LOS ANGELES (CBS.MW) - October
brought us the American Jobs Creation Act of 2004 and
the Working Families Tax Relief Act of 2004. American
voters were sufficiently pleased with these tax cuts to
give President Bush and his crew another term.
And why not? A family with two small children, with a
household income of $70,000, could pay about $100 per
month in federal income taxes, under the present tax
laws. All they need to do is to put $6,000 into IRAs or
401(k) plans and $5,000 into a health savings account
(or flexible spending account) to cover health insurance
and medical costs, and pay for child care or pre-school
for their two children.
OK, so we may be feeling better about our tax burden.
With tax bills being so much lower, we're also less
likely to have to interact with IRS. After all, we can
pay these smaller tax bills, right? No need to fudge on
the tax returns.
Well, the money to run this country and to pay for
all the services we take for granted will have to come
from somewhere. Just because we're not feeling the pain
on the federal tax forms doesn't mean the burden is
Let's look around and see what we're really paying
tax on, shall we?
Sales taxes All over the country, we are
hearing rumblings from states and even cities and
counties wanting to increase sales taxes, which in some
urban areas can run as high as 10 percent already.
In Utica, N.Y., the Oneida County Board of
Legislators has approved a hike in the county sales tax
to 9.75 percent, up from 8.25 percent - an 18 percent
Although voters in Los Angeles County rejected a city
sales tax hike for funds to hire more police officers,
James Hahn, the mayor of the City of Los Angeles tried
to get the funds by raising the city's sales taxes.
Chicago's Mayor Richard Daley proposes raising sales
taxes by .25 percentage points to fend off a $220
million budget deficit. Of course, Daley also wants to
raise taxes on cigarettes, liquor and amusements and
even tack $1 on car rentals.
Expect cities, counties and states to find ways to
raise these taxes - even if they have to find a way to
get around the voters.
Fueling around We pay federal taxes of 18.3
cents per gallon of gasoline. But most states also
charge gasoline taxes.
If you want to drive your car in Georgia you will pay
7.5 cents per gallon of gas; in New York it's 8 cents
per gallon. Stay away from the pumps in Rhode Island
where they add a shocking 30 cents to each gallon of
gasoline. California, notorious for smog and high taxes,
only charges an extra 18 cents.
Due to all the wear and tear on the roads - and the
problems with storms and other natural elements - they
need repairs and improvements. Despite the higher prices
at the pumps, expect to see increases in fuel taxes.
No whining about alcohol We're paying federal
and state taxes on alcohol - beer, wine and liquor - and
paying sales taxes on top of the excise taxes.
If you want to pay the least taxes - buy beer. The
taxes are typically only pennies per gallon. Raise a
stein to Wyoming, where beer taxes are cheapest - only 2
cents per gallon. But you'd better own a piece of the
pipeline in Alaska, where liquor can cost you as much as
$12.80 per gallon in taxes. Wine taxes fall somewhere in
between beer and liquor....even Alaska only charges $2.5
All puffed up You might want to make the Great
American Smoke-out permanent. If you buy a pack of
cigarettes in New Jersey the state adds $2.05 to the
price. Rather than hitting the duty-free shops, do your
cigarette shopping in Virginia, Kentucky, North Carolina
or South Carolina where they only charge you 2.5 cents
to 7 cents per pack.
Look for increases in both alcohol and tobacco taxes
in the next couple of years. Legislators feel the public
won't be too vocal objecting to sin taxes. In fact,
Oakland, California, Mayor Jerry Brown wants to
aggressively tax our bad habits. He'd like to see a tax
on junk food - and chocolate, modeled after Canada's tax
Pretty-penny property Property taxes generally
provide funds for schools and local infrastructure. But
for homeowners, they're a burden - especially to those
who have no children and resent having to support the
To pay the least in property taxes, consider moving
to Louisiana where you'll pay under $500 annually for
the same kind of home that would cost you more than
$7,000 in Connecticut.
Although most states don't have personal property
taxes, except on businesses, about a dozen states do.
Jackson, Miss., and Columbia, S.C., have the highest
personal property taxes - but their regular property
taxes are modest compared to other states.
Many states have either legislated limits to property
tax, or understand how sensitive it is to propose
increases. So you won't see any overt increases in
property taxes. But you will see sneak attacks: special
assessments, or bond payments or other additions to your
property tax. The worst news: where property taxes are
deductible on federal income tax returns, other forms of
assessment are not.
Lots of other taxes We haven't even scratched
the surface of other taxes - imaginative or mundane.
We're subject to amusement taxes every time we go to the
movies; tolls on highways; bed taxes in hotels; gate
taxes at airports; gift taxes; payroll taxes;
communications taxes (have you seen your phone bill or
cell phone bill, lately?); utility taxes....
And then there are the bizarre taxes - 11 states have
an illegal-drug tax. Utah has a sex-sales tax (don't
ask.) West Virginia shines with their
sparkler-and-novelty tax. Maine taxes blueberries
(someone needs a better lobby). Alabama taxes your
If you do some digging, you might just find that your
state has some odd taxes that you didn't realize. Send
us a note about your state's most bizarre tax and we'll
post them all.
Eva Rosenberg is the founder of TaxMama.com
and an enrolled agent licensed to represent taxpayers
before the IRS.
Originally published on November 25, 2004
Excerpted from the New York Daily News www.nydailynews.com