Tax Breakdown

People who work from home become fascinated by just how much of that hard earned money is going to pay taxes of all sorts. It can almost seem eternal. You pay income tax right off the top. Then with what you have left you pay a sales tax on every item you buy. You pay property tax on the home you live in. Just how much of your money goes towards paying taxes?

If you are NOT self employed, then your company pays 7.65% towards your social security and medicaid. Therefore, according to 2009 averages, you end up with rates like this in the US:

Fed tax: 17%
State / local tax: 10.1%
Sales tax: 9.7%
Soc Security / Medicaid: 7.65%
Fed Corp share: 3%
Property Tax: 2.5%
Fuel / Gas Tax: 0.5%
other Taxes: 5%

You keep: 45% of your income

That looks like this:

Tax Breakdowns

However, if you ARE self employed, then suddenly your Social Security payment jumps to 15.3% because you are paying "both halves" of that tax. That then looks like this:

Fed tax: 17%
Soc Security / Medicaid: 15.3%
State / local tax: 10.1%
Sales tax: 9.7%
Fed Corp share: 3%
Property Tax: 2.5%
Fuel / Gas Tax: 0.5%
other Taxes: 5%

You keep: 37% of your income

That looks like this:

Tax Breakdowns

Pretty scary, yes?

So where is all that money going?

Official reports from 2007 says that this is how the US government is spending money:

US Government Spending

However, this is how we *spend* money - which includes us spending Social Security money out of a trust fund. I.e. this is money they already have, it's not a breakdown of how the money we GIVE them in a given year is spent. If you look at what our incoming taxes in a given year are spent on, it apparently is primarily on the military. Here is a chart done by GlobalIssues.org

US Taxes 2009

Be sure to read all about it at GlobalIssues.org - world military spending

Taxes and your Home Business
Work from Home Main Page