Do you know how much tax you pay? Consider this example: to buy a Chevrolet priced at $20,000 in Indiana you must pay a 7% sales tax plus licensing and excise tax. To manufacture your car General Motors, suppliers and dealerships must also pay taxes. These include corporate income taxes, real estate taxes, inventory taxes , employee social security tax and so on. Of course these hidden costs are included in the price of the car. How much does all of this add to the price? According to a Harvard economist the answer is 18% or about $3000.
So to purchase your Chevy you must earn an extra $3000 for the government tax burden. However, your earnings are also taxed. For simplicity let’s assume your net federal income tax rate is 15% after deductions. In Indiana you will also pay state income tax of 3.4% plus a 1% local option tax. Do the math and we find that we must earn about $24,800 to keep $20,000. So, adding it all up, the total tax burden in this case is $7,800 or 39% of the purchase price. Taxation is nearing the point where the USA will soon be a Socialist economy.
