You: You mean there’s a choice?
Not really. While it’s possible to structure some of your financial affairs to lessen your tax burden, most high-income earners will still pay a lot in taxes while those at the lower end will pay far less.
You: So then why ask what the right amount of taxes to pay is?
I’m thinking on more of a macro basis.
You: What?
As a society, how much tax is appropriate? I just finished reading “Do Americans Pay Too Much in Taxes?” at Kiplinger. Like many of the commenters, I believe he underestimates the current tax burden in his discussion, but I’m not as angry about it as they are.
You: Why not?
What’s the point of getting angry at a columnist? If you want to make a difference, talk to someone in a position to make a policy difference. (I generally do neither.) Regardless, it raises the question of how much tax is appropriate. A typical middle income taxpayer might face:
- 25% income taxes on his wages (at least for a sizable portion of his income)
- 7.65% payroll taxes (Social Security and Medicare) that he sees withheld from his paycheck
- 7.65% payroll taxes (Social Security and Medicare) that he doesn’t see withheld from his paycheck
- 8-11% income taxes, in a number of states, in state income tax
- up to 10% (like in Chicago) sales tax
- thousands of dollars in annual property taxes (paid directly as a homeowner or as part of your rent as a renter)
Add all of these taxes together and they’re often a far higher percentage of your earnings than you might first sense. Furthermore, there are other, comparably more minor, fees and taxes the typical person pays.
I live in New Hampshire, a state with no income or sales taxes. People from out of state sometimes ask me how my state’s services are. When I ask them to describe their state’s services, we realize no one is happy there. Still, I don’t have all the answers, do you?
Do you pay too much, too little, or just the right amount of taxes?
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