The state Democrat controlled General Assembly and the Democrat Governor
enacted a 66% increase in your personal income tax, from 3 percent to 5
percent, and a business and corporate tax increase from 4.8 percent to 7
percent. That tax has been in effect for the past couple of years and is set
as a temporary tax that will expire in January 2015. It has become a hot
issue in the current election cycle that will end with the election of a new
Governor or the current Governor who raised the taxes being re-elected.
Although the Governor is running on making the temporary tax increase a
permanent increase, the General Assembly members would not support his
proposal, even his fellow democrats. That is, at least until after the
November election. So now, of course, the only ideas the Governor seems to
have is how he can find new taxes to fuel his enormous spending habits.
These taxes have deleterious effects on the typical, hard working family.
For a family of four whose gross paycheck amounts to $40,000 per year the
current state income tax has been $1,200. With the passing of the new
increase in state income tax the same family of four will now pay $2,000 per
year. That represents about $67 per month less the family of four has on
which to live.
When one considers the new tax increase to 7 percent on business and
corporations, it also will impact on that family of four even further. If
the business or corporation is providing a service or making a product there
is a strong likelihood that the tax increase will be passed on to the
customer. In which case for all goods and services the family purchases
during the year the cost will increase the 2.2 percent above what the cost
of the goods and services cost last year. That increase for goods and
services will be paid from the family’s net money, not the gross.
When these two tax increases are combined and added to the tax that the
family of four already pays it takes a huge bite out of the family’s
paycheck. The federal tax deduction from each paycheck will be at least 3.6
percent, FICA at least 6.2 percent, Medicare at least 1.4 percent and the
current state tax at 3 percent. Together these already account for 14.2
percent of the family’s total gross paycheck. Adding the increase for the
state it moves to a total of 16.2 percent taken from the gross pay, and then
an additional 2.2 paid out from the family’s net pay. The $40,000 is reduced
to $33,520 even before the family sees the bi-monthly paycheck. With another
corporate and business tax passed on to the consumer at 2.2 percent, the
family’s net pay is reduced again by $737 down to $32,783.
[to top of second column]
So the family of four, who thinks they have the spending power of
$40,000 per year, actually has only $32,783. Suppose the family of
four owns a small, modest house. Depending on the assessed value of
the house, it is not unlikely that property taxes will amount to
roughly $2000 for the year. The family’s net income is reduced to
$30,783 after the property tax is paid. The property tax for the
family represents about 6.1 percent of their annual net pay. The
effect of that tax results from the $40,000 gross reduced to
$30,783. In taxes alone the family of four has reached almost 25
percent of their annual income.
Remember, the $30,783 is a net income that is used to pay bills,
buy food, educate the children, buy clothes, gasoline and all other
things to just live life. Remember, however, from the net income
anything that is bought will include a tax as a portion of the
total. Just for fun the next time a utility bill is paid, look on
the bill and record the amount of tax that is charged. The telephone
bill has a tax levied. The gasoline has a tax from the state
government. The next time groceries are purchased, check out the
amount of tax that is paid to the state. In fact, anything that is
purchased will be taxed; any service that is purchased will be
taxed. License plates for cars, driver’s license, and hunting
license, anything purchased will have a tax attached to it by the
local, state and federal governments.
The fact is, every time a dollar bill changes hands from a consumer
for products or services the government collects a tax on it. If you
change the oil in your car you pay a tax on the service and the oil.
The service station pays a tax on the oil they purchase and then
charge a tax when you purchase from them. Over the years the
government has found a way to tax just about everything that exists.
Municipalities, states and federal governments have discovered ways
to make laws, create regulations, ordinances and requirements to
levy a tax for everything one uses in life. It is taxed over and
over by various levels of government. Taxes are deducted throughout
the year by the government from each paycheck of the citizens. It is
used interest free by the government throughout the year with a
final accounting from each citizen to make sure all income taxes are
paid for a final accounting by April 15 each year.
Again, with the taxes being levied by the governments of our land
from the gross pay and the net pay that approaches, or perhaps even
exceeds the 50 percent level, how long will it be before citizens
say enough is enough and demand that deficits be reduced by
reductions in spending rather than continuing to raise taxes?
[By JIM KILLEBREW]
Click here to respond to the editor about this