Republished from: https://www.cpapracticeadvisor.com/tax-compliance/news/21211629/americans-pay-more-than-525000-in-tax-over-a-lifetime
The US government collects over $5.3 trillion in taxes each year, but how much will the average American pay in taxes throughout their lifetime?
We used the Bureau of Labor Statistics’ expenditure numbers to see what we as Americans were spending each day to work out what taxes we would be paying until we’re no longer able to contribute financially. It’s a lot.
We’ve analyzed this data specific to each state so you can see what you may be giving to your local government in taxes across your entire life.
Key statistics
The average American will pay $525,037 in taxes throughout their lifetime
That’s an average of 34.3% of all lifetime earnings spent on taxes
Residents of New Jersey will pay the most in lifetime taxes ($931,000) and people in West Virginia will pay the least ($321,000)
Tax on earnings is where most tax will come from, with the average American paying $339,173 in a lifetime
Owning a car will cost an additional $29,521 in tax payments alone
Tax on property will set you back an additional $128,581 above the property price and maintenance
Tax payers in California will pay the most on everyday expenses ($40,084), followed by New Yorkers ($39,745)
Which states will pay the most in taxes over their lifetime?
How much tax will the average American pay in their lifetime?
Using our state averages, we can see that the average American will pay $525,037 over their lifetime, almost 65% of this will purely be tax on earnings. This amount varies drastically by state but uses averages for earnings, expenditures, property and auto taxes. You can see the average American’s lifetime tax breakdown in the following chart:
Methodology
We used the Consumer Expenditure Report (2019) from the Bureau of Labor Statistics to understand the main average household spending habits. We took this data and divided it by 2 to create a personal spending report for one American. We then took this spending data and applied state-specific taxes on each expenditure. Car property tax and sales tax data was also analyzed at a state level based on the average number of vehicles the average American will own over 60 years and a purchase cost of $25,000. The tax paid on earnings was based on state level tax and federal income taxes when applied to the average salaries in each state. While Alaska does not implement a state-wide sales tax it does allow localities to charge local sales taxes which we have gathered as an average to analyze via the Tax Foundation.
A worklife of 36 years was used to analyze income taxes based on data from the study ‘Total Worklife Expectancy’ in the Journal of Forensic Economics. The average years where an individual will pay taxes on expenditures was derived from the age of 18 and the average life expectancy (79) as dictated by the World Bank.
Inheritance tax was excluded from this study as it was deemed the average American would not have to pay this due to inheritance thresholds not being exceeded. Marriage and its effect on taxes was also not applied to this study as it did not impact taxes in the vast majority of cases representing the average American taxpayer. /end of article reprint
How does this make you feel? Are you in one of those states? I am! What if:
You could live in one of those states and ELIMINATE your income tax burden in retirement using the tax code?
What would it be like to go "on strike" with your money, without sacrificing your lifestyle?
In fact, what if we could greatly ENHANCE your lifestyle in retirement and increase your economic opportunities and potential for doing so?
What if, we can help you re-capture up to $250,000 of your hard earned Social Security retirement benefits rather than letting the taxing authorities take it to fund THEIR agendas?
What would your life be like if we could do that for you?
Reach out to me and we can find out together!