Sunday, February 5, 2012

Taxes and what middle-class people pay.

 I have some records of one middle class family (my own) in terms of earnings and taxes paid.  I've taken the median family household incomes for 2006 through 2010 (and estimated them for 2011) in current (not constant, inflation-adjusted) dollars, and then compared these to my actual 1040 tax forms (which also use current, not inflation-adjusted dollars) to arrive at percentages we paid in federal income tax, state income tax, and property taxes.  I'm excluding payroll deductions (e.g., Medicare, unemployment, Social Security, etc.)  and sales taxes, as well as various other taxes such as excise taxes or tariffs.

Taxes in 2010 were a little lower because we purchased an energy efficient heating and cooling system for our house and received a tax credit for that.  Income was lower in 2006 because my wife had a home business in which she lost significant amounts of money. The increase in our income in 2011 reflects my working an extremely heavy load over the summer and my wife getting extra work in her job during the year, and taxes went up that year partly because our income was higher and partly because state income taxes increased from 3% to 5% in Illinois.

Here is the historical record:

2011: I'm estimating we earned 119% of the median family household income.
2011: Federal income tax was 5.8%
2011: State income tax and property tax combined was 9.3%
2011: Federal and State income and property taxes: 15.2%

2010: We earned 103.9% of the median family household income.
2010: Federal income tax was 1.7%
2010: State income tax and property tax combined was 8.1%
2010: Federal and State income and property taxes: 9.9%

2009: We earned 91.2% of the median family household income.
2009: Federal income tax was 2.7%
2009: State income tax and property tax combined was 8.8%
2009: Federal and State income and property taxes: 11.5%

2008: We earned 84.9% of the median family household income.
2008: Federal income tax was 2.3%
2008: State income tax and property tax combined was 8.9%
2008: Federal and State income and property taxes: 11.2%

2007: We earned 89.2% of the median family household income.
2007: Federal income tax was 2.7%
2007: State income tax and property tax combined was 9.0%
2007: Federal and State income and property taxes: 11.7%

2006: We earned 66.4% of the median family household income.
2006: Federal income tax was 0.0%
2006: State income tax and property tax combined was 9.1%
2006: Federal and State income and property taxes: 9.1%

Our taxes have not been excessively burdensome, I think. I wouldn't mind if they were a bit higher.