The 20-25% in federal income taxes is actually rather high. IIRC, most people's effective federal income tax rate is around 10-15%, which makes sense (mathematically) when you look at the tax brackets.
Of course, when you add in SS and Medicare taxes, then you end up with an effective federal tax rate of around 18-23%. But then you'd have to count deductions like state income taxes and home mortgage interest, which will then bring that figure down to around the mid-teens.
All of this is tricky to figure out and really depends on which income brackets you are looking at and which tax breaks you want to count. That's why I'd rather rely on the "tax freedom day" measurement, since that is a good indication of how much the American public is being collectively taxed.
For the typical middle income family, they're probably going to be closer to 20% than 25. If you had two earners making 75K (taxable)/each claiming the standard deduction ($11,900), the effective rate would be 19%. At 100K/each, it would be around 21%. So, 20% is a better figure -- I don't think you could get to 25% unless you were married filing separately.
The point holds, however. We are vastly overtaxed and it certainly isn't historically low when half our incomes are going to one kind of tax or another.
Some states, like TX, are better off, as they don't have personal income taxes. But they DO have sky-high real estate taxes. |
