Ken and Daria Dolan are widely known as America's First Family of Personal Finance.
This time of year, we are all well aware of how much we pay Uncle Sam in income taxes. And we all can clearly see the sales tax we pay when we go shopping or enjoy a nice dinner out. We're not happy about them. But at least we know that we're paying those taxes.
But most of us have no idea just how many hidden taxes we pay every day that take a serious bite out of our wallets. We pay little known-taxes on everything from travel to peanut butter (Ken's favorite), to life insurance to liquor. Often, we don't know, specifically, what federal tax we are paying on goods and services because that tax (such as excise tax on imports or 'sin' taxes on liquor), is built right into the price, and doesn't appear anywhere on the sales slip as a tax.
And boy, does it add up! We consumers pay hundreds of billions of dollars in "hidden" taxes each year. It's estimated that our federal income tax represents less than half of the taxes we pay each year. So let's expose eight hidden taxes you probably didn't even know you were paying...
1. Gasoline tax. Next time you fork over big bucks at the gas pump, remember that you are paying nearly 46 cents per gallon in federal, state and local taxes. That's nearly 15% of the cost of a gallon of gas!
2. Gas guzzler tax. If you are driving an SUV or other large vehicle, you have a tax double whammy. Not only are you paying that big gasoline tax, but you also got socked with a special tax dealers are charged – and pass right along to you on the sticker price – for gas guzzlers. This tax can be as much as $7,700!
3. Hidden taxes on travel. Airfare, hotels, your rental car -- you are paying a hefty tax on each one of them. You pay a 7.5% tax on a domestic ticket and a $3 tax for each segment of a flight. Hotel and rental car taxes vary by state, but can be as much as 40% of your overall cost. Ouch!
4. "Sin" tax on beer, liquor, gambling and cigarettes. The federal tax on a pack of cigarettes is 39 cents, but there are many state and local taxes that increase the price. Tobacco taxes contribute more than $7 billion to the Treasury every year. Almost half of the cost of beer and liquor comes from excise taxes.
5. Catching a fish or two isn't free. A fishing enthusiast pays 10% of the sales price on sport-fishing equipment in taxes. That's enough to make you switch to another sport. Maybe archery? But wait, an archer pays 40 cents tax per arrow. And quivers are taxed at 11%! If you buy a shotgun or other firearm, you'll pay 11% of the sales price in federal tax on the gun as well as any ammunition. Handguns are taxed at 10% of the sales price.
6. State taxes on insurance premiums. This little doozy brings in $9 BILLION in revenue a year! States charge insurance companies a tax on the insurance premiums they receive from customers in that state. And who do you think the insurance companies pass that cost along to? You got it. You and me.
7. Excise tax on imports. The sneakiest of all the hidden taxes that we pay is in the form of excise taxes on many of the products we import. The tax makes the prices of imported products artificially high to make it easier for domestic products to compete.
Here are just a few of the items and the percentage that their prices are jacked up by import taxes:
- Bicycles 11%
- Brussel sprouts 12%
- Cotton hammocks 15%
- Infant formulas 18%
- Flashlights 18%
- Peanut butter 143%
- Girdles and panty girdles 24%
- Brooms 32%
- Plastic school supplies 5%
8. Payroll taxes. Forget about your income tax withholding. When is the last time you looked – really looked – at all the other taxes coming out of each and every one of your paychecks? You've got your Social Security tax, your Medicare tax, your unemployment tax, your workers compensation... It all adds up to a serious percentage of your money going into someone else's pockets.
That's eight hidden taxes and there are 80 more where those came from! The bottom line is all these hidden taxes are nickel and diming us to death. And with so many Americans already struggling, every dollar counts.