly county or city) income tax.
That’s only true for income that’s above the lower bound for the highest bracket, which is about $400,000 depending on your filing status. The first $400,000 is taxed at a lower rate, which means that your overall rate for your entire income, considered as a whole, is less than 39.6%. The more you make (above $400K), the closer your overall rate is to 39.6%.
This of course neglects state income/sales taxes.
You could also buy a house along the 495 corridor and use the express lanes to travel during rush hour. The rates vary in accordance with the level of congestion. I’ve heard of it going as high as $14.50, but here’s a verified report of $11 from this time last year.
andrewm I think you may be combining the sales tax and restaurant tax in DC. The highest combined state and local tax is in Tennessee, at 9.45% .
Are we counting government issued permits as taxes? I was paying the government more in faxes and permit fees than I was paying myself when I was in Utah.
This right here is an example of the fallacy of composition. Just like one can’t estimate the value of a car by adding up the replacement value of each part, one can’t add tax rates to come up with a total rate of taxation. For one thing, income taxes do not treat your first and last dollar of income equally. Some taxes phase out totally after a point, like for Social Security. As a result, the top one percent, with incomes of $1.5 million or greater, pay just a shade over 30% of their income in all Federal taxes - income, payroll, capital gains, excise, etc.
I have no clue at all where to find what those individuals pay in state and local taxes. Of course, those taxes are generally deductible from Federal taxes, making this a very complex question indeed.
If you wanted to pay the most to “the US government” you would live in a state with low or no income taxes and low property taxes, since those are deductible. State governments are not “the US government”.
That may not be what you meant, but that is what you said, and it’s sort of an interesting side topic based on your question.
More rules: Maximum income cap of $1M/year
Fees, Penalties and surcharges do not count towards taxes
No voluntary payment of excess tax, otherwise the answer is trivial
Taxes towards any form of government within the United States counts.
If we’re allowing for state and local taxes, work in an income tax state and live in a no-income tax state. No income tax states tend to have high property taxes, so you’re getting the worst of both worlds.
At least, this is true for those who cross the NH-MA border.
I have no idea how deductions work, but the max income tax bracket is 39.6%.
You could also be self employed and pay both your and your employers payroll taxes, which is about 15.3%. However the SS portion of that (which is the bulk) is capped at something like 120k a year.
If you made 120k that is about 22% of gross income in federal income taxes, and another 15.3% in FICA taxes for a total of about 37%.
However if you earned a ton of wages I’m sure you could get your federal income taxes much higher, but your FICA taxes would be much lower (maybe 4%) of gross income. An income of 1.2 million has a 36% tax, plus maybe 4% for FICA. So whether it is 120k or 1.2 million, your federal tax burden is roughly the same (37% vs 40%). At the lower income, you would pay a higher % of income in property taxes, sales taxes, sin taxes, etc.
According to this
Bridgeport, CT has a state/local tax rate of 21.8% of income. So that would push you to about 60% if you made 120k a year.
I suppose if you bought a lot of cigarettes you could probably push it up a bit.
Also buy the most expensive house you can in an area you can’t afford. If you can get a 50 year ARM mortgage on a house, go for it.
Ok, I’m going to give this an actual run. Single person, $1m income.
Self- employment taxes would be $54,160. Taxable income is reduced by $27,080.
State taxes in New York would appear to be $65,739. NYC taxes would be about $36,452.
Federal taxes would reflect deductions of New York taxes and part of the self-employment tax, as well as that standard deduction. That should be about $299,500.
So as a total I’m getting $455,841, or 46% of the millionaires income. And this is if he has no other tax deductible activities ( like interest payments on a mortgage) or tax credits (like buying a Tesla).
Does the state tax include sales tax? Could you assume that all of his leftover income was used in purchases, thereby bumping up the percentage a bit more? (I think it would be easier to calculate that way since if the leftover income was used to invest either in equities or housing, the taxes on those would not necessarily correlate to income in any given year.)
Clearly you could have 0 income in one year, but a bit of cash from a previous year. If you buy anything and pay sales tax, you’ll pay an infinite percent of your income on taxes.
Well, if the guy rents an apartment and eats food, those generally aren’t going to be taxed, but if he uses a large chunk of his income to buy consumer goods, I suppose you could add another $40-50,000 in taxes. Seems like this guy could get up to 50% of his income in taxes by making really, really bad choices.
Rent, don’t own. Don’t get any income from dividends (taxed at 15%). Don’t hold any stock for longer than the short-term capital gains rate. There are probably thousands of things you can legally deduct-- don’t do any of those things! 
The express lane tolls are not taxes. They are not paid to the government. These lanes were built by and are operated by a private consortium.
If you are a millionaire and take only the standard personal deduction, you will pay 34.9% of your income in federal income taxes. California has the highest state tax rate at 10.9%. At that income FICA and medicare is only around 2%. The highest sales tax rate in California I could find was 9.5% in Oakland. Since that is only on after tax income, sales taxes would add 5.1%. Unless I am missing something or my math is wrong, that would put the total tax burden at 53.8%.
This is the key and there is no limit to how high your income taxes could be in relation to your income if you managed your affairs to that end. You can buy goods for resale, sell them at your cost and fail to deduct your inventory expense. Your tax return will show extraordinary taxable income (equal to the gross revenues of your “business”) even though your actual income is zero. You can repeat this as many times as you’d like to get arbitrarily high taxable income and arbitrarily high income tax.
Part of the problem with talking maximum is that there are so many different taxes now. Nobody in Congress has the guts to raise overall rates, but they are OK with surcharges.
So, additional Medicare tax of 0.9% applies on earned income like wages over 200k/250k (single/married).
A 3.8% net investment tax applies on investment income over 250k.
People lose tax deductions all over the place and this doesn’t increase their tax rate, but it absolutely increases their total tax. It’s not unusual for people in the 100-150k range to have an effective marginal tax rate of 37% or so as they’re losing child tax credit, student loan interest and the like.
I suppose the absolute worst-case scenario is someone with very high income entirely from interest. They’d get the 39.6% highest bracket, plus the 3.8% NIIT, and then lose 80% of their itemized deductions, all their personal exemptions, and most of the credits out there.