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Wednesday, May 30, 2012

Your Taxes - AICPA Total Tax Insights

Most of the talk we hear about taxes is usually about income taxes. Yet, we all pay a lot of other types of taxes. A significant one for workers and for many, greater than their income tax is the 15.3% payroll taxes paid by the employee and employer (but typically viewed as borne by the worker). If you look closely at your household bills, you'll see a lot of other taxes - utility use taxes, sales tax, property taxes, excise taxes and hotel taxes.

To help people gain a better appreciation for all of the federal, state and local taxes they pay, the AICPA has released "Total Tax Insights."  It is a one-page input sheet asking for your income, utility bills, and other information to let you know roughly how much you paid of various taxes. It also includes a pie graph at the end showing how your total tax pie breaks down to pieces of the various taxes you owe.

While not completely accurate, it is still a good tool given its ease of use, accessibility and breadth as to types of taxes paid.

This can be a good tool for helping people better understand taxes so they can better understand and contribute to tax reform discussions.

You can find more information about state taxes in an April 2012 report from the US Census Bureau - here. It includes the pie graph included at the end of this post. I encourage you to check out that report.

Try it.
 What do you think?
U.S. Census Bureau, April 2012 report

1 comment:

Ami Shah said...

Yes it feels overwhelming when we sit down and calculate the amount of taxes we pay. For many of us in California it could very well be 50% of the gross income. I did try the AICPA calculator which looks like a good tool to assess the total taxes we pay annually. It was very much surprising when I saw the different types of taxes we pay. The calculator has covered most of the taxes for an individual taxpayer but excluded following which might not fall under the definition of taxes.
State Disability Insurance
DMV Fees
The cost of compliance to pay all these taxes has to be considered as well.
The tool is basically meant for Individual tax payers, while small businesses pay additional taxes like unemployment tax, highway vehicle tax, gross receipts tax and those could add up to a considerable amount.
Higher number of different taxes diminishes the transparency of the tax system. Forget about the purpose of the tax many taxpayers would not know even the name of the taxes they are paying. It is practically impossible to calculate the total tax cost for an average taxpayer.