Commentary

Tis’ the Season to be Taxed

By Peter J. Ferrara
This article originally appeared in the Washington Times.

On your way to grandmother’s house this holiday season, paying taxes will probably be the last thing on your mind. But that is what you will be doing every step of the way.

First, when you get in your car to drive over, you probably don’t realize that 45 percent of what you paid for the car actually went to the government in taxes at the federal, state and local levels, rather than to the car manufacturer. When you put gas in the car, you probably don’t realize that 54 percent of what you pay for it goes to federal, state and local taxes rather than to the oil producer. For the tires on the car, 36 percent of what you paid goes to taxes rather than to the tire manufacturer.

Once you get to grandmother’s house, you’re still not done paying taxes. If you have a little rum with your eggnog, 72 percent of the price paid for it actually goes to the government. The same goes for any other drink made with distilled spirits. If you have a beer instead, 43 percent of what you pay goes to taxes. And even if you just drink soda, 35 percent of what you pay for a can goes for taxes at all levels.

Once you sit down to dinner, the tax man is still there with you. About 31 percent of what you pay for bread goes to the government in taxes, rather than for the bread. About the same would be true for the turkey and the rest of the food. Unless you provide for heat and light solely through the fireplace, you will be paying taxes again. At least 26 percent of your electric bill goes to the government in taxes.

Don’t think you can avoid any of these taxes by going out to a restaurant for Christmas dinner. About 28 percent of what you pay for a meal at a restaurant actually goes for taxes, rather than to the restaurant. Nor can you avoid the tax man by staying home and just calling grandma on Thanksgiving Day. That is because about 50 percent of your phone bill actually goes to taxes, rather than to the phone company.

This tax burden arises in part from taxes assessed directly on the consumer, such as state and local sales taxes, liquor excise taxes telephone excise taxes, federal and state gas taxes, food and beverage taxes, and others.

But that is just the beginning. The producer in each case must use what you pay for the product for a heavy tax burden as well, including federal, state and local income taxes, payroll taxes, property taxes, use taxes, unemployment insurance taxes, workers compensation taxes, corporate franchise taxes import fees, and others. In fact, 30 different taxes are imposed on the production and sale of a loaf of bread. The government imposes at least 43 taxes on the production and sale of a gallon of gas.

This is just another part of the excessive burden of taxes working people must bear. Overall, close to half or more of what working people earn ends up going to taxes rather than for their own families. The average family pays more for taxes today than for food, clothing and shelter combined.

Peter Ferrara is general counsel and chief economist at Americans for Tax Reform and an associate policy analyst at the Cato Institute.