Opinion | Scott M. Estill: Happy Tax Day!
Everyone’s least-favorite day of the year is coming up next week: April 15, or Tax Day. In an era of polarization, there are very few of us who fall into the “I-am-not-paying-enough-in-taxes” category. As Chris Rock once said, “You don’t pay taxes — they take taxes.”
Unfortunately, I don’t think the typical person really knows just how much the government is “taking.” If you are a so-called “average couple” living in Summit County, your household income will be $76,900 (this is the median income, meaning that 50% will earn more than this amount and 50% will earn less) . Unfortunately, this amount is before taxes.
Assuming this income comes in the form of salaries or wages, they will pay $5,883 in employment taxes, along with $5,709 to the IRS and $3,499 to the State of Colorado in the form of income taxes. If you wonder why their 19.6% tax rate is higher than Jeff Bezos and certain Mar-a-Lago residents, it’s because the wealthy take minimal or no salaries and can offset investment income with tax shelters, along with business and investment losses.
After income-related taxes, this hypothetical couple has $61,809 to spend on life expenses. But the taxes are just starting. Whether this couple rents or owns their home, there are property taxes to pay (to the tune of $1,671 for the median in Summit County). When property taxes go up (and they have by a considerable amount here), the property owner will not typically eat this increase but instead will pass the increase along to the tenant in the form of higher rent.
While $76,900 sounds like a very livable income, we are now down to $5,000 per month to pay the bills. Fortunately, most groceries are exempt from sales taxes, but many other goods are taxed at varying rates. Head to the Target to pick up some clothing and taxes will add 6.375% to the overall bill. Picking up a prescription will add 3.475% to your bill.
Speaking of drugs, in addition to the 6.375% sales tax, you will also pay an excise tax (hidden in the price) on beer, wine and hard alcohol. Smoking cigarettes will cost you $1.84 cents per pack in taxes to our friends in the Federal and State of Colorado governments. Summit County also imposes an additional $4 per pack tax as of January 1, 2020 (and 40% on e-cigarettes and vaping devices). Perhaps the county is trying to send a health message concerning alcohol and cigarettes?
And while many governments were slow to recognize legalized marijuana (medical or recreational), they have no problems with slapping an extra 15% tax on retail purchases (in addition to the ordinary sales tax rates). There is also a hidden excise tax levied on the producers, which ultimately comes out of the consumer’s pockets at the time of purchase.
If you own a car, you will pay 22 cents per gallon to Colorado (and another 18.4 cents per gallon to the Feds), along with paying title and registration fees on the car that cleverly avoid the “excise tax” label. Colorado also manages to sneak in an excise tax of an average of $10.40 per month on every cell phone plan (often labeled as an Other/Miscellaneous charge).
So, we (almost) all agree that we pay a lot of taxes. The real question becomes: What do we get in return for paying all of these taxes? This is where the fun really begins, as someone (i.e., elected officials) gets to decide how to spend the riches collected in tax revenues.
The answer to the question of what we get is: hard to tell. The Summit County 2022 general fund budget is a mere 224-page document but as best that I can tell the money is spent something like this: 27% to public safety (sheriff, jail, district attorney, coroner,), 23% to the Strong Future Fund (early learning, mental health, recycling, public facilities, wildfire mitigation), 21% to county administration (commissioners, finance, assessor, attorneys, clerk/recorder, information systems, salaries), 10% to human services (health, senior, youth, community centers), 13% for auxiliary services (grants, housing, insurance) and community development (building planning, development, CSU extension), and 6% for public works (engineering, maintenance, vehicles).
While most of these categories seemed familiar to me, I was not aware that most of the Strong Future Fund (80%) is funded by a voter-approved tax increase in 2018. In addition, expenses for the transit (Summit Stage), education, library, roads and bridges, etc. are not included in these amounts as these come from specific revenue funds that are targeted for these predictably expensive services.
There are letters to the editor written every week complaining about the government or how it allocates the tax revenues it receives. While it is exceedingly difficult to reduce tax rates, a good starting point is no more tax increases. Once this is part of the plan, the next step becomes how to spend the pot of money that tax revenues provide.
This is the tricky part, as spending in one area necessarily removes spending from another. Where would you start? Want less services for the youth, seniors or sick? Less police or emergency services? Less attorneys (of course)? Don’t repair the roads or let the bridges collapse a la the recent Pennsylvania incident? Not concerned about wildfire mitigation? It’s easy to direct criticisms at the county commissioners over decisions that they collectively make. But it’s much harder to send along suggested changes with the critiques.
Here’s the link to the budget: SummitCountyCO.gov/217/County-Budget. With inflation currently hitting the economy, you can bet that the spending in 2023 will go up. Tell the Commissioners what services you want to eliminate. Start the defunding process now or be prepared to pay higher taxes in the future. The choice is yours.
Scott M. Estill’s column “Challenges, Choices, Changes” publishes biweekly on Thursdays in the Summit Daily News. Estill is an attorney, author and public speaker who lives in Dillon when not traveling or attending to legal matters in Denver. Contact him at email@example.com.
Scott M. Estill’s column “Challenges, Choices, Changes” publishes biweekly on Thursdays in the Summit Daily News. Estill is an attorney, author, and public speaker who lives in Dillon when not traveling or attending to legal matters in Denver. Contact him at firstname.lastname@example.org.
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