Michael on June 8th, 2010
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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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