2 out of 3 Votors Say Americans are Overtaxed

According to a recent Rasmussen poll, 66 percent of American voters believe that America is overtaxed. Only 25% disagree.

The gap is even wider when those polled are divided into Mainstream Americans (those who are “skeptical of both big government and big business”) and the Political Class (those who trust political leaders and are “far less skeptical about government”).

Not surprisingly, the tax issue provokes a wide gap between the Political Class and Mainstream Americans. Eighty-one percent (81%) of Mainstream American voters believe the nation is overtaxed, while 74% of those in the Political Class disagree (see more about the Political Class and Mainstream Americans).

Eighty-one percent (81%) of Republicans believe the nation is overtaxed. So do 73% of voters not affiliated with either major party. Democrats are evenly divided on the question.

So not only do Republicans and Independents overwhelming believe that they are overtaxed, so do half of Democrats! How’s that going to play out in November?

Then there’s this:

Forty-three percent (43%) of voters believe that the average American should pay about 10% of their income in taxes in exchange for the services provided by the government.

We have a long, long way to go to get to the 10% mark.

In calculating the amount of time Americans have to work to pay for government in order to determine Tax Freedom Day, the Tax Foundation says:

Tax Freedom Day answers the basic question, “What price is the nation paying for government?” An official government figure for total tax collections is divided by the nation’s total income. The answer this year is that taxes will amount to 26.89 percent of our income, and the stretch of 99 days from January 1 to April 9 is 26.89 percent of the year.

Nearly 27%! And that’s the average. The Tax Foundation notes that Americans will pay more taxes in 2010 than they will spend on food, clothing and shelter combined. Why? Because there are taxes everywhere we turn.

This is before Obama slips in the “stealth sales tax” that we will soon know as value added taxes, or VAT, similar to Britain.

According to a couple of Boston University economists, the Tax Foundation’s figures may even be a little light. In 2007, Laurence J. Kotlikoff and David Rapson calculated the actual tax burden imposed on the citizenry by “the true maze of taxes and government benefits.” They found that our “all-in marginal tax rate” is 40%. Read it again: Forty Percent.

Most workers will pay about that much on each dollar of income when all taxes — federal and state income taxes, sales taxes, taxes for benefit programs, etc. — are considered.

As a consequence, a 30-year-old couple earning only $20,000 a year has a marginal tax rate of 42.5%, while a 45-year-old couple earning $500,000 pays at 43.2%. There are some exceptions: A 30-year-old couple earning $50,000 a year, for instance, pays 24.4%, and a 60-year-old couple making $150,000 a year faces a tax rate of 47.7%.

Consider that while you watch the deficit explode and feel the bite of higher prices after the imposition of the VAT on virtually all sectors of our economy.

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Posted April 13th, 2010 Filed in Economics and the Economy, Taxes and the IRS