Hidden taxes: Eight you are paying every day
Filed under: Banks, Budgets, Tax, The Dolans
Ken and Daria Dolan are widely known as America's First Family of Personal Finance.
This time of year, we are all well aware of how much we pay Uncle Sam in income taxes. And we all can clearly see the sales tax we pay when we go shopping or enjoy a nice dinner out. We're not happy about them. But at least we know that we're paying those taxes.
But most of us have no idea just how many hidden taxes we pay every day that take a serious bite out of our wallets. We pay little known-taxes on everything from travel to peanut butter (Ken's favorite), to life insurance to liquor. Often, we don't know, specifically, what federal tax we are paying on goods and services because that tax (such as excise tax on imports or 'sin' taxes on liquor), is built right into the price, and doesn't appear anywhere on the sales slip as a tax.
And boy, does it add up! We consumers pay hundreds of billions of dollars in "hidden" taxes each year. It's estimated that our federal income tax represents less than half of the taxes we pay each year. So let's expose eight hidden taxes you probably didn't even know you were paying...
1. Gasoline tax. Next time you fork over big bucks at the gas pump, remember that you are paying nearly 46 cents per gallon in federal, state and local taxes. That's nearly 15% of the cost of a gallon of gas!
2. Gas guzzler tax. If you are driving an SUV or other large vehicle, you have a tax double whammy. Not only are you paying that big gasoline tax, but you also got socked with a special tax dealers are charged – and pass right along to you on the sticker price – for gas guzzlers. This tax can be as much as $7,700!
3. Hidden taxes on travel. Airfare, hotels, your rental car -- you are paying a hefty tax on each one of them. You pay a 7.5% tax on a domestic ticket and a $3 tax for each segment of a flight. Hotel and rental car taxes vary by state, but can be as much as 40% of your overall cost. Ouch!
4. "Sin" tax on beer, liquor, gambling and cigarettes. The federal tax on a pack of cigarettes is 39 cents, but there are many state and local taxes that increase the price. Tobacco taxes contribute more than $7 billion to the Treasury every year. Almost half of the cost of beer and liquor comes from excise taxes.
5. Catching a fish or two isn't free. A fishing enthusiast pays 10% of the sales price on sport-fishing equipment in taxes. That's enough to make you switch to another sport. Maybe archery? But wait, an archer pays 40 cents tax per arrow. And quivers are taxed at 11%! If you buy a shotgun or other firearm, you'll pay 11% of the sales price in federal tax on the gun as well as any ammunition. Handguns are taxed at 10% of the sales price.
6. State taxes on insurance premiums. This little doozy brings in $9 BILLION in revenue a year! States charge insurance companies a tax on the insurance premiums they receive from customers in that state. And who do you think the insurance companies pass that cost along to? You got it. You and me.
7. Excise tax on imports. The sneakiest of all the hidden taxes that we pay is in the form of excise taxes on many of the products we import. The tax makes the prices of imported products artificially high to make it easier for domestic products to compete.
Here are just a few of the items and the percentage that their prices are jacked up by import taxes:
- Bicycles 11%
- Brussel sprouts 12%
- Cotton hammocks 15%
- Infant formulas 18%
- Flashlights 18%
- Peanut butter 143%
- Girdles and panty girdles 24%
- Brooms 32%
- Plastic school supplies 5%
8. Payroll taxes. Forget about your income tax withholding. When is the last time you looked – really looked – at all the other taxes coming out of each and every one of your paychecks? You've got your Social Security tax, your Medicare tax, your unemployment tax, your workers compensation... It all adds up to a serious percentage of your money going into someone else's pockets.
That's eight hidden taxes and there are 80 more where those came from! The bottom line is all these hidden taxes are nickel and diming us to death. And with so many Americans already struggling, every dollar counts.
Ken and Daria offer more tax tips – including 10 Tax Changes You Need to Know Now – through their web site and free newsletter at Dolans.com.
Reader Comments (Page 1 of 3)
3-11-2008 @ 7:31AM
David Scott said...
Given the Congressional Budget Office projections that deficits will explode as Bush leaves office, it's obvious that somebody isn't paying enough taxes -- hidden or otherwise. Like rich people, for instance. And energy corporations.
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3-11-2008 @ 12:34PM
JOHN said...
I DID A FRIENDS RETURN SHE MADE AROUND $16000. SHE PAID NO TAXES AT ALL!. I SAID NO! TAXES. YET SHE GOT OVER $5000.00 REFUND.
NOW IF THE POOR ARE NOT PAYING TAXES AND ACCORDING TO YOU THE RICH PAY NO TAXES. JUST WHO IS.
I AM NOT RICH BUT OUT OF $50000. I PAID OVER $10,000!
I KNOW PPL WHO MAKE OVER $200,000 A YR AND THEY PAY SOME HARSH TAXES.
GET OFF THE RICH PAY NO TAX BIT.
3-11-2008 @ 5:16PM
David Scott said...
John, read my post. I never said the rich pay no taxes. I said they dont pay enough.
3-12-2008 @ 8:58AM
Joe C said...
Scott, you're an idiot. Who are the rich? Usually anyone that makes more money than the person making person making such a subjective comment.
OK Let's say that the govt. confiscates all the money that individuals make that is over the amount you make. They diligently re-distribute that money to make up for their lack of efficency and to buy votes. How many people out there do think there will be to make the effort required to make more than you. Guess you would be one of the rich then. You need to pay more taxes, Scott!
3-12-2008 @ 8:45AM
David Scott said...
Joe C, what you describe is so far away from reality it's ludicrous. The richest Americans pay the lowest marginal tax rates of any western industrial nation. They also control a staggering proportion of this nation's total wealth. We are literally borrowing trillions of dollars to finance tax cuts for the wealthiest people in this country. As a matter of fiscal policy, that is insane, and you do not know what you are talking about. I do.
3-11-2008 @ 7:43AM
David Scott said...
What an outrage! I say we repeal all these onerous hidden taxes immediately. And charge all our government spending to our kids instead. But then again, I'm a Republican "fiscal conservative."
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5-15-2008 @ 12:55PM
Willy said...
Commie.
3-11-2008 @ 8:24AM
PeterDutch said...
ohh, you lucky US citizens, let me tell you our hidden taxes:
Gasoline, on every 1000 ml (1/4 of a gallon? ) 1,02 euro
Buying a car,you pay here upto 70% tax
Payroll taxes, upto 52%, excluding health insurance
Heating tax 40%
Electicety tax 120%
VAT 19% ( in 2009 20% )
Tabacco tax 390%
Alcohol tax 110%
CO2 Tax on airport per ticket till 2500 KM 11 euro
CO2 Tax on airport per ticket 2501 till....KM 45 euro
Used paper tax 11%
Recycling tax, from 3 till 500 euro per product.
Parking tax ( sold as parking tickets but in real just ordinaire local taxes ) from 1 euro per hour till 7,60 euro per hour ( Amsterdam )
As a joke ppl here say: from every euro you earn you can keep 20 cents and even over those 20 cents the governement charges 19% VAT if you buy something ;)
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3-12-2008 @ 1:35PM
Guy said...
That's why people left Europe and came to the US in the first place, and why our founding fathers PROHIBITED the federal government from levying taxes. Then some bastards amended the constitution, and the rest is history. Now we're quickly headed right back where we came from ...taxation without representation, and a government run amuck. Just because someone pays MORE is no reason to join them in their misery. The people need to STAND UP and force their governments to quit spending and start balancing the books....
3-11-2008 @ 9:09AM
Tim G said...
George Harrison said it best>>>>>>
"Let me tell you how it will be
There's one for you, nineteen for me
'Cause I'm the taxman
Yeah, I'm the taxman
Should five percent appear too small
Be thankful I don't take it all
'Cause I'm the taxman
Yeah, I'm the taxman
(If you drive a car car) I'll tax the street
(If you try to sit sit) I'll tax your seat
(If you get too cold cold) I'll tax the heat
(If you take a walk walk) I'll tax your feet
Taxman!
'Cause I'm the taxman
Yeah, I'm the taxman
Don't ask me what I want it for
(Ah, ah, Mr. Major)
If you don't want to pay some more
(Ah, ah, Mr. [..])
'Cause I'm the taxman
Yeah, I'm the taxman
If I reduce it again you'll see
(Ah, ah, Boris Yeltzin)
Get back more at the V.A.T.
(Ah, ah, Mr. Bush)
'Cause I'm the taxman
Yeah, I'm the taxman
If you get a head head, I'll tax your hat
If you get a pet pet, I'll tax your cat
If you wipe your feet feet, I'll tax your mat
If you're overwieght weight, I'll tax your fat
Now my advise to those who die
(Taxman!)
Declare the pennies on your eyes
(Taxman!)
'Cause I'm the taxman
Yeah, I'm the taxman.
And you're working for no one, but me
(Taxman!)
Yes, I'm the taxman
Yeah, I'm the taxman
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3-11-2008 @ 1:16PM
SJW said...
Well said!
3-11-2008 @ 9:22AM
nick said...
please do not mislead. unemployment taxes are not deducted from anyone's pay. that is illegal. those taxes are paid by the employer. of course the cost of those are included in the products or services they sell and then the company writes off the expense against income. the unemployed person getting benefits then has to pay income taxes on that received.
seems fair?
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3-30-2008 @ 3:22PM
Stan said...
Glad somebody said it, good for you. Don't know about other states but in Texas the same thing applies to Workers Comp Insurance.
3-12-2008 @ 3:06AM
Tamanite said...
Very true. State and Federal unemployment, worker's comp and all the various hidden taxes are not paid directly by the employee, BUT you can bet that the employer considers it ALL when it comes time to give out raises or determine if that employee is even worth keeping. My last company, an oil company, had a list by employee that calculated all the costs of salary, taxes and benefits and reminded us at review time of our TOTAL compensation package even if we were not being paid it in cash.
3-11-2008 @ 9:20AM
Scott Kochman said...
The government takes in THIS much money, The government spends THAT much money. If they didn't gey THIS much money from these "hidden" taxes, they would have to get it from someplace else, like higher income or sales taxes. Do you really thing YOU should be paying for someone else's Gasoline, Gas guzzlers, Plane tickets, cigarettes, handguns, insurance and peanut butter?
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3-11-2008 @ 10:49AM
frank frantz said...
Do you always walk around in a daze or just when you are awake? Time to wake up.
3-11-2008 @ 9:27AM
JAMES said...
I SEE NOTHING NEW HERE.
Reply
3-11-2008 @ 9:28AM
Carole Ansag said...
Apathy has caused our tax problems. Most don't register to vote or don't bother to go to the polls. Our elected officials are among the "rich" who have a lower tax rate, most of which have been republicans during my 67 yrs of life! They accuse the democrats of "tax and spend" but they line their pockets and those of their friends...Dick Cheney is their idol! Our tax money has paid for gas subsidies, his Haliburton and KB have made Bush, with his "blind trust", Cheney and thier republican business sharks very rich, while we get a greater and greater defecit! Do us all a favor, vote for Hillary. Bill left us with a surplus and stopped a lot of the republican tax scams.
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5-15-2008 @ 4:36AM
Concerned Patriot of the OLD republic said...
I don't think I've ever seen someone make such a stupid comment. 67 years and you are still as gullible as a teenage girl on prom night! The really funny thing is that the majority of those posting here think themselves "experts"! Most of you are simply repeating what you heard from some other "expert" like Rosie O' Donnell about the evil rich,and how they ruin everything. The true problem with these taxes is they trick you into "taxing the rich more" when that will JUST GET THE COST FILTERED DOWN TO YOU! ARE YOU BLIND? WAKE UP! Let me explain: (I'll try to go reeeeaaallll slow for you marxists that don't understand free enterprise economics) when an "evil coffee corporation" (ooh that corporation buzzword!) gets taxed to death, then are forced to pay higher wages, then have to pay payroll taxes, and sometimes also give health benefits, they MUST raise the price of coffee in order to stay in business! Think real hard about that... Am I wrong? If you think so you obviously just believe what you want, not the TRUTH. Newsflash-redistribution of wealth is socialist/marxist/communist ideology! marxism failed the Russians! China's socialists slowly switching to free market! I don't know why I waste my time...most of you don't know what marxism/socialism is...how could you know you were a communist? I pity all of you...(by the way, i make only $16,000 or so a year, so I'm not rich, and don't have any rich friends or family, I simply realize that rich people's money is not MINE, i am not a thief like you people!)
3-11-2008 @ 9:48AM
rfwiles said...
Sure Bill left us with a surplus! You expect us to believe America was out of debt with Clinton??? The national deficit grew under his reign, same as any other president. Unfortunately the luxury tax of days gone by - taxes on yachts, private jets, cars costing over $100,000, etc.- were declared illegal because they taxed only a certain segment of the population (the rich). So now they tax more of what we working poor need to survive, and leave the rich alone. No matter your political affiliation, things will not change until someone working for minimum wage can afford to run for president (or congress, for that matter). Until then, laws (and taxes) will be dictated by the rich.
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