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April 19, 2021

The middle class worker pays over 50% of their income in taxes.


How much tax does a worker pay in the US? Well, a lot more than most people think. In fact, the middle class worker probably pays more of their income in taxes than they keep.

Paying taxes is never fun, but it is necessary for a society to function. The issue however is that the vast majority of the tax burden is on the middle class. If all the hidden taxes are included, a worker gives away more in tax payments than they keep. This is an average example, but completely valid for a typical worker. In this case, an average income of $44,000 for an individual is used as that is a commonly referenced average 2019 income.

The main taxes are federal income tax, federal Social Security and Medicare taxes, and state income tax. In 2020, the Tax Foundation estimated that in 2019 the average single American worker contributed 29.8% of their earnings to just three taxes, federal income taxes, Medicare and Social Security. Adding Idaho state income tax, for this example, effectively deducts another 5.5% of their income, bringing the total income tax to 35.3%

Adding the post income taxes such as sales tax, property tax and vehicle registration, as well as the hidden taxes such as fuel tax, excise tax and tarrifs, can add another $7,885 in taxes a year.
The total taxes end up being 53% of this workers income.

Real total tax example.


Average Single Tax Burden Example

Of the workers $44,000 income, $23,417 is paid in taxes, leaving the individual with just over $20,000 to pay for housing, food, transportation, medical expenses, etc.
This example shows how much tax a typical worker pays, while not even being aware of a large portion of the hidden taxes. And to add insult to injury, this is before any "sin tax" such as alcohol or tobacco taxes are included.
Is it hard enough to get by as an American worker, without paying more of your money in taxes than you can keep? It seems that this may be a large contributor to the decline of the US middle class.

And what do they middle class get back? Roads and national security, not much else. They pay for almost everything, and get very little back. Even Social Security, is expected to be underwater in a few years.
It must be noted that this is an average example. A person or couples tax can vary widely based on income, state of residence, family size, etc..




The average US worker works far harder than their counterparts in other developed nations, and get less and less for it every year.
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This release is for informational purpose only.

No legal, financial or investment advise is given, just opinion.

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