My Tax Rate as an Individual and as an Employer

Bernie Sanders is proposing raising the highest bracket of the federal income tax from 37% to 52%.  This caused me to think once again about the taxes I pay.

I pay all of the usual personal taxes such as federal income tax, Social Security tax, Medicare tax, Maryland income tax, real estate taxes on my home, and the Maryland state sales tax.  In addition, I am a small business owner.  As a small business owner, I pay the following taxes:

Social Security (half for each employee)
Medicare (half for each employee)
Federal Unemployment
Maryland Unemployment
S Corporation Tax
Workman’s Compensation Insurance (required by state)
Real Estate Property Tax
Personal Property Tax (laboratory equipment, supplies, computers, furniture, etc.)
Sales Tax

The sales taxes are too onerous to calculate, so I am going to leave those out of my calculation of the tax burden I carry as an individual and as an employer.  I did this calculation for the year 2018.

Leaving sales taxes out of the calculation for both the company and at home, the other taxes I paid equal 99.0% of my income.  Taking into account the sales taxes, that percentage goes beyond 100%.

Now most of you are likely to argue that many of the taxes I paid are just a cost of doing business and it is not as though the various governments ganged up on me and took every penny I earned and more and left me to actually starve in the streets.  But it is true that if these governments did not tax me, my personal income could have been more than twice what it was and close to about four times what I was actually able to spend after the ordinary personal taxes on the personal income I had in the year 2018.  Viewed from this perspective, I was likely only able to control the spending of about one-quarter of the income I could have had were it not for the many government taxes I pay both as an individual and as a small business owner.  I am one hell of a taxpayer.

Is it any wonder in the modern era that so few people choose to be employers and so many prefer to be employees.  This does not even consider the many risks involved in being an employer and a business owner.  It does not include the paperwork burdens.  It does not include the weight of the responsibility for your employees’ welfare.  It does not include the cost of complying with the many regulations imposed by governments, many of which have little regard for a cost-benefit ratio that is rational.

Reducing the costs and the many other burdens that governments put on employers has a truly dramatic effect on encouraging entrepreneurs, who are under extremely heavy burdens at present.  The entrepreneurial spirit in America is being squelched.  Let it flourish and the growth rate in our economy will skyrocket.  Even small improvements in the growth rate have a tremendous impact on compounding the growth of the economy over the 40 year period that most people have yet to live. 

Think about this when the Democrat Socialist Party politicians propose more taxes to partially cover the expenses of their many proposed new welfare programs.  Not only are they not going to allow entrepreneurship to grow the economy more, but they are actually determined to further squelch it, to smother it, to brutally murder it.  They simply view employers as the enemy, which is exactly what is to be expected of socialists.

More and more employers will go on strike — they will shrug their shoulders and let all of these heavy burdens crash to the ground.  Atlas will shrug.  The many American employees will have far fewer jobs with far fewer people willing to bear the many burdens of being an employer.  The number of employers has fallen dramatically over our history as governments have grown.  This is not the only reason for this, but it has been an important reason for it.