Part 1
Taxes and America
“It would be a hard government that should tax its people one-tenth part of their income.”[4]
I…...Welfare and Minimum Wage
II…..1975 to 2005 Expense Comparison
III…..General Analysis
IV..…Government Statistics and Guidelines on Wages and Earnings
V…...The People, Actual Earnings vs. Expenses and Taxes
VI…..Regressive Taxes
VII….Expense of our Government
IIX….National Debt
IX......Joe's Income to Tax Ratio vs. The President
I. Welfare and Minimum Wage in US
Welfare 4,293.00 16,090.00 + 274%
Minimum Wage 2.10 5.15[1] + 145%
4.25 + 102%
II. 1975 to 2005 Expense Comparison
A. FOOD 1975 2005 % Change
1. General Food
Ketchup .39 (Hunts 26oz) 1.29 (Hienz 24oz) +233%
Pepsi .99 (8-16oz) 3.33 (12-12oz) +199%
Miracle Whip 32oz. .99 2.88 +191%
Peaches .40 lb 1.59 +298%
Medium Eggs .38 .53 +39%
Dole Bananas per lb. . .19 1.99 +947%
Bread .33 1.25 +279%
Margarine 1lb .38 .99 +160%
Chocolate Milk ½ Gal .59 2.69 +355%
Pillsbury Cake Mix .49 2.25 +359%
Macaroni and Cheese .23 1.13 +391%
Milk 1 Gallon 1.57 3.99 +154%
Jiff Peanut Butter 18 oz .79 1.89 +139%
Sugar (10 lbs) 2.69 3.79 +36%
Apple Sauce 3lb 2oz .79 2.97 +276%
Corn .10 (8oz Del Monte) .44 (Generic 15oz) +140%
.67 (Green Giant 15 oz) +350%
Tuna Starkist 5 oz .43 1.25 +191%
MEDIAN INCREASE +263%
2. Meats (per lb)
Ground Beef 1.49 2.79 +87%
Chuck Steak .79 3.29 +316%
Sirloin Steak 1.69 7.09 +319%
T-Bone Steak 1.79 8.89 +397%
Club Steak 1.49 6.49 +335%
Pork Chops 1.39 4.39 +215%
Rib Steak 1.29 9.99 +674%
Chuck Roast .69 3.19 +562%
Top Round Steak 1.39 4.39 +215%
Sliced Bacon 1.59 6.19 +289%
Smoked Ham .89 2.79 +213%
______
MEDIAN MEAT DIFFERENCE +329%
Because meat is between 20 to 30% of a persons Budget for food (276-283%), we will use the figure of 280% as the increase in a person’s food budget today.
My Home 30,000.00[2] 129,000.00 +330%
New Home Average 42,600.00 264,000.00 +520%
Twin Cities (Southern Suburbs)
1br Apartment 175.00-200 550.00-675 +214%-238%
2br Apartment 200.00-250 750.00-850 +240%-275%
Average Change
St Cloud Area
2br (St Cloud) 200.00- 250 600-650 +160-200%
1br Apt (1117th Street North) 167.00 450 +169%
Average Change
Year 2000 Today
Gas .38212 .94179 +146%
Electric .063500 .069169 +8.9%
Year 2000 used due to difficulty locating utility prices in 1975.
D. MISC PRODUCTS and NEEDS
Excedrin PM .39 (30) 7.29 (50) +1054%
Bufferin 1.17 (100) 7.59 (130) +398%
Tide Laundry 1.17 (49 oz) 4.63 (50 oz) +296%
Joy .77 (32 oz) 2.01 (25 oz) +332%
Candy Bar .15 regular price .75 +400%
On-Sale .10 on sale 3 for .29) .545(2 for 1.09) +445%
Coffee (2lbs) 1.89 5.99 (2 lb 2.5 oz) +188%
Kleenex (200) .37 1.49 +303%
Kotex Plus (24) .69 3.19 +362%
Arrid Extra Dry .78 (9 oz) 4.19 (6 oz) +708%
AIM Toothpaste .49 1.29 +163%
Pampers (30 ct) 1.79 9.99 +458%
Toilet Paper .59 (Pack of 4) 1.63 +176%
Shaving Cream 11oz .49 Colgate 1.95 Gillette +298%
Sunday Newspaper .50 1.50 +200%
Weekday Newspaper .15 .50 +233%
MEAN CHANGE +384%
The cost of clothing is proportionate to style today. Teen fashion trends bring prices skyrocketing, while basic clothing remains under the standard increase. Because of Americas Trade Agreements, access to the foreign work market and tax-free imports has allowed Corporations to use these lower wageworkers to reduce their production costs. This free trade will be discussed later in this report.
Chevy Impala 4,245.00 21,278.00 +400%
Chevy Chevelle 4.215.00 19,825.00 +370%
Gasoline .57 2.15 est. +277%
Movies 1.00 7.00 +600%
Drive Ins (no longer available) 3.00 per carload N/A
Embers Chopped Beef Steak Dinner 1.95
FICA 4.95% 7.65% +55%
FICA Self Employed 7.00% 15.3% +118%
Federal Gasoline (Cents Per Gallon) .04 .184 +460%
State Gasoline Tax (National Avg.) .084 .236 +180%
Overall actual Fuel Tax $ difference based upon 3 – 17 gallon tanks per week +250%
Minnesota Sales Tax 3% 6.5% +117%
FICA (Max) 14,100.00 87.900.00 +523%
Year 2000 Today
Long Distance 19% 40%
Gas
City 1.5% 2.0%
State N/A 6.5%
Electric
State 6.5% 6.5%
City 3% 3.5%
1975 2005
GOLD 157.00 425.03 + 171%
SILVER 4.58 8.04 + 76%
PLATINUM 165.00 $887.80 + 438%
2. Interest Car Loans 36 month 13.38%-49 month 11.40%
Less than 2.00% typical
III. General Analysis
The Government rates welfare at a 274% increase over the last 30 years. Although this conforms to this report for ½ of a person’s primary living expenses (Rent, Utilities and Food) it does not take into account the secondary ½ of a person’s expense.
By breaking down a person’s income into two categories, primary living expenses and secondary living expenses, we get a more accurate assessment over the last 30 years.
Primary ½ of a person’s expenses
Rent +274% (30%)
Food +280% (10%)
Utilities +274% (10%)
Secondary ½ of a person’s income
Car +385%
Medical +1000%
Basics Needs +384%
Gasoline +275%
Add all 4, divide by 4, and then divide by 2 for ½ remaining income (Total +511%)
The second half of a person’s income alternates every month according to the individuals needs. These are Auto, Gas, Basic expenses not associated to food (ex: toilet paper, Paper towels, clothes or trash bags), Medical, or Child Care expenses, and what little entertainment we can muster to name a few. This has resulted in an increase of 511% with medical leading the way for additional expenses. This indicates that the Welfare amount today is 119% lower than what its equivalent would have been in 1975 (Half the percentage difference of 274% and 511%)
Adding the additional 119% onto the 274% that the welfare is currently set at would increase the welfare to +393%. This would place the current Welfare amount in 2005 up from $16,090 to $21,164 in order to equal a life style today proportionately to 1975.
To receive the full understanding from America’s perspective on figures for the average American, I contacted a Statistics Technician with the US Bureau of Census to locate the overall average for the nation, as a whole, as one body.
1975 2005
All Families 13,719.00 52,680.00 +284%
Married 14,867.00 62,281.00 +318%
Single Male 12,995.00 38,032.00 +193%
Single Female 6,844.00 26,550.00 +288%
PEOPLE
Full time Year around Male 12,758.00 40,668.00 +219%
Full time Year around Female 7,504.00 30,724.00 +309%
V. The People, Actual Earning vs. Expenses and Taxes
1. Union
For the primary source of income verification, the following is the Sheet Metal Workers Union pay scales for 1975 and 2005. Unions have established pay scales for the private sector for many years, so these earnings are the most accurate when calculating income variation over time.
(Sheet metal workers Union, does not include Union Dues)
JOURNEYMAN WAGES (5 years)
May 16, 1975 Today
Base Package 11.27 46.36 +311%
DEDUCTIONS
Pension .50 8.04 +1508%
Vacation .80 2.20 +175%
Health Insurance .42 5.20 +1138%
Training, misc. local and International .12 .96 +700%
___ ____
Take Home before Taxes $9.43 $29.96 +218%
No Vacations or Holiday in 1975, one with conditions today
Vacation is paid through wages deducted
At this take home pay rate we must also include that this individual would be paying a minimum of 5% of his income into regressive taxes. Along with the other increases in living expenses and withholding taxes, for this report we will generalize income is up +200%, and yet the expense for living is up 393%, meaning that it is twice as difficult to live today than it was 30 years ago. This trend has been accelerating rapidly this past decade and shows no sign of declining.
The “Base Package” of an increase of 311% corresponds to the Governments data regarding Family Earnings over the years. The Government however has not adjusted for the take home pay and the deductions that have been included in these packages. In order to make an accurate assessment we must use the actual “Take Home” and not the gross to adjust for these additional expenses.
2. “Joe’s” Tax
Joe, a Self-Employed single male is a Father of 3, two of which he is paying child support for and he owns his own home. Joe was able to make over $95,000 in Gross Sales for the year 2004, and after expenses made a net profit of $22,800. An Adjusted Gross income is accomplished by returning ½ of his Social Security payment (FICA) back into his income plus 336.00 for Medical Insurance payments lowering his income to $20,861. The interest on his mortgage and taxes lowered his income down to $15.025. Joe had to discontinue his Medical insurance during the year because he was no longer qualified for the lower insurance rates.
You will find the taxes associated to the services that Joe and the average taxpayer encounters throughout the year. Although renters do not pay “Property Tax” they do inadvertently pay for it through their monthly rent. At the end of each tax year the landlord issues out a Rent Credit, this is for the property taxes applied upon ones rental dwelling.
2004 TAXES PAID
(includes ALL surcharges and payments to Government facilities with the exception of Public Utilities unless tax is applied to the service)
ITEM Federal State/City
Gasoline $530.04 $624.00
(3 - 17 gal. tanks per week) (18.4 cents per Gallon) (20 cents per Gallon)
Heat and Electric 180.00
Cigarettes (2 packs a day .48 per pack) 350.40
Cigarette Sales Tax (6.5%) 142.35
$22.78 tax includes 6.5% State Sales Tax on .48 State Tax
Water/Sewer 5.21
Cable TV .72 84.00
MCI Long Distance 48.00 72.00
Telephone Residential 26.04 41.52
Cell Phone (5000 Minutes anytime) 120.00 168.00
Vehicle License and/or Registration 473.90
State/City Sales Tax (avg. taxable purchases of $92 per week, $13 per day) 311.58
This tax is based on known receipts and is a conservative amount
Total Regressive Tax 2004 $724.80 $1,979.06
Total Regressive Tax Paid 2004 $2,703.86
.30 per Gallon of Wine
.15 per Gallon of Beer
5.03 per Gallon of Spirits
Joe’s 1040 Taxes based on $11,025 taxable earnings
Self-Employment tax 3,223.00
Withholding Tax 1,431.00 710.00
TOTAL 2004 $4,654.00 $710.00
Property Tax 910.00
TOTAL TAXES PAID 2004 $5,378.80 $4,072.96
(Federal) (State)
Joe’s Year End Statement
Gross Income 20,861.00
Taxable Income 11.925.00
Tax Paid 1040 1,431.00 (12%)
Self Employment Tax (SS) 3,223.00
Minnesota State Tax 710.00
Property Tax 910.00
Total Regressive Tax Paid 2,703.86
Total Taxes Paid/Due $8,977.86 (75.3%)
Child Support 2004 -5,520.00
House Payment (Less Property Tax) -8,690.00 ($724.17 per month)
I have to ask what kind of a cruel government would charge any of its citizens more than their monthly rental or house payment (less the property taxes), and almost twice the amount of taxes than their responsibility for child support for 2 children, and then have the audacity to name many of them as “Dead beats?”
So, how can Joe and others manage this? Well, regrettably, we go into debt. For small business owners like Joe and the average American workers, it may mean going in debt to a lending agency, Credit Card Company, the IRS or State Government, Child Support, dropping medical or other insurances, and make cuts in any other areas we can to offset these figures. Then, more and more people, like Joe, line up every few years to refinance their homes for an increased loan amount to pay off many of these debts. Joe has had to refinance his home twice over the past 5 years, borrowing an additional $50,000 to pay off debts to the Government and other agencies and companies. Joe also had to declare Bankruptcy just over 4 years ago. The truly regrettable part is the equity in Joe’s home is one area that he had hoped to be able to retire with and/or, turn over to his children when he dies. Instead they will be left with an additional financial burden now if he dies before he is 73, because this is when the current loan will be paid, but Joe anticipates that this will not be the last of his refinancing endeavors.
Small Business to the Government is large Business’s to people like Joe, and this is one area that the Government does not completely understand. Joe is hit extra hard because he is self-employed with the self-employment tax of 15.3% making it VERY difficult to get a business up and running to compete in today’s market. It would be highly beneficial for the government to place a 7.65% Self-Employment Tax on the first $30,000 earned for those who are self-employed and to place the 15.3% tax on all earning above $30,000 as to not hit the small business sector so hard and promoting entrepreneurs and small stay at home business parents.
Medical Payments as well need to be allowed for those who are either under or not insured. Medical has become a very huge burden today for so many people, and not allowing an individual such as Joe, who can no longer afford to pay for Medical Insurance not to take Medical Deductions is unfair to the less affluent people.
Joe has even run into additional burdens, because being in the Service Business the gasoline prices are driving his costs up. Additionally, the Government is looking at pushing him and others like himself near bankruptcy today because of this burden they put upon him through the heavy taxes. His Eldest is now coming to him for help with College but he really has nothing left over to offer by the end of the month.
The Government has taken so much from him, that as he hangs his head he enters the low-income office to apply for assistance, only to find out that the taxes he has paid all year long and the child support he is ordered to pay is added to his income by over $8,000, money he never had. What Joe does not realize, is that he is only asking back what is rightfully his in the first place.
3. Dick and Jane’s Taxes
Dick and Jane are employed and earn $30,000 a year each. They were married, but they have been hit hard over the years so after careful deliberation they decided to get a divorce without an annulment and remain co-hebetating. To them they are still married in the eyes of God, but not to the Government today. They have 2 Children and in the Divorce decree they both have one child for a dependent. The following is their taxes compared to when they were married to today.
Income 60,000 30,000 ($14.42 per hour)
FICA 4,290 2,145
Federal Tax 6,601 2,793 (58.00 EIC)
TOTAL TAX OBLIGATION $10,891.00 4,938 x 2 people $9,876.00
___________________________________________________________
Minnesota Tax 2,954.00 1,276.00
Marriage Credit -178.00
Working Family Credit N/A -20.00
State Tax $2,776.00 1,256.00 x 2 people $2,512.00
____________________________________________________________
Total Tax Obligation $13,667.00 $12,388.00
Regressive Tax[5] 5,407.72 5,407.42
Property Tax 910.00 910.00
____________________________________________________________
TOTAL TAX $19,984.72 (33.3%) $18,705.43 (31.1%)
Savings of $1,015.00 Federal Tax and $264.00 State Tax
Financial Gain $1,279.00
What kind of a cruel Government would support such a form of taxation where people who are married are financially discriminated against? This form of discrimination only adds tension to newlyweds, creates strife, and leads to a decline in the Family Morals and Values and MUST come to an end.
These figures are not to be taken literally as the only deduction these people may be able to take. Owning a home would reduce their Gross income to an “Adjusted Gross” lowering their taxes even further for interest payments. If the children are of daycare age or in need of an after school program, this too would be a deduction as well. We need to remember that decreasing their “Taxable Income” may lower their percentage of Federal and State Taxes owed proportionately, because of the fixed “Regressive Tax” and Social Security on Earnings, the total tax paid will only increase in value.
This $1,279 amount is ONLY for the taxes, but the additional benefits are far more reaching through Social Service and Community Base Programs. When a single parent with a child comes to their office they have many programs for them to become involved in, but a married couple with 2 children grossing $60,000 a year would be discouraged from ever returning, and yet they share the same struggles. The only benefit that a single parent with one child should be eligible to receive above a married couple with 2 children is some financing that would help offset their rent if there is no Child Support being paid.
By no means are we saying that we should reduce the benefits for the single parent, but to make the same benefits available to the married couple if the earnings are proportionately the same. We would be interested in exploring the possibility of offering a tax deduction for those who are married and have chosen to remain married over a period of time. We need to offer people reasons for remaining married, not justification for obtaining a divorce.
VI. Regressive Tax
As each percentage or price tax is added, the less affluent are hurt extensively more because these basic costs are shared among its people. An example of this would be the Fuel tax. A man earning a million dollars a year will not use any more fuel personally than the average man who earns $25,000, thus they pay the same amount of tax. The rich man might even be able to write this off as an expense, but the less affluent person will feel this expense proportionately greater. The same applies to the basic needs and sales tax laws. A wealthy man in general will not use more personal phone lines, cables bills, or energy expenses than the less affluent, yet applying sales tax on these and basic needs will once again affect the less affluent in greater proportions. Because of the hardships it has placed upon its less affluent people in America today, it is necessary to begin removing these taxes or allowing these taxes to be deducted as “Taxes Paid” for the less affluent, and not just a deduction in calculating their income when it comes to filing their income tax returns. Because it is the State applying the majority of these taxes, these taxes will need to be calculated into both Federal and State forms.
Who are the people that are in this lower income and high tax rates today? Almost all our soldiers over in Iraq and all the youth coming out of High School or College, as well as those in High School or College. The numbers are staggering because nearly all of America is identified within this structure.
US Treasury
All states that apply a sales tax have an established rate. This established rate can pose problems. All people, no matter how much money they earn, pay the same percentage of tax. Such a tax is called a regressive tax because the people with smaller incomes pay a larger percentage of their money into the sales tax system than people with higher incomes. However, since all of us use state services, such as state highways, state public schools, and state medical institutions, all should pay a tax for using these services.
While the War Revenue Act returned to traditional revenue sources following the Supreme Court's 1895 ruling on the income tax, debate on alternative revenue sources remained lively.
The nation was becoming increasingly
aware that high tariffs and excise taxes were not sound economic policy and
often fell disproportionately on the less affluent.[1]
US Treasury http://www.treas.gov/education/fact-sheets/taxes/state-local.shtml
Today we have a $3,100 allowable deduction for each dependent and ourselves. When we file our forms we need to realize that the deduction we take for ourselves is really not a “Deduction” as to how it was intended, but an offset to the taxes we have already paid.
VII. Expense of our Government
Presidents Income 200,000.00 400,000.00 &nbs