Percent Tax You Paid To Income

[heydude]

Add the tax federal and state and compare to gross income. What percent did you pay?

I paid 12 percent.

[freein05]

I also paid about 12% in Federal and state taxes. I live in California a high tax state.

[Mighty Frugal]

Did you pay 12% flat? Does your tax rate not climb as your income grows? Eg 12% taxed up to $40k. 15% taxed from $40,001-$60k. 20% from $60,001 - 75k, etc

or is it 12% regardless of income?

Here in my province we pay fed-which goes up from 15% to 22%, 26% and 29% (for over 132k per year) and then tack on Prov. tax-smaller-like 5%, 7%, 11% is highest

So..I pay 20% (both fed & prov) for first 40k (approx) then 32% for the next big chunk and so on....

[screamingflea]

My income is low enough that I've been paying 0% for almost a decade. Now that I live in Oregon I don't pay a sales tax either.

[sweetana3]

I pay way too much (a lot more than Romney %wise) but am happy because I have the income to support our family.

[bae]

Many years, 0% in federal tax, and this state has no income tax. I arrange my affairs to have no taxable income as often as possible. I suppose that could be reckoned as 100% as well :-)

[Zoebird]

we pay 15% for our business taxes (GST). and that's it for now. nothing in the us and no income tax here (don't earn enough). and then, like bae, i arrange things to pay less.

[freein05]

The stated 12% is my effective rate for both Fed and state. As most of my income comes from investments I control what I invest in for tax advantage. I try to invest in dividend paying stocks that are qualified for the max 15% rate, muni bonds, and T-bills which are free from state tax. I also control how much I take out of my IRA.

[jp1]

Finally did my taxes last night. 15% federal, 5% state. Last year was 14.2% federal, 5% state.

[JaneV2.0]

I'd say between fifteen and twenty percent, because my property taxes are high.

[morris_rl]

Many years, 0% in federal tax, and this state has no income tax. I arrange my affairs to have no taxable income as often as possible. I suppose that could be reckoned as 100% as well :-)


Here are two quotes of Supreme court Justice Learned Hand that apply:

"Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes."

Gregory v. Helvering, 69 F.2d 809, 810 (2d Cir. 1934)


"Over and over again courts have said that there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant."

Commissioner v. Newman, 159 F.2d 848, 851 (2d Cir. 1947) - dissenting opinion


Could it be that Mr. Obama and his fellow travelers are engaging in "mere cant" by demanding more money of high income folks "in the name of morals"?


Best,


Rodger

[Alan]

Yes!

"Cant" is a word that needs to be used more in political discussions as many are the result of the unthinking recitation of pre-cooked words and phrases.

[bae]

Could it be that Mr. Obama and his fellow travelers are engaging in "mere cant" by demanding more money of high income folks "in the name of morals"?


I do things as I do precisely *because* of morals. I do not like to contribute to our war machine, and half a dozen other such things. By living as much as possible without taxable income, I can avoid doing so. It's about all I can do, other than voting "NO" and lobbying against.

I pay a lot of property taxes, but those funds go back to the local community to fund schools and hospital districts and port districts and our libraries and so on. Not a lot of killing there, and not much bloat except in our school administration.

"Simple Living", YMOYL-style, seems to be designed around *not* paying taxes. I wonder how long it will take before Simple Livers are targetted for "not paying their fair share"? :-)

[morris_rl]

I find that I paid about 16.74% of my gross pay before taxes in combined federal and California state income taxes. If one adds my Social Security and Medicare taxes to that, it comes out to about 22.29% of my gross pay before taxes.

At this point in time, our political Democratic and Republican party demogogues are defining those with relatively high pre-tax income as "rich", with the threshold being about $250,000 per annum. As time goes on and they scrape closer to the bottom of the economic barrel, I suspect they will broaden their definition of rich to include those who are frugal and who have significant financial assets.

At that point, perhaps we will have a modern version of, "The Grasshopper and the Ant" fable played out, with the frugal ants' assets confiscated to feed the grasshoppers. Here is a satirical 2010 modern version of the fable:

"The ant worked hard in the withering heat all summer long, building his house and laying up supplies for the winter.

The grasshopper thought the ant was a fool and laughed and danced and played the summer away.

Come winter, the shivering grasshopper called a press conference and demanded to know why the ant should be allowed to be warm and well fed while others were cold and starving.

CBS, NBC , PBS, CNN, and ABC showed up to provide pictures of the shivering grasshopper next to a video of the ant in his comfortable home with a table filled with food.

America was stunned by the sharp contrast.

How could this be in a country of such wealth, this poor grasshopper was allowed to suffer so?

Kermit the Frog appeared on Oprah with the grasshopper and everybody cried when they sang, 'It's Not Easy Being Green.'

Acorn staged a demonstration in front of the ant's house where the news stations filmed the group singing, ‘We shall overcome’.

Jeremiah Wright then had the group kneel down to pray to God for the grasshopper's sake.

Nancy Pelosi and Harry Reid exclaimed in an interview with Larry King the ant had got rich off the back of the grasshopper, and both called for an immediate tax hike on the ant to make him pay his fair share.

Finally, the EEOC drafted the Economic Equity and Anti - Grasshopper Act retroactive to the beginning of the summer.

The ant was fined for failing to hire a proportionate number of green bugs and, having nothing left to pay his retroactive taxes, his home was confiscated by the government Green Czar.

The story ends as we see the grasshopper finishing up the last bits of the ants food while the government house he was in, which just happened to be the ant's old house, crumbled around him because he did not maintain it.

The ant had disappeared in the snow.

The grasshopper was found dead in a drug related incident and the house, now abandoned, was taken over by a gang of spiders who terrorized the once peaceful neighborhood.

Moral of the story: Be careful how you vote in 2010."


In any event, given our relative political clout, the "powers that be" are more likely to come after middle class folks like "loosechickens" and me than "bae" and the other "bloated Plutocrats"...

<WINK AND VERY BIG GRIN>


Best,


Rodger

[bae]

I almost lost my home and my business to Clinton's retroactive tax changes, after I had carefully and prudently paid my quarterly taxes according to the tax laws and rates prevailing at the time the income was earned.

Fool me twice....

[morris_rl]

bae,

Your problem was that you failed to employ total precognitive omniscience to anticipate the actions of the federal government...

;->

So as not to totally hijack this thread, let me observe that the 22%+ of my pretax income I pay to federal and California state taxes probably places me somewhere above the median for those who are working stiffs, somewhere below the median for those who are self employed, and somewhere well below the median for those who can derive significant income from tax-free municipal bonds and the like.

I would love to talk with you off-line sometime about how I can lawfully minimize my taxable income once I retire.


Best,


Rodger

[cx3]

I do things as I do precisely *because* of morals. I do not like to contribute to our war machine, and half a dozen other such things. By living as much as possible without taxable income, I can avoid doing so. It's about all I can do, other than voting "NO" and lobbying against.

I pay a lot of property taxes, but those funds go back to the local community to fund schools and hospital districts and port districts and our libraries and so on. Not a lot of killing there, and not much bloat except in our school administration.

"Simple Living", YMOYL-style, seems to be designed around *not* paying taxes. I wonder how long it will take before Simple Livers are targetted for "not paying their fair share"? :-)

Well said Bae.
My tax preparer just finished our taxes.I'm looking at form 8879 plus State form.Adding my $1800 in property taxes,it looks like wife and I paid 12.7% of adjusted gross in State,Federal,and property taxes.We adjusted grossed 80k(our best year ever,both of us would have preferred to work less and make less),have 2 surviving children, and contribute the minimum matching in our 401k's.
Question:12.7% seems really low to me, and by judging from some of your posts,others look low also.This makes me wonder if investing in tax defered instruments(like 401k's and regular IRA's) is really the prudent thing for most people to do?Maybe paying taxes now,instead of later would be a better option(excluding employer matched 401k contributions).Thoughts?

[jennipurrr]

We paid about 11 percent of our true gross income, of course the tax code does all sorts of stuff to tinker around what they determine the gross income to be. We had a chunk removed for the money we put in 403bs, and then another chunk removed for phantom losses (depreciation) on our rentals - one rental was positive this year, so I suspect that we won't enjoy those losses for too much longer.

In addition to the state/federal, our property tax is very low ($514) , but our sales tax is very high (9% - including grocery purchases). I live in a small house and limit my spending so neither really affect me that much. I would like to go through my spending and see how much sales tax I paid. I suppose it is mostly on my groceries and dining out.

Fortunately we no longer work in a municipality that collects a city tax. DH and I used to work in a city that had its own local tax...I believe that tax has been deemed unconstitutional in our state constitution so they had to get rid of it. My Dad paid it for years but lived outside the city limits and loved to cry "Taxation without Representation" as the most horrendous public officials were always being reelected.

I am not an investment expert, and I know they do carry risks in this economy, but my parents have been super happy putting a chunk of their money in municipal bonds. Since my Dad doesn't have a traditional pension, my Mom calls it his retirement check. The ones they bought are for 30 years and if the bond is for your state there is no state or federal income tax. The ones they purchased are for our local community and they have a killer interest rate (over 10% if you factor in the tax savings, at my parents tax levels). It seems to be similar to the strategy to YMOYL, but since treasuries aren't doing that well right now, it could be another option.

[Spartana]

Many years, 0% in federal tax, and this state has no income tax. I arrange my affairs to have no taxable income as often as possible. I suppose that could be reckoned as 100% as well :-)

Ditto for me - zero %. All of my assets are in tax deferred stuff and a part of my income is tax-free. The remainder that is taxable is under both the Fed and State (Calif) standard deductions and exemptions.

Of course when I owned a home I paid property taxes (only 1% of purchase price in Calif and can't be raised by any more than 2% of that 1% amount each year) so fairly low, sales tax (don't buy much but non-taxable food), fuel for the vehicle (fairly low taxes for that) and ...umm... that's about it.

[Spartana]

.This makes me wonder if investing in tax defered instruments(like 401k's and regular IRA's) is really the prudent thing for most people to do?Maybe paying taxes now,instead of later would be a better option(excluding employer matched 401k contributions).Thoughts?

Depends on what you think your taxable income will be in the future. Will it be more, or less, than during your working years? Will you have more tax free or partially tax free income streams when older (i.e. Social Security isn't taxable until it your total income reaches a certain point - approx. $25K* - unless you are still working and earning)? Will you have more tax write-off now (kids, spouse, property tax) or more later (over 65, spouse over 65, etc..)? What will the tax brackets and deductions and personal exemption amounts be in the future? They usually increase by $100 each per year. And the biggie - what will your income requirements be when you are retired? Will you be debt-free and mortgage-free? Will those expensive kids be out supporting themselfs? Will you downsize some of your expenses? Will you need alot less money in retirement then you need today and therefor can live on a small income (and pay less in taxes) then you do today? So basicly it's guesswork to a certain extent. I knew that my expenses would be ALOT less after I quit work because I would have a paid for house and no debt. I also knew that my income stream would be less when I was older because I was retiring very early. I also knew that i could (and would) happily cut expenses back in retirement if needed to not only make my money go further, but to keep my taxes low. So I choose to put my money into the max. allowed of tax deferred things while working so that I paid less in taxes then. But I am paying even less in taxes now that I've been retired for 12 years (since I was 42), so that stratigy worked for me. YMMV!

*You will have to pay federal taxes on your Social Security benefits if you file a federal tax return as an individual and your total income is more than $25,000. If you file a joint return, you will have to pay taxes if you and your spouse have a total income of more than $32,000.

ETA: some states, like Calif., don't tax social security benefits at all. So if you got $100K in Soc. Sec. benefits you would not have to pay any state income tax on that in Calif. That's something to check out when thinking about your current vs. future tax status.

[pcooley]

I think Turbotax put our tax rate at .16% this year. Most years it's negative because of credits, but our income went up slightly.

[1tolivesimply]

23.5% or 18.92 per turbo tax. That's not including Medicaid or SS...

[cx3]

Depends on what you think your taxable income will be in the future.

Ah,there's the rub.
Just look at Obama and Romney now.They are both throwing all kinds of radical tax proposals out there.Thats what politicians do.
If my real tax rate doubles from 12.7% to say 25% I would be in serious financial trouble.Bae mentioned how the Clinton retroactive tax had a huge impact on his finances.And I also agree that they will be coming after us SLers eventually for not "paying our fair share".
For me,I'll take the bird in my hands.The two birds in the bush might not be accessable in 20 yrs.