Consumer Spending: How Do You Spend Your Hard-Earned Dollars?

Taxes 32.0%
Housing 16.7%
Medical Care 11.5%
Food 8.2%
Transportation 7.9%
Recreation 5.7%
Clothing 4.1%
Savings 1.4%
Other Miscellaneous 12.5%

So there you have it. If you think you are being "nailed" by the government, you are absolutely right. You spend more on taxes than any other category of consumer spending. In fact, you spend more on taxes than on food, clothing, and housing combined!!! (Run the numbers: Food-8.2% + Clothing-4.1% + Housing-16.7% = 29% vs. Taxes-32.0%)

Think about it -- the Average American spends 32% of his/her income on taxes. And it’s not just federal income taxes we’re talking about here. There’s also state income taxes and local income taxes (like your city or county).

Oh, we’re not done, yet! That 32% also includes "Payroll Taxes" -- for employees, that’s the 7.65% of your gross wage that goes to fund Social Security and Medicare programs; for business owners and self-employed people, Payroll Taxes are double that amount -- 15.3% of your wages or self-employment income.

Finally, we also have to include Corporate Income Tax. Why do I include that in the 32%? Well, where do corporations get the money to pay their corporate income tax? From consumers like you and me, that’s where! When you buy groceries, part of the price is going to be used by the grocery store to pay the store’s income tax. The grocery store just passed his tax bill on to you!

Here’s another way to look at it. Each year economists do a calculation to determine "Tax Freedom Day". What is "Tax Freedom Day"? It’s a way to graphically depict that we spend 32% of our money on taxes. In Year 2002, Tax Freedom Day was April 27. That means that from January 1 through April 27, all the money you made went to taxes. Finally, on April 27, you now get to keep what you make for the rest of the year!!! Yippeee!!!

By the way, the April 27 date is a national average. Your actual Tax Freedom Day may actually be a few days sooner or later than April 27, depending on which state you live in. That’s because state and local taxes vary considerably. For example, Washington, DC residents do not get to celebrate Tax Freedom Day until May 17. Connecticut’s Tax Freedom Day is May 14 (the latest of any state.) The earliest state to celebrate Tax Freedom Day is Alaska -- April 8.

Maybe you already knew "intuitively" that your Tax Bill is outrageously high. If not, the picture I’ve just painted should thoroughly convince you that you pay too much tax, period.