Taxes: Your BIGGEST Expense!

"The problem is not that the people are taxed too little. The problem is that the government spends too much." ~
Ronald Reagan

When most people are asked what their biggest expense is, their mortgage payment or rent payment usually is at the top of their mind.  This may be true.  But usually, when added together, YOUR tax bill is YOUR largest expense.

  • Income Taxes
  • Sales Taxes
  • Excise Taxes
  • Payroll Taxes
  • Property Taxes
  • Estate Taxes
  • Gift Taxes
  • Capital Gains Taxes
  • Carbon Taxes
  • Transfer Taxes
  • Soda Taxes
  • Alcohol Taxes

This isn’t an all-inclusive list by any means.  But I show this for two reasons. 

This isn’t an all-inclusive list by any means.  But I show this for two reasons. 

First, when you hear a politician say forty some percent of Americans don’t pay taxes as justification for tax increases or changes to the tax code, what they are referring to is they don’t pay FEDERAL income taxes.  And even this is only partially true.  Everyone has taxes taken out of their paycheck.  But if say you make only $12,000 a year, then all your federal taxes you paid for in a year will be given back to in April of the following year as a “refund.”  Basically, you are providing an interest free loan to the government.

Second, instead of focusing on just one type of tax it is better to concentrate on one’s total tax liability.  Even IF you got a refund of 100% of your federal income tax, you still may be paying state and local taxes.  Do you own a house?  Depending on where you live, 1-5% of the market value will be charged to you every year.  Do you ever have to buy….like, anything?  Depending on where you live you could pay up to 13.5% on sales taxes!  That $100 coat will really be $113.50.  That $10 fast food meal will be $11.35.  Do you drive a car?  If you live in Pennsylvania about 20% of your total gas bill goes to taxes.  Cell phone bill?  Hope you don’t live in Illinois….the combined tax rate on cell phone bills in the Land of Lincoln is over 31%!

And don’t forget there are other tricks that various governments use to siphon more money from you.  It may not be called a tax per se, but a “fee” or “duty” or “license.”  They pretty much do the same thing.  Put lipstick on a pig, it is still a pig.  For more absurd examples of how much taxes can take a bite out of your wallet, I HIGHLY recommend Kristin Tate’s book, How Do I Tax Thee?

Read Next: Tax Timeline

*Full disclosure I am NOT a CPA nor a certified financial advisor (or any other alphabet soup designation) and all of the information in this section is provided solely for educational purposes and does NOT constitute legal or tax advice. EVERYONE should consult their own financial advisors, CPAs and tax strategists to compile their own individualized plans.*


Sign up for the Nexus Newsletter and Blog! (we will not spam you nor sell your info)