What The Walking Dead Taught Us About Taxes
As a fan of The Walking Dead, the last thing I expected was to learn a little something about taxes. But that is exactly what we learned in the last episode.
Avoiding any real spoilers I won’t get into a lot of detail about the episode, but let’s break it down:
- They were told they must give up half of what they gather or produce
- There would be severe consequences if they don’t give up half
- The ones with all the power get to collect the half and wield the punishment if they don’t comply
- You are told you must give up half of what you gather or produce (I will give more detail)
- There will be severe consequences if you don’t give up half (severe fines, wage garnishments, and even prison – just ask Wesley Snipes)
- The ones with all the power (Congress, the President, the federal government, the IRS, the courts) get to collect half and wield the punishment if you don’t comply
We Give Up Half Our Income to Taxes
Some people disagree and say we only pay a small percentage of our income to taxes. Well, let’s be fair and point out that the government would never come right out and simply ask us to pay all of our taxes at one time in one big check for the year. There would be an uprising!
Your marginal tax bracket is probably around 25% or so, but with deductions and so forth you probably pay a lot less. But then when you consider social security and medicare taxes, according to the Tax Foundation, the average tax rate is 21% for federal taxes.
Don’t forget about state income taxes, property taxes, fuel taxes, sales tax and other taxes levied by your state and local governments. States sales taxes average around 5%, state income tax is around 6% and property taxes average around 1% of property value. According to the American Petroleum Institute, the average gas tax including state and federal taxes and fees is 48 cents per gallon.
Zero Hedge lists 97 taxes that Americans pay each year (not everyone pays all 97). Don’t forget about dog licenses, tire disposal taxes, airport taxes, etc.
Yes, even if you don’t own a corporation… who do you think actually pays those taxes? Quick example. If I own a company and need to $70 for an item to make a profit, but I am in the 30% corporate tax bracket… I will have to charge $100 for the item to have $70 after taxes. Of course you will go to buy it and pay $105 at the register. But you had to work and earn $146 to have the $105 left over after state and federal taxes. So the corporation needed $70, but you had to go earn $146.
Obviously this example is over-simplified but the point remains… we pay almost half of what we earn in taxes. For us that is apparently okay – but for the survivors on The Walking Dead – this is just evil.
So What Is the Point?
I am not actually trying to say taxes are evil or anything of the sort. I am trying to point out that we pay a lot more in taxes than people realize. In fact, according to the Tax Foundation, “Americans will collectively spend more on taxes in 2016 than they will on food, clothing, and housing combined.” That means we have to put together a solid tax strategy and make sure we account for taxes in our everyday financial decisions.
Note: Yes, I wrote this minutes after filing and paying my federal and state taxes for last year. Did I owe? What do you think 🙂
Second note: I am in no way affiliated with AMC’s The Walking Dead – and these opinions are mine and do not reflect those of AMC or The Walking Dead