First, we are NOT accountants, this is our attempt to simplify the numbers so that everyone can discuss the issues from the same, correct starting point. We are dumbing down the calculation, because we are not sure that ANYONE understands the entire American Tax Code, that exceeds 60,000 pages. (Just for reference, and comparison, the Encyclopedia Britannica is 32,640 pages) The following is a breakdown of the taxes that we used to calculate the amount of taxes paid in each state. The assumptions that we made include:
- We assumed a Single Filer
- For these calculations we assumed a $30,000 and $100,000 Adjusted Gross Income. This is after all federal and local deductions. The Median American Income in 2007 was $39,000 not including benefits. http://answers.yahoo.com/question/index?qid=20080716125949AAC8Mtz.
- The Federal Tax Rates are taken from the posted Federal Rates. http://www.taxguru.org/incometax/Rates/1040-09.htm#Sing
- The State Tax Rates are from the Tax Foundation. http://www.taxfoundation.org/taxdata/show/228.html
- The State and Local Sales Taxes are from the Sales Tax Clearing House. http://www.thestc.com/STrates.stm
- Gas taxes are from the Energy API website. This calculation assumes 12,000 miles traveled in a car that gets 20 MPG, resulting in 600 gallons of gas purchased in a year. http://www.api.org/statistics/fueltaxes/upload/MotorFuelNotesJan20092.pdf
- Automobile Registration Fees are from the DOT. We assumed that a two earner household has two cars, so each person covers one. http://www.fhwa.dot.gov/ohim/hwytaxes/mv103.pdf
- Property Taxes are from the Tax Foundation. These are calculated using the median home price per state. Even if you do not own your home, you are paying rent that covers this tax. We understand that, more often than not, there all multiple earners living in the same house. We did not adjust this number. http://www.taxfoundation.org/publications/show/1913.html
At this time we have not included additional taxes on automobiles, utility services (Gas, Electric, Telephone, Water and Sewer).
We can also argue if we should include the employer portion of Social Security and Medicare which would add 7.65% to everyones tax bill, or if we can break this tax out of each employers cost of doing business that gets PASSED on to customers in the price of products. Either way it is an INCREASE in the taxes paid by the individual.
We welcome any constructive input in our calculations. Hopefully, we can get these rates as close as possible to reality, so that each working American can know how much they pay to the government.