The impact of taxes?

March 16, 2009
The Impact of Taxes by Kerby Anderson

What is the impact of taxes on American citizens and businesses? You're probably like me and don't know many people in the top income tax bracket. So it is hard to imagine what would happen when the current tax cuts expire. A recent commentary by Pat Buchanan put a human face on what are often abstract economic issues and principles.
Small businesses will be affected when the current tax cuts expire since two-thirds of them are taxed at the same rate as individuals. So consider "what this means to the owner of a restaurant and bar in Los Angeles open from noon to midnight, where a husband and wife each put in 80 hours a week." At the end of the year, they will pay a U.S. tax rate of 39.6 percent and a California income tax rate of 9.55 percent.
But these aren't all the taxes they will pay. "Medicare payroll taxes on the proprietor as both employer and salaried employee will be $14,500. Social Security payroll taxes for the proprietor as both employer and employee will be $13,243." That means that federal taxes, state income taxes, and payroll taxes will take half of the income they earned through 8,000 hours of work.
After paying all of this, they also have to pay the day-to-day taxes that come with living in the United States and living in California. That would be a state sales tax of 8.25 percent. It would also include gas taxes for the 50-mile commute, and tens of thousands of dollars in property taxes on both their restaurant and home.
It's not hard to see why someone in this situation might be inclined to work less or even give up. This hypothetical couple worked hard and yet sees the government taking a substantial share of their income. No wonder so many taxpayers are discouraged. I'm Kerby Anderson, and that's my point of view.

Just a thought as I pass this way;
Mervi

Yes, this is barrowed!