What Percentage of My Income Do I Pay in Taxes?

[jpmassar]

So it's tax time, but the forms have all been e-shipped to the appropriate e-destinations, so I thought I would try to figure out just what percentage of my income really goes to taxes. This is not trivial

Comments

[clutch_c]

Interesting calculation. Mine was 22.5% allowing 1% for nuisance and sales taxes. Adding 25% of pretax retirement contributions gives 27.0%, which I guess is pretty average according to the chart.

[adb_foldem]

The fair market value of your house wouldn't change your taxes much, since tax rates would be proportionately lower. In some states the valuation is pegged at 50% of actual value for instance.

[jpmassar]

If that were true they would have never passed it in the first place.

Are you saying that tax rates would automatically adjust? I thought the tax rate was set, and to change it would require legislative or voter approval.

[clutch_c]

At least here (AZ), they figure out how much they need in taxes and then divide that by the total assessed value to get a rate. So when my assessed value goes down (as it has each year for the last three years) the tax rate goes up, leaving the tax paid about the same.

[adb_foldem]

Well, yes, but voters would already have done this. If the valuation system was different, then the tax rates would also be different to arrive at the same final amount.

In a vacuum, of course, you would not be pleased with reverting to full value over some %, although Cali already is using full value and auto-adjusting the value every year - My house valuation was over $700k and is now down to $399k. This is a serious problem in most locales, who expected the higher revenues.