We received the following Letter to the Editor from Dan Eddy regarding Denton Butler’s “Where Does All The Money Go?” illustration which Denton had submitted with his letter to the Board of Finance on April 11. Dan’s letter should have been posted on May 25, the day we received it, but because of a mix-up on our part it is being posted today. Sorry for the delay, Dan.
Tax season is over and I was just catching up on your letter section. I found Denton’s letter and have a short comment.
As part of my business I prepare over 300 individual tax returns and 80 small business returns.
I am not sure Denton’s figures properly represent the tax situation as outlined. No one likes paying taxes but I think the raw data needs to be accurate to allow individuals to form opinions and questions.
The social security tax on wages of $62,400 is $3,869, and if an individual lives to age 62 they can start getting this back at probably around $15,000 a year so this really isn’t a tax but forced savings.
The Medicare amount is $905 and again if you live to normal retirement age you will get this back, so again we have a forced savings situation.
The federal income tax calculated at the highest possible rate, single, no exemptions, only a standard deduction is $9,419, less the $400 federal stimulus credit for working people, net 9,014.
If I buy into Denton’s argument that these are all taxes the total is only 13,824. ($4,774 of which will be returned upon retirement)
His state income tax is $2,420, he forgot to take advantage of the $500 property tax credit.
True “Federal and State income tax” figures at the highest possible tax rates are $2,562 less than Denton projected.
His gas tax, (Fed. 18.4 cents, State 25 cents) $828 represents 1,908 gallons, at 20mpg is 38,160 miles, more than twice the national average for an individual.
His sales tax $898 represents $14,976 in sales taxable items. Seems high when you consider his housing costs, insurances, utilities, gas for his car, most food products, many clothing items, are not subject to sales tax. Just what did he spend $14,900 on that was subject to tax. Lots of meals out?
Now if you justify the mileage and large sales tax item by saying he is married with kids, BOTH his federal and state income taxes would be much lower.
I did not check his other figures for accuracy. It is to easy to bash people about taxes, without thinking about all we get for our money.
Let’s at least be accurate with our numbers when we gripe.
Dan Eddy
New Hartford
Dan Eddy, a long-time New Hartford resident, is an accountant.
The New Hartford House in New Hartford Center earlier today, June 3, 2011. Photo: Maria Moore
