The Government is Hungry for your Taxes - (W3:D1) Debt Free Millionaire Podcast

Simplified Explanation: Taxes are money, collected by the government, from citizens, to pay for its operations. They use it for the infrastructure, salaries of state and federal employees, and anything else they decide to fund - literally anything they decide they want to do with your money. You pay your taxes through your paycheck, or by being charged on a regular (or not so regular) schedule. Compared to other countries, the United States is moderate in the amount of income taxes their people pay, but one of the highest in corporate tax rates.

Real Life: Here is how you find out how much you pay in taxes. This may be hard to stomach…

Where do your taxes go? – There are many types of taxes you pay each day, ranging from the taxes taken from your paycheck, to taxes taken from your credit card (such as gas and sales taxes). Here is a breakdown:

Taxes

Percent

Income

Depending on…

Federal Income Tax

17%

$17,000

Varies by income

Social Security

7.65%

$7,650

Varies by income

State Income Tax (This varies by state)

10.1%

$10,100

Varies by income

Property Tax

1.3%

$1,300

Varies by property value

Sales Tax (This varies by city)

9.75%

$9,750

Varies by purchase

State Gas Tax

Based on how much you buy, not income ($0.15 in Alaska- $0.67/gallon in California)

Federal Gas Tax

Nationwide, Americans pay $0.1742 per gallon

Cell Phone Tax

Based on your service plan, but costs an average of $270 per year

Utilities Tax

Varies by cities – Washington State charges 6%

You may not like taxes, but remember: most European countries pay 60-70% of their income to the government; the United Arab Emirates pay 55%, and the Netherlands pay 52% of their income - just in income tax, not including other taxes! Also, these taxes go to services that you and others use, and some projects you won’t agree with, all signed into law by your elected officials. If you want to pay less in taxes, you would elect those who want to reduce them or stop frivolous spending.

Activity - Part #1: First, calculate your taxes, drawn from how much you will most likely make out of high school, or even college ($30k). Look up these numbers online. This information you may have to research:

Taxes

Percent

Dollar

Totals

Federal Personal Income Tax

17%

$30,000

FICA (Social Security, etc)

7.65%

$30,000

State Personal Income Tax

%

$30,000

Local Property

Tax (Car, House)

Car:

House:

-

-

State Gas Tax

What is your State Tax Rate:

_____________%

Drive 20,000 miles, Car gets 20 MPG,

Buy 1,000 gallons

Federal Gas Tax What is your State Tax Rate:

_____________%

Drive 20,000 miles, Car gets 20 MPG,

Buy 1,000 gallons

Cell Phone Tax

%

$1,200 service plan

Utilities Tax

%

Use $3,600 per year

Total Tax: How much do you pay and the total percentage?

Total ($______/ $30,000)

%

Total:

$