What is your effective tax rate?

As the next elections grow nearer, we are hearing more and more about how we need to bring our deficit into balance not only on the federal level, but also on the state and local levels. So the question has come to mind, what is your effective tax rate and how do you feel about it? Effective tax rate you say and what is an effective tax rate? Simply said, if you added all of the fees, taxes, and charges that your government charges you each year, and divide that by the total income you earn, the percentage you end up with would be your effective tax rate. Have you tried it before? Do you really know how much you actually pay in taxes each year? You really ought to know, for information is power and with that power you can work not only harder, but smarter towards a better life!

So let’s begin the exercise using the income and taxes accrued by my family. Though we don’t make much, we do pay a bit in taxes each year. As of last year we earned, through our various jobs, etc a total of $ 36,000. Yes, we will do a bit of rounding here as it makes things easier to understand. Though we have rentals, they are a family business that we derive no income from of any type. Though for this exercise, you would include any and all sources such as dividends, interest, etc. Do not include company reimbursements for expenses as part of your job.

Totals to date:

Income                        $ 36,000

Then there are the taxes that we pay each year to the local, county, state and federal governments. These are lengthy in their list, but must be listed so bear with me. Also, any time you are mandated to spend money by any government agency that would be a tax. So if your state mandates that you buy car or health insurance 
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Redgage Picture of the day---sunrise


Enjoy!