What does this article mean?

http://www.usatoday.com/money/perfi/taxes/2010-05-10-taxes_N.htm

Because if it means that anyone in the US pays even close to 10% of their income in taxes (all kinds of taxes combined), I call bullshit.

In NY state, the sales tax alone is 8.5% on practically every dollar you spend. Did they survey people who don't spend any money at all? How much does one have to earn to pay under 10% income tax? $10000 per year?

If they had said that about 35-45% of personal income went to taxes I'd believe it, but I can't believe anything under 10%.

Yeah, I don't know where that data came from. The lowest income tax bracket is just over 10%. Of course, that's after deductions, so it's easily possible those people pay less than 10%, but that doesn't count state income tax or sales tax (or property tax, etc.).

I don't know how they could say it's the lowest since 1950 I know I am not paying less than last year. (and yeah it's more than 10%)

Okay, this table from the BEA seems to be their source. (1102.5 ÷ 12026 ≅ 9.2%) This document from the BEA defines "Personal Current Taxes" as:


It does exclude some taxes, but it still seems quite wrong to me.

If you own your own business, it's easy to pay less than 10% federal, but then there's all the other taxes...

One year when I was a working class slob I logged all the taxes I pay... Fed, State, Sales, Property, Gas (counted only that at the pump, gas is taxed lots even before that), Utilities, Car, etc... It was approaching 70%...

My accountant told me to knock it off, it only serves to irritate me...

How? If your business makes any income you get slammed with Self-Employment tax. I almost had a refund this year until hitting that particular line in the 1040.

I wish they wouldn't call it the "Self-Employment Tax". It makes it sound like they're taxing you because you don't have an employer, when that's not true. It's Social Security and Medicare taxes that would otherwise be collected by your employer.

You've answered your own question. If your business spends all its money and reports no profit, then it pays no tax. If you sufficiently co-mingle your personal finances with your business finances (e.g., that vacation to Hawaii was actually a business trip, yeah, that's it), I suspect you can do pretty well with driving down your taxes.

(Note: I don't actually do anything like this, but I can see how you could pull it off.)

Here's someone else's follow-up to that article:

http://taxfoundation.org/blog/show/26292.html

The original article most definitely said the figures included property taxes. Which apparently now they don't. Also not included is "payroll tax" - now is that an employer's contribution or the amounts deducted from each of your salary payments?

If the latter, that makes the stats completely meaningless. The 9.2% would be some figure of taxes due at tax time that you hadn't already paid during the year. Regardless, the figures seem to be totally out to lunch and I have yet to see any evidence backing up the claims.

The only way I've been able to make them jive is to take the tax amount of some low-paid job and factor them as a percentage of someone else with a much higher salary. Creative, but completely meaningless.

While I was working for the man, my take-home pay was probably no more than 60-65% of what my salary was. The rest accounted for federal and provincial taxes as well as Canada Pension Plan (old age security) and EI (Employment Insurance, formerly called UI, Unemployment Insurance).

I've generally heard of people in many US states paying less income tax, but I was under the impression this was still upwards of 30% for a decent middle-class salary (inclusive of OAS and any unemployment benefit payments).

If I figure taxes paid as (gross-net)/gross then, Yes I typically see that rake off as approx 35%. That has been pretty constant the last 33 years.
This year Fed tax, SS, Medicare, State Income tax = 32% of gross.
Looking only at the Federal Tax I paid 16%.

It was clear in that article that SS and Medicare are not considered as taxes. It's only an accounting fiction as those monies wind up in the general fund.

Yeah, when you own a business, everything is deductible. I work out of the house now (thanks, recession) but even then, a part of the house is deductible, as is one of the cars, any tool I buy, etc...

When I was last "working for the man", the fed was 28% and the state 9%, then come the myriad of other taxes...

Even with the "self employment tax", it's a sweeter deal...

And not only is part of the house deductible, but a proportion of any repair/upgrade made to the house is also deductible. Last year, I wrote off ~10% of the cost of re-painting my kitchen, living room, dining room, and nursery. I also wrote off ~10% of the cost of a new toilet seat, and the water and electrical bills. It was fantastic.