Do You Really Know How Much Tax You pay? Does Anyone?

Recently, I opined that how much federal income tax you should pay depends on what benefits you demand of government. Now, I suggest that to answer that question intelligently, you also need know what other taxes you are paying.

Assume you are single executive without dependents and an adjusted gross income of $155,000, with a home assessed at $400,000. On that, you will be paying these very "conspicuous" taxes:

-- Federal income tax: $30,000;

-- Illinois 5 percent income tax: $7,600;

-- Rock Island County real estate tax: $10,900;

-- FICA (6.25 percent on first $106,800 of earnings): $6,675;

-- Medicare (1.45 percent): $2,500;

-- Sales tax (city, 1 percent and State 6.25 percent) $1,500.

That totals roughly $59,000, or about 38 percent of your adjusted gross income. But is that all the taxes you pay? If you think it is, you need a court-appointed guardian. Apart from inflation, there are a plethora of "hidden taxes" you pay -- perhaps unknowingly. Modern government provides a vast range of service for the citizen, as diverse as maintaining an army, paying government pensions and collecting garbage.

Most hidden taxes seem small. But some, like sewer and water, are significant.And they come at your from almost every direction, and in many guises. That quarterly $150 "user fee" you pay for city water and sewer adds up to $600 per year.

The $3.81 you pay each month on your cable bill adds up to an annual tax of $46. The $12.83 "taxes, governmental surcharges and fees" you find each month on your cell phone bill multiplies out to $154 a year. The $2.54 you pay each month for your landline phone adds up to an annual tax of $30. If your electric bill runs $35 per month, over a year you will pay $31 in taxes.

If your natural gas bill runs $150 per month, over 12 months your sundry taxes will run about $102. If you use 12 gallons a gas per week for your car, in addition to general sales taxes, you will pay 37.4 cents per gallon in state and federal taxes, or $233 annually.

And if you buy 600 gallons of gasoline per year at $3.85 per gallon, you will pay a $70 a fuel storage tank tax. That's another $1,400 per year. Hidden federal taxes include:

-- A gasoline tax of about 18.4 cents per gallon;

-- Cigarette tax at $1 per pack;

-- Telecommunication's tax at 3 percent on local calls;

- Air travel tax at 7.5 percent of the price of a domestic airline ticket, plus $3.70 for each segment of the trip;

-- Alcoholic beverages taxed at $13.50 per proof gallon;

-- New truck excise tax at 12 percent of the purchase price;

-- Vaccine tax at 75 cents per dose,

-- Indoor tanning tax, at 10 percent of price;

-- Taxes on sporting goods, fishing equipment, 10 percent tax on price; Archery equipment, 45 cents per shaft and 11 percent of the sales price per quiver; shotguns, rifles and ammo at 11 percent of the sales price, and handguns and ammo at 10 percent of the sales price;

-- Tax on coal mined underground or on surface, 4.4 percent of sales price.

Not to be outdone, Illinois also imposes "hidden taxes." Included are:

-- State gasoline tax at 19 cents per gallon, plus a 3 percent underground storage tanks tax;

-- State cigarette tax at 98 cents per pack;

-- State taxes on alcohol; liquor at $8.55 per gallon, table wine at $1.39 per gallon, beer at 23 cents per gallon;

-- An electricity excise tax at the rate of a third-of-a-cent per kilowatt hour; a gas utility tax at the lower of 5 percent of current charges before taxes or 2.4 cents per therm;

-- Illinois Commerce Commission tax at one tenth-of-a-cent;

-- Telecommunications tax at the rate of 7 percent;

-- A 911 fee at 73 cents per month.

And then there are municipal taxes. In Moline we have:

-- A hotel/motel use Tax of 2 percent of rental charge, a hotel/motel operators' occupation tax at 5 percent of all gross rental receipts and a special service area motel/hotel tax at 1 percent of all gross rental receipts;

-- A 2 percent tax on premiums paid to foreign fire insurance companies;

-- Motor fuel tax of a penny per per gallon;

-- A 1 percent sales tax;

-- An amusement tax of 3 percent of admission for venues over 8,000 seats;

-- A video tax at the rate of 5 percent of gross receipts;

-- A prepared food and liqore tax at 1.5 percent of the sales price;

-- A utility tax of 3 percent of gross receipts which is scheduled to increase to 5 percent;

-- An electrical usage tax of 12 cents per kilowatt-hour, which will increase to 36.6 per k/hr on Jan. 12, 2012.

Then, of course, we pay for water at $25 per month, plus $3.80 for each 1,000 gallons used, and for sewer at$20 per month, and $4.08 for each 1,000 gallons of water metered. And if you buy a new car that gets 22 mpg, you will pay a $1,000 "gas guzzler" tax; $7,700 if it gets less than 12.5 mpg.

And the list goes on: building permits, license plates, driver and commercial drivers licenses, court fines and cost, dog licenses, fishing and hunting licenses, marriage licenses, fees to record deeds and mortgages, fees for birth and death certificates, septic tank permits, recreational vehicle taxes, road and bridge tolls, fees to dispose of used motor oil and dead batteries.

So if you are one of those people not content with paying a mere 38 percent of your income in the six "conspicuous" taxes I described, you might want to calculate how much you are paying in "hidden taxes" before you lead the charge to raise income taxes.Or if you are guilt-ridden over your untaxed income, feel free to donate it to the government.

Governments like hidden taxes.

How much do you pay?

Do you know?

Does anyone?



Posted Online: June 16, 2011, 9:09 am - Quad-Cities Online.com

By John Donald O'Shea


Copyright 2011
John Donald O'Shea