I just got my W-2 for last year, which, when combined with Turbotax or similar, allows me to calculate my income tax rate.<\/p>\n
The direct, visible tax rate I’m paying — including federal and state taxes — is about 33.4%.<\/p>\n
By any honest measurement, this is far below what I am actually causing to make its way into the government’s coffers. First, my Social Security tax and Medicare taxes are matched by Facebook — 6.2% and 1.45%. I never see this money in my “income”, but Facebook views it as a cost to employing me, so this is exactly equivalent to me paying all of these taxes as a slightly elevated pay rate.<\/p>\n
Then there is the VPDI, “voluntarily paid disability insurance”, which, like most government schemes, isn’t really voluntary at all. I can choose to participate in my company’s plan, or I can pay the state — my choice! I of course chose to not pay the state, but essentially this is also a tax (since I wouldn’t carry disability insurance otherwise), albeit one that I get a service out of (of course, some people would claim this of all my paid taxes).<\/p>\n
When these are taken into account, my income is taxed at more like a 38.1% rate.<\/p>\n
And then, I buy things. I bought a car and paid sales tax on that. Every time I go to the store, I pay sales tax there. Where I live in Palo Alto, the sales tax rate is 9.25%. That’s right, everything I buy, I give another almost 10% to the government. Taking into account the approximate sales tax I paid, using some rough but not unreasonable estimates I made using data from my Mint.com records (I used reasonable assumptions, such as all gas, dining, and entertainment was purchased in state; shopping was half online; travel was mostly reimbursed and not counted, etc), my tax rate goes up to 39.6%.<\/p>\n
We’re at nearly 40%, and that’s just the stuff that’s easy to figure out. I pay more for my housing because of property taxes. I pay all sorts of government taxes when I travel (occasionally they are enumerated and they often add 40% to the base rate).\u00c2 I’m sure there’s a lot I’m missing too. How much do all of these things add to my total tax burden? I figure it’s almost impossible to tell. And that’s not unintentional.<\/p>\n
I have a friend who recently calculated his income tax rate, and it came to about 1\/8th of mine because he and his wife (one of whom is currently collecting unemployment benefits) are paying two mortgages. Viewing the unemployment payments as a reverse tax, their effective tax rate is well below 0%.<\/p>\n
So the guy who made all the “right” decisions — studying hard and busting my butt to be worth a decent income; working through school to avoid student loans; not buying a house circa 2006 because I did the numbers and decided I couldn’t afford it; saving on my own for retirement — now pays at least 40% of his income to taxes, while others who bought the house, financed the car, and take the revolving door job — get net reimbursed with that money.<\/p>\n
God bless America.<\/p>\n","protected":false},"excerpt":{"rendered":"
I just got my W-2 for last year, which, when combined with Turbotax or similar, allows me to calculate my income tax rate. The direct, visible tax rate I’m paying — including federal and state taxes — is about 33.4%. By any honest measurement, this is far below what I am actually causing to make […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[59,7],"class_list":["post-1919","post","type-post","status-publish","format-standard","hentry","category-everything","tag-finance","tag-politics"],"_links":{"self":[{"href":"https:\/\/arcanius.silverfir.net\/blog\/wp-json\/wp\/v2\/posts\/1919","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/arcanius.silverfir.net\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/arcanius.silverfir.net\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/arcanius.silverfir.net\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/arcanius.silverfir.net\/blog\/wp-json\/wp\/v2\/comments?post=1919"}],"version-history":[{"count":3,"href":"https:\/\/arcanius.silverfir.net\/blog\/wp-json\/wp\/v2\/posts\/1919\/revisions"}],"predecessor-version":[{"id":2225,"href":"https:\/\/arcanius.silverfir.net\/blog\/wp-json\/wp\/v2\/posts\/1919\/revisions\/2225"}],"wp:attachment":[{"href":"https:\/\/arcanius.silverfir.net\/blog\/wp-json\/wp\/v2\/media?parent=1919"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/arcanius.silverfir.net\/blog\/wp-json\/wp\/v2\/categories?post=1919"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/arcanius.silverfir.net\/blog\/wp-json\/wp\/v2\/tags?post=1919"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}