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Tax Freedom Day

March 29th, 2007 at 09:52 am

http://www.taxfoundation.org/press/show/22300.html


Just an article summarizing it takes the average american 4 months (of pay) to pay their federal income tax obligation.

But I don't buy it for a second. The article is assuming your entire income is taxed at your top taxable rate, assuming the average american is in a higer bracket, and doesn't look like it is allowing ANY deductions. I am not sure where they got these figures. I got enough six-figured clients who don't pay in nearly that much.

Just wanted to say it takes me a week to pay my income taxes, and I make a really good wage.

I am a little jealous reading the article though because the reason is COL is so dang high (but lots of deductions). It's going to take me 6 months to cover mortgage, property taxes, and our health insurance. God forbid someone got sick or hurt and we had to start shelling our more money to healthcare.

I just don't really buy the hoo-ha that income taxes are so expensive. They are at historic lows. I just keep wondering what people will do when taxes get raised to cover these huge deficits. I am saving my pennies because I know I will not pay such low taxes forever. Trying not to get to used to it. I paid in a whopping 3% of my entire wage last year and got $200 back. (I had other taxable events as well to boost my income so maybe it was more like 2.5% effectove tax rate). The year before I took time off work and the government gave me $1500 or so - $1500 of the government's money (child tax credit) because I didn't make enough to owe any taxes. Sure I would gladly give it back - I will be paying that back tenfold down the road.

I think a lot of us who have hung around here are probably smart with 401ks and such and minimize taxes as well.

I am not sure if they counted social security and other payroll taxes. If so it would take me a month of gross wages to cover all of my federal and state income tax and payroll tax liabilities.

A 2nd wage is another story. A full 35% would go to taxes. & then there is the cost of working and daycare. If you did not believe me it was cheaper for my dh not to work, maybe the fact that it takes a week to pay my income taxes, maybe that will convince you. As is I get to keep 90% of my check and we don't have all the expenses and headache of a second job.

Of course if he could get a job with a 401k, that is another story. OR some good benefits so I could save this $10k+ a year we are shelling out in insurance.

I know many people assume I have a lot of tax tricks up my sleeve. But I don't. I got a big mortgage, insane health insurance (high enough to deduct much of it) and all the deductions and credits that come with kids. Sometimes I wonder if we are really that bad off living in a high COL area. All that money would go to taxes instead if we paid the mortgage and didn't have such expensive healthcare. There may be something to that...

ETA: I am at a loss how they calculate this. Total federal government revenues divided by total american income or something. Revenues from what? All revenues? a big chunk that corporations paid? I don't know. Does this include social security then? I don't know. Kind of a shock factor thing that doesn't make much sense for the average american. The average american does not fork over 1/3 of their income to the federal government. I just am not really sure how they calculates this thing is all. Was digging further trying to figure it out. But you can do your own experiment, look at how much you owed the government for the year (not how much you paid in, not how much you owed April 15th, but your total tax for the year on your tax return...) and divide it by your salary, you can get an idea how big or little it is.

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