years back, there was a furor among We The People about
why "Johnny can't read". Personally, I
would like to know why "Johnny can't do the
math". How much of your paycheck goes to
taxes? 15%? 20%? Maybe even 25%? Let's crunch
the numbers and see what we come up with:
You are a single person earning a salary of $40,000 per year. You have zero exemptions. Here's how your withholding breaks down:
$ 7,403 Federal tax
Now you have to live somewhere, right? Maybe you don't even own a home (where they REALLY sock it to you!). You can expect to pay right around $750 per month to rent something decent, or $9,000 per year. If you have relatives or friends out of state, you have a pretty good sized phone bill. Mine last month was $111.78, corresponding to about $1,341.36 per year. Out of that $111.78, $44.93 was taxes, so now you have another $539.16 per year that you paid Uncle Sam. You also have an electric bill. Mine last month was $84.65, with $12.75 of it going for taxes. This comes to $1,015.80 per year and $153 in taxes. You with me so far or have you dozed off?
Next comes insurance. I have life, auto, and renter's insurance that totals $1,644 per year including a 5% tax, or $82.20. Oh yeah, and my oil bill, which is $640 per year and another 5% tax, or $32. If you fill your gas tank twice a week at $1.25 per gallon, you'll spend about $1,950 per year. Approximately 30% are taxes, another $585 per year. Register your vehicle and pay another $35, which is certainly a tax because it it goes to the government. If you bought a $15,000 car, you paid a 5% sales tax on it, not to mention licensing. Let's say you have a 5-year note of $300 per month, or $3,600 per year,on the car. Your total tax on the vehicle was $750, or $150 per year. (On top of that, you're paying a finance charge on your tax as well as the price of the car if you financed the whole thing.)
After paying all those expenses, you're left with $7,206.84 to spend as you please. Let's put $100 a month, or $1,200 per year of that into savings so you can build for your future. Now you have $6,006.84 left. What are you gonna do? SPEND IT! You're going to buy groceries, go to the movies, buy some new clothes, take a trip! Don't go too wild, though, because this equates to only $500.57 per month. And no matter what you buy, you will pay at least 5% in sales tax. If you blow the whole wad, you're looking at at least another $300.34 for your sales tax.
Tot up all the bold numbers (your taxes) and tell me what you come up with...how does $15,443.70 sound? What percentage of your gross salary is that? Glad you asked! Take the total tax number and divide it by your gross salary (15,443.70 ÷ 40,000); you should come up with 39%. That may not sound so bad to you...some people are happy to contribute 39% of the money they worked their butts off for to pay some bureaucrats inflated salary or buy Slick Willy a new $200 haircut. You never even see it, right?
But what if, instead of getting this money taken out directly or added into your daily purchases... what if you got a bill for $1,286.98 every month? That's what it comes out to. More than your rent, car payment, phone bill and electric bill combined. But, hey, the economy is good right? That's what our elected officials keep saying.
Do the math.
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