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Last year, I suggested that the price of civilization (i.e., government) should be no more than 15% of your income. I further suggested that any taxation beyond this level would be tyrannical.
Fifteen percent is obviously an arbitrary threshold. Your “tyranny” threshold may be higher. But before I make the case again for 15%, let’s see how Mrs. Groovy and I did in 2016.
2016 Income
In 2016, Mrs. Groovy and I had an income of $128,766. Here’s how that amount was derived.
| Source | Amount |
|---|---|
| Wages | $110,590 |
| Dividends | $13,297 |
| Capital Gains | $3,278 |
| Pension | $1,546 |
| Interest | $55 |
| Total Income for 2016 | $128,766 |
2016 Taxes
Considering that Mrs. Groovy and I left the workforce in October of 2016, our income for 2016 was pretty darn good. Now let’s turn to our tax burden. Here’s what we paid in taxes.
| Source | Amount |
|---|---|
| Federal Income Taxes | $6,597 |
| Social Security Taxes | $6,535 |
| NC Income Taxes | $2,799 |
| Property Taxes | $2,101 |
| Medicare Taxes | $1,528 |
| Sales Taxes | $875 |
| Federal Refund | -$2,406 |
| State Refund | -$147 |
| Total Taxes Paid in 2016 | $17,882 |
The Results
Okay, if you divide $17,882 by $128,766, you get an effective tax rate of 13.89%. Hooray! Mrs. Groovy and I were under my tyranny threshold. We paid a reasonable amount for civilization in 2016.
The Case for Fifteen Percent
My first defense of 15% is philosophical. One of the hallmarks of freedom is the ability to spend the money you earn on the things that interest you. This freedom, of course, isn’t absolute. The political majority has the right to confiscate a portion of your income for things such as roads, schools, and welfare. Likewise, the right of the political majority to take your money for the common good isn’t absolute either. If the political majority had an unlimited claim on your income, you wouldn’t be free. You have to draw the line somewhere. I think 15% is a reasonable compromise between the political majority’s taxing prerogative and the individual’s right to be the primary steward of his or her money.
My second defense is practical. When I worked for the government, I estimated that my department gave the taxpayers about 50 cents of service for every dollar in taxes they surrendered to us. Was that degree of wastefulness and contempt peculiar to my little corner of government? I don’t think so. I think inefficiency, corruption, and disdain for the taxpayers is the norm for government at all levels. It’s part of the operating system.
Consider education for a moment. I grew up in Plainview, Long Island. Plainview’s school district currently spends over $25K per student annually. That’s right. A kid starting kindergarten today will cost the Plainview taxpayers over $325,000 by the time he finishes high school. Now a question. What’s being taught in Plainview’s schools that a child can’t learn on his own for far less money, providing he’s motivated and his parents are responsible? The Khan Academy is freakin’ free, after all. And so are libraries (at least if you’re a minor with no income, that is).
But wait, there’s more. The New York State Board of Regents, the body responsible for setting teacher qualifications, is seriously considering scrapping the literacy exam that all prospective teachers are required to take. I kid you not. Apparently a large number of New York’s prospective teachers have trouble reading. And some board members would rather sacrifice standards than force prospective teachers to up their game. Now another question. Does the New York State Board of Regents strike you as an entity dedicated to excellence?
My point here, of course, is not to pick on public education or New York State. Take any government agency or program anywhere in the land and you will find wasteful and absurd practices. And, sadly, for a large number of government agencies and programs, you will also find corruption and disdain for the taxpayers. My point, rather, is this: The government is just a lousy steward of our money. And until the government proves otherwise, I see no reason why it should get more than 15% of my hard-earned money.
Final Thoughts
Okay, groovy freedomists, that’s all I got. What say you? What was your effective tax rate in 2016? What’s your tyranny threshold? How much are you willing to surrender to the government given its current make up and business practices? I’d love to hear your thoughts. Grease for peace.
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