Posted tagged ‘Federal tax rate’

What 1946 Can Tell Us About 2010

April 6, 2010

Here is some very interesting statistics about the end of WWII and a comparison with our current economy and political enviroment. Click onto the article from The American, A Magazine of Ideas

What 1946 Can Tell Us About 2010 — The American, A Magazine of Ideas.


August 2, 2009

I recently read that 40% of U S income taxes are paid by 4% of the U S citizens and President Obama keeps talking about the top 5% of taxpayers who he is going to make pay for everything for the rest of us.

I am not sure those figures are really correct. Income taxes are paid by many different entities such as corporations, some non-profit organizations, and certain other entities that are not people. There is also some information going around that claims that 95% of the citizenry don’t pay any income taxes or if they do won’t have their taxes raised one dime. See the New York Times article for some serious comments from the left and the right. Perhaps these statements are correct as far as they go.

There are many names for taxes in the United States and the various States and many ways for them to be assessed. You can avoid some of these taxes by not using or consuming the article on which the tax is imposed. By not smoking, drinking alcoholic beverages,  using other products that have excise taxes, etc. you can avoid excise taxes.

One of the greatest proofs of who pays the tax is the sales tax. Sales tax is always paid by the last consumer and there shouldn’t be any question about that.  Buy something that requires sales tax and you prove my point.

Let’s consider a slightly more complicated purchase and how tax might be applied and who ends up paying the tax.

Let’s assume that all the parts of this product are made and sold by companies that make a profit. The other day we bought a lawn chair for $19.96 to use on our patio. This particular chair has plastic feet and drink holders which are formed from an oil by-product. For this small part of the chair we have the tax on the sale of land on which to drill,  tax on companies that explore for oil, tax on the manufacturing company that makes and sells the feet.  The frame is some kind of steel, the frame would incur taxes on the land bought for mining, the mining company that mines iron and any other products from mining to make steel, then there is the company that turns the ore into steel tubing or sheets. There are net seats and net backs sewn into cloth seats and backs so that there is air flow through both areas. Made from the same cloth material is the bag to store the folded chair. I am beginning to get tired of this so I will just state that we still need dye for the cloth, netting, and the storage bag, the thread used to sew the cloth, netting, and bag together, paint for the steel frame, the steel grommets that allows the seat and arms to slide up and down and other miscellaneous parts and supplies.

If the federal corporate tax rate is 50% based on all the profit from all these companies, and the profit is 25% of all the combined selling prices there is a calculated total federal tax on this chair of $19.96 X 25% = $4.99 and a tax rate of 50% = $2.50. The $2.50 does not include sales tax which in this case was $ 1.40.

Assuming that the above rates are somewhat accurate we paid $21.46 including sales tax and federal tax of $2.90 or 13.5% taxes paid by us as a consumer on this one item.

Think about how much “hidden” tax you are paying and how much more would you like to pay?