Do you really know how much of your earned income actually goes to taxes? Here is a simple way to roughly figure the percentage of money you earn that goes to taxes. Fill in each line, add lines 1-6, divide by your adjusted gross income (line 31 from form 1040), multiply times 100.
1. __________________ Total federal income tax (enter line from form 1040)
2. __________________ Total state income tax (from your state tax return)
3. __________________ Total social security tax and Medicare tax
(from W-2 forms)
4. __________________ SS taxes your employer paid for you (re-enter line 3.)
5. __________________ Property Taxes (enter total property taxes you paid)
6. __________________ Sales Taxes (33% of gross income times your
state sales tax rate)
____________________ Total Tax (add line 1-6)
____________________%, Total Tax / Gross Income X 100 = Percentage of your
income that you paid to taxes
Other taxes that are collected from businesses that effect the cost of the goods and services you buy, include: property taxes on all business property (furniture, machinery, inventory, real estate), sales taxes on goods and services that businesses purchase (utilities, property, inventory, real estate), gross receipts tax businesses pay to local governments, state and federal income tax on business
profits.
Other costs to individuals and businesses, due to our overly complicated tax system, is the cost of keeping track of, accounting for, and filing of all tax information. Not to mention the costs that the government has to spend to police the tax codes.
There are also many other negative effects that taxes have on growth, productivity, and freedom. Businesses refrain from buying equipment as much as possible. People and
businesses refrain from selling assets as much as possible. Businesses refrain from hiring extra help as much as possible. And many time people refrain from working more.