It’s halfway through the month, and time to update you on my experiment. To review, I chose September to capture every penny of tax we pay, and see exactly how much goes to the government. I am only capturing direct taxes, rather than driving myself into the abyss of insanity by attempting to accrue all the corporate taxes, and second- and third-removed taxes on money we pay.
A few notes on lifestyle. My wife and I have two boys, ages 5 and 3 (about to be 4). We live pretty modestly. In fact, other than travel for work or the occasional vacation, I can live my entire life within one square mile of my bed. My office (I have a home office too, but I mean the actual work office not in my house), church, grocery stores, favorite restaurants, movie theaters, mall, are all within that square mile. If I expand the square to 3 miles, that includes most of our friends, the kids’ preschool, Lowes, and most of my wife’s relatives (mine all live far away).
There it is: we don’t drive very far, therefore we don’t fill our tanks much. That’s good, because we live in Georgia, and the gas tax in Georgia is $0.459 per gallon. That rate qualifies as the highest effective tax rate we pay, a whopping 14.71%. Funny thing, they don’t show you the tax at the pump. Maybe that should be the law. The government requires a full ingredient list, and the US Recommended Daily Allowance of every vitamin, mineral, calorie, carbohydrate, and fat on a single packaged cookie, but they don’t disclose where our money goes for a gallon of gas.
It surely helps with gasoline purchases that I sold my 2011 Subaru Impreza STI (tears flowing here) and bought a much more fuel efficient 2015 Subaru Legacy. My actual MPG went from about 16 to 35. My average driving speed decreased in an inverse proportion to my MPG (imagine that). My family is not the typical Subaru-loving group. We go to church. We don’t live in Oregon or Washington or Colorado or Alaska. We don’t give to the World Wildlife Federation, Greenpeace, or PETA. We don’t believe man-made climate change is settled science or irreversible or the greatest challenge of humanity ever. We just like Subarus because they are safe, efficient, and well-made cars and SUVs (we’ve owned a total of 5). We also don’t smoke, don’t drink a whole lot, and don’t buy lottery tickets. This reduces our “sin tax” to effectively zero. I’ve always called the lottery a tax on the stupid. We don’t exhibit that particular stupidity (we have other forms of stupidity, just not so public).
If gasoline is the highest tax rate, in Georgia you can still get a haircut and pay no tax. Thank God we have that or else I’d be ordering a Flowbee from Amazon. We used to be able to buy from Amazon tax-free, but no more. Now we pay Georgia sales tax. But with a Flowbee I’d only have to pay the tax once…we’re sticking with the professional hair stylists for now.
Obviously, the biggest share of my tax is withholding from my paycheck. I should get a big chunk of that back every year, but I really don’t. In fact, the last two years I’ve done pretty well, and the government did well also. I had to write some fairly large checks in April. I don’t want to disclose how much money I make because frankly that’s none of your business. I’ll provide a simple breakdown by percent instead. At the end of the month, I plan to go back and categorize everything as a percentage of income—how much I spent on that category, and how much of it was tax.
At this point, I’m focusing on the bigger picture.
My combined Federal, State, Social Security (both employer and employee), and Medicare withholding so far is 32.07% of my income for the month. Frickin’ ouch. My other taxes paid, combined, only equal 3.36% of income. Again, lifestyle contributes a lot to that, and the month is only half over, so it could go up. My combined effective tax rate so far is 35.43%. That means for the first 10.629 days of September (right up until September 11), I was working for Uncle Sam and his nieces and nephews, not me and my family. If that rate holds, I should be working for my own food and shelter the rest of the month. On a weekly basis (7 day), I work to pay taxes for nearly 2 and a half days. In a 5 day week, that’s 1.77 days, or 14 hours of a 40-hour work week.
To be honest, it’s not nearly as bad as I thought it would be. I have a whole lot more room for conspicuous consumption to feed the beast we call government. I would rather donate the money to 501(c)(3) charities or tithe to our church. At least for now, that is tax-free.