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Something To Gripe About

April 19, 1994

NEW YORK (AP) _ You have paid your taxes, or you should have, and therefore have won the right to gripe for the rest of the year.

It has been that way since history was recorded, demonstrating that perhaps the biggest complaint of all time also has been one of the most ineffectual. People pay and complain and pay again, just as they did thousands of years ago.

Here are some observations to feed your gripes through the year:

-You might have paid up, but you’re still working for the tax man. Tax Freedom Day, the day on which the average American has earned enough to pay all his or her taxes for the year, falls on May 5, two days later than in 1993.

Source: The Tax Foundation, independent, nonpartisan researcher.

-You might or might not want to shed a tear about the unique tax problems faced by professional athletes, especially after marginal tax rates rose to 39.6 percent from 31 percent for those earnings $250,000 or more.

The tax paid by an athlete earning $1 million a year jumped from $264,000 in 1992 to $323,758 in 1993.

So what’s unique? Just that the income is compressed into a few years, resulting in a larger fraction of an athlete’s lifetime earned income going to taxes compared to a worker with a similar income over a normal worklife cycle.

By one method of calculation that accounts for the falling buying power of dollars, an executive accountant with the same lifetime income will be taxed, in terms of buying pwoer, $398,808 less than the ballplayer.

Source: School of Business Administration, University of Dayton.

-Because of taxes, the average worker needs to earn a lot more than the price of a car in order to buy that car. That, of course, is easily understood. Not so clear is how much more.

In an average-tax state, a middle-income worker with earnings of $34,000 must earn an additional $17,038 to purchase a $10,000 car.

It means that the worker must earn $10,000 to pay for the car and $7,038 to pay the sales tax on the car and the income and payroll taxes on the earnings used to pay for the car.

Stated a bit differently: A worker with a $34,000 income must work 3.5 months of the year to pay for the car, and then 2.5 additional months to pay the taxes on the income used to purchase the car.

Source: George Nastas and Stephen Moore, the Cato Institute.

-The big changes in Federal tax-dollar expenditures in recent years have been in two areas: National defense and health.

In 1984, national defense accounted for 27 cents of every tax dollar; in 1994, 19 cents. In 1984, health care took 10 cents of every federal tax dollar; in 1994, about 17 cents.

Source: The Tax Foundation.

-Here’s a mind-twister. The overall tax burden is probably up a bit over the average from 1970 through the mid-1980s, most of it due to state and local taxes. Federal taxes have remained at about 22.5 percent of income.

That’s not because Federal taxes and rates didn’t rise. What happened is that transfer payments - received, for example, as Social Security and Medicare payments - raised personal income faster than increases in taxes.

Source: DRI-McGraw-Hill, an economic analysis and research company.

-Most aspects of the 1993 Tax Act were made retroactive to Jan. 1, 1993, but one increase didn’t kick in until this year.

It is a jump to as much as 85 percent from 50 percent for Social Security recipients with ″provisional″ income in the form of adjusted gross income, tax-exempt interest, some foreign income and half of Social Security benefits.

Source: Ernst & Young, accountants.

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