In 1773, the colonists dumped British Tea in to the Boston Harbor because of the taxation that was coming from the British empire. This act by the colonists was one of the first steps to the American Revolution and ultimately American Independence from the monarchy.
Fast forward to today. Now who are the ones who are taxing its people the most? Yes. It is your government, state, federal, local, etc. You name it and you are being taxed at every turn.
It is your biggest expense by far and there isn’t a close second.
Here are some interesting facts from self.inc
And when I say interesting what I really mean is scary as shit.
- The U.S. government collected over $4.9 trillion in taxes in 2022
- The average American will pay $532,910 in taxes throughout their lifetime
- That’s a third (33.23%) of all estimated lifetime earnings ($1,571,244) spent on taxes
- Tax on earnings is where most tax will come from, with the average American paying $287,901 in a lifetime
- Owning the average passenger car will cost an additional $25,714 in tax payments alone, across the average 9.4 cars owned in a lifetime
- Tax on property will set the average homeowner back an additional $144,553 on top of the purchase price and running costs
The chart below shows what the average person will earn in a lifetime and how much they will pay in taxes during their lifetime.
Now for the sake of this report the authors of it calculated all taxes, even consumer spending taxes you pay. Go to their website here and you can read the methodology of where the numbers come from.
|State||Lifetime Earnings||Lifetime Taxes||% of Earnings on Tax|
|District of Columbia||$2,837,996||$1,150,126||40.53%|
I think most of us can agree that some taxes are well worth it and we should pay them to have the convinces we have. However, our federal government is taking anywhere from 10% to 37%, depending on your tax bracket in taxes. And this doesn’t include the additional 6.2% coming out of your paycheck for social security. And 1.45% for Medicare.
So add your tax bracket:
10%-37% + 6.2% + 1.45% = 17.65% at the lowest end and 44.65% at the high end.
Now add in your state and local tax and your paycheck is getting taxed at anywhere between, low end 20% to high end close to 50% before you ever see it.
Again, I say I don’t have a problem with paying taxes. I know we pay for necessary services. However, our government, especially at the federal level has gotten out of control. And they waste so much of it on things you never even see or use.
When you look at the chart above and it doesn’t make you a little sick that over your lifetime you are paying close to 1/3 of the money you will ever earn to some kind of tax, then I don’t know what to tell you.
It sickens me. Because of all of the waste. Think about your property taxes that pay for your local schools. Most of the schools suck. Unless you happen to be in one of the good school districts, in which the taxes are probably even higher, but your kids may or may not get a better education.
I share this data with you not to be a negative person. I want to point out to you that you need to find a way to get some deductions your life. And not just the basic interest tax deduction you get on your home each year.
Instead of being in one of those higher tax brackets, maybe you can get it into the lower double digits around 10-12% instead of in the twenties.
My number one suggestion to people on taxes is consult a person who know what they are talking about. Stop doing your taxes on your own and talk to a professional and let them teach you, find someone you can grow with. Find someone who can help you lower your tax burden.
As one of my mentors says: “Its not how much you make, it’s how much you get to keep.”
To your success and your future.
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