The Cumulative Effective-Tax Rate

Taxation in AmericaEarly Americans would roll over in their graves if they heard about modern-day America’s topsy-turvy departure from many of the hard-won freedoms and liberties of the American Revolution. They would be unable to make sense of all the different taxes we pay today, and especially the government’s legal entitlement to a portion of an American’s labor via an income tax. There was no such tax on labor for the earliest Americans; it was unconscionable to tax someone’s personal property, which one’s labor was then considered. The concept of paying one’s “fair share” did not exist until after mid-20th century.

In general, operating expenses of private corporations and the federal, state and corporate-county municipal governments are passed on to the end users (public) in the form of taxation.

A partial list of the transparent as well as all the unseen hidden taxes include: federal and state income tax, county taxes, federal and state sales tax, accounts receivable tax, alcohol tax, alternative minimum tax, building permit tax, cigarette tax, corporate tax, dog license tax, education tax, estate tax, excise tax on imports, food license tax, fuel permit tax, gift tax, hotel tax, inheritance tax, inventory tax, car rental tax, IRS interest charges, IRS penalties and levies, license tax, labor tax (withholding), marriage license tax, Medicare tax, municipal state tax on insurance premiums, worker’s compensation and unemployment tax, property tax, recreational vehicle tax, sales tax, self-employment tax, road usage tax for truckers, school tax, Social Security tax, Supplemental Security Income (SSI), telecommunications tax, travel tax, utility tax, vehicle licensing registration tax, vehicle sales tax, watercraft registration tax, well permit tax, hospitality tax and last but not least, the hidden tax of inflation of a debt-based central banking system and all finance charges.

I’m sure I must have missed something!

While on a TV talk show in 1981, President Reagan mentioned that 46 different taxes contributed to the price of one loaf of bread. Imagine how many more taxes have been added since then. How many taxes and fees are hidden in an airline ticket? Seldom considered is how the cost of doing business has the effect of decreasing one’s purchasing power as more and different kinds taxes make up the retail price you end up paying.

The total of the multiple costs of doing business becomes the retail price. Throughout a company’s chain of events from production to sales and marketing, labor costs take a huge bite; they are the wages, taxes and fees imposed on the labor of every employee from the factory-floor worker to CEO. Materials, essential resources, and the interest amounts on a company’s business loans are all rolled into the price you pay.

Americans take a beating from taxes that now appear to exponentially erode earnings (personal property). “Bracket creep,” as it is called, over time automatically moves a taxpayer into new, higher tax brackets. For example, in 1970, private pensions and Social Security retirement were not considered taxable income, though today, they are. These sort of official changes often move people into a higher income bracket with subsequent increased amounts due to state and federal governments.

What if mainstream media routinely reported on the cumulative total of what everyday American pays annually in taxes? Would you connect the dots to the direct impact this has on your personal finances, e.g., actual disposable income and increasing dependence on credit? The addition of all taxes, transparent and not so transparent, (hidden taxes mentioned above, upfront fees and regulation costs of federal and state regulatory compliance, federal fines (like what British Petroleum passed on to consumers after the Gulf oil spill) lead this writer to the educated guess that the average American pays somewhere in the range of a cumulative 30 to 60 percent of their annual gross earnings in taxes, depending on their tax bracket.

Are you powerless when it comes to this topic? I don’t think so. Knowledge is power, and power can lead to informed action.

2 Responses to “The Cumulative Effective-Tax Rate”

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  1. Douglas S. says:

    Informed action that is most effective leads the individual to interact in community with others who desire Truth from any and all dependable sources. This leads to more knowledge and more power. Mind you, this power is beneficial power, intended for healing and maintaining excellent health. Good power builds, while a false notion of power attacks and tears down society and all of its elements.

    Thanks for reminding us about the symptom of taxes. Taxes indicate eroding liberty. Every government is enabled through funding, but donations to a good and worthy government provide an alternative. If readers knew of an alternative government that offered Truth (with no desire to spread lies), would they donate to it? Pay the taxes and also donate in the direction for building some separate government which never interferes with operations of this government who imposes taxes. The tax imposing government suffers when its citizens so enjoy building that other (separate) government, they refuse to ask services at the hand of the tax imposing government. Yes … refuse to take a Social Security check, because a better way exists. Yes … refuse benefits of socialized medical help, because a better way exists. Yes, pursue the goal of developing new infrastructures (this takes many years), and then use them instead of leaning upon systems which underhandedly erode your liberty.

    So then, pay the taxes and find a way to donate to a lasting cause which protects liberties. Such a cause exists. Seek to find it.

  2. Sue E. says:

    Thank you for your insights!

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