Monday, April 5, 2010

Tax Impact...

For many Utahns, "Tax Freedom Day" arrives on April 11th. Whew! We are almost there! This, according to The Tax Foundation is, "the day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2010, Utah taxpayers work until April 11 to pay their total tax bill." However, the Tax Foundation’s figures are just including state, federal and local tax figures, those are just the obvious taxes. There are many more hidden taxes. In addition, this year we now have the national healthcare reform bill and the Bush tax cuts expiring, who knows where we will be.
I would like to know what my total tax bill actually is, but it’s difficult thing to figure out because they get you coming and going. In Utah we pay a five percent flat tax on all personal income and if it ended there, we would be doing great, but it doesn’t.
For example, in Utah we pay 24.5 cents per gallon of fuel we purchase, but then there is an added federal tax of 18.4 cents per gallon making it 42.9 cents per gallon. My husband and I both drive cars that are very fuel efficient getting around 36 miles to the gallon. I fill up my tank, buying about 12 gallons each time, about twice per month. So for both cars, we spend at least $247.10 per year in just gas tax. Now if you drive an SUV or a Van, you can blow that figure to bits. There are also state tax and licensing fees. It was impossible to figure out what that number might be from the DMV web site. If you purchase a new car, the taxes can be thousands, but we don’t notice because those taxes are built into the car loan.
Utahns pay 3% tax on food. How much is that per year for your family? We pay 6.6 percent sales tax for items other than food. So if for example if you spent another $500 per month on other items like paper towels and clothes for your kids or new tires, you would pay another $400 to the state per year.
We are not even half done and we are getting into some real money here. There are taxes on all the utilities we use. If you live in Salt Lake County, you will find a $2.56 cent franchise fee tax on your Comcast cable bill. You pay a tax on you cell phone bill every month.
There are taxes we don’t even really see. There are payroll taxes that employers pay to employ us. Our doctors, hospitals and dentists pay taxes and those taxes are passed on to us, but I couldn’t find a bill when the taxes were itemized so I have no idea how much tax I’m paying there.
Even those Americans (about 50 percent of us) who don’t pay state and federal tax and also qualify for "earned income credit" (a government effort at wealth redistribution) pay most of these hidden taxes.
One great concern we have is that our property taxes have almost tripled since we moved to Davis County eight years ago. Tripled. What is government doing? My brother lives in Rhode Island and he makes a good living, but cannot afford a modest family home because the taxes are over $1,000 per month. And, in Rhode Island, the roads are horrible and the schools leave much to be desired.
The way tax monies are handled is a national disaster ripe for fraud and waste. Monies are taxed away from the states in federal tax and filtered through bureaucracy after bureaucracy until the value of the monies initially taxed away has greatly diminished. Government does not and can not add any value to the dollar.
In Davis County Utah, we recently had a stark example of this when $4.3 million federal tax dollars were embezzled away from the school district. Read here...
If you happen to own a business, you can spend more time dealing with taxes than working to earn money. It is no wonder that more than half of new businesses fail in the first year. Truly the power to tax is the power to destroy.
I often wonder if instead of hiding these taxes in all the little purchases we make, what would happen if we had to write out a tax check every month to the government for the entire amount for the month? Would we be warming the tar and shaking the feathers out of our pillows and sharpening the pitchforks to march on Washington? Benjamin Franklin wrote, "It would be thought a hard government that should tax its people one tenth part." We are far beyond that tenth.

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