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In the USA we pay 60% taxes

Thinking of taxes, I’m reminded of certain civilization style games where you can tax your civilizations between 0 and 100%. It depended on the game. Most games leveled off between 20% and 50% at which point the civilizations would be so unproductive and unhappy it didn’t make sense to go higher. Did you know our […]

Thinking of taxes, I’m reminded of certain civilization style games where you can tax your civilizations between 0 and 100%. It depended on the game. Most games leveled off between 20% and 50% at which point the civilizations would be so unproductive and unhappy it didn’t make sense to go higher.

Did you know our own tax rate in the USA is about 60%? It’s just that most of it is hidden.

Suppose you go to get a job and you negotiate 80K with your employer. You actually negotiated 100K, it’s just that you only get 80K of that. The other 20K, which your employer pays, goes to taxes.

Of course you don’t actually get 80K. About 25% of that is taxed – social security, medicare, medicaid, straight up taxes, and various other things. So now, instead of 80K, you take home 60K.

Just having 60K doesn’t do you much good. You buy things with that 60K. A lot of that is subject to a sales tax (8.5% around here). If about half of what you buy is subject to a sales tax, that knocks us down to roughly 57K. That’s not bad. Now you have to pay the business, property, and employee taxes of those you buy from. Not directly, but they pass the charge on to you. Taxes account for about 20% of the cost of a good or service. So it brings our purchasing power down to 45K.

Do you own a house? Do you pay property taxes? Mello-Roos? That’s another 10K of taxes you pay.

So in the end, without a house a person actually earning 100K a year has a purchasing power of 45K. With a house, it’s 35K.

On average that’s a 60% tax rate.

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