Taxing in 2020

It's that time of year......time to evaluate your funds and your salary and stuff.  And make sure the government gets its fair share.  One good thing about this COVID19 quarantine is that I had time to do my taxes.  And up my game with some pretty graphs and stuff.  The other good thing is the tax deadline was extended into July in case you need extra time.

A good 27% of my salary goes to taxes.  First the Feds take 15% for income tax, then another 6.2% for Social Security, another 1.45% for Medicare, and then the State takes its 3.6%, and the township takes its property taxes.

After that, all the other withholdings for insurance and my retirement come out of my salary for a total of about 42%.  Visually, it looks like this:

I like to do some analysis to notice trends over the years.  I started originally back in 2007 / 2008 timeframe when the whole Obamacare (Affordable Care Act) was taking shape.  I was curious to track what would happen with my medical insurance costs, so I started tracking my taxes and insurance costs.  With the extra time I have now due to quarantine, I went back into my records and filled in some holes so I could see my data for more than 10 years.

For all these graphs, I'll show 2 different versions because depending on what you're looking at, they can tell a different story.  Sometimes it's good to look at things by the actual numbers (dollar amounts).  And sometimes it's interesting to compare by a percentage of my salary.  For example, social security tax.  It's usually a flat rate up to a certain amount, so it's easy.....6% of my salary.  But.....6% of $50,000 would be $3,000, while 6% of $100,000 would be $6,000.  Is that good or bad?  Hard to say....it's good to make more money, but disappointing to see more money leave your pocket as well.  But it's the same because it's always 6%.....right?

Other examples are my 401(K) and my HSA.  They have dollar amount limits, so as my salary increases, if I'm maxing out the dollar amount, as a percentage they decrease even though the dollar amount is likely staying the same.

Here's the data on the original reason I started tracking this.  What has been happening to my insurance costs?  Contrary to the promises, my healthcare insurance costs increased throughout the Obama administration (2008-2016).  They have leveled off somewhat in Trump years.  I'm not convinced it's all due to the president.  There is a correlation, but correlation does not always imply causation.  Also, the orange bar for the Health Savings Account may be somewhat misleading as that's money that may be spent that your or might be saved and used some other year since (so far) I don't track what I take out of my HSA, only what goes in.  But that's an interesting idea of something to track......maybe if I still have some extra time if the quarantine drags on for months, I'll look into that.  I hear people talk about how my company's insurance plan is not that great.  It is a high deductible plan.  But.....my insurance costs really aren't that much, especially if you compare them to what I'm paying in federal income tax.

Before we can compare insurance to taxes, first let's look at the taxes by themselves.  See that?  Total around 26% - 27% of my income recently.  With federal income tax and social security being the biggest chunks.  This doesn't include the sales tax I pay on stuff, so total taxes I would guess to be around 30% if you count all the kinds of taxes that I pay.  When I look at the dollar amounts (you can't see the total dollars since I hid them for privacy purposes), I realize that the taxes I pay are probably as much as some people's salaries.  Which makes me thankful to have a job that pays well.

Now let's add those together and throw in my 401(K) contribution as well since that money is taken out pre-tax too.

Finally, we compare to my total salary and add the net wages in.  And then we look at the whole picture.  Sometimes the dollar value of my taxes increased because I happened to get a nice raise or I had a good bonus that year.

That's all folks.  No super big revelations this year.  I was surprised to note that my social security taxes actually went down in 2011 and 2012.  So did my property taxes.  Maybe that was because of the economy being in the tank.  It looks like Congress realized social security still needed funds, so they increased the amount again.

Until next year when it's time to talk taxes, this is your tax commentator signing off.  Stay tuned though.  Maybe later this week we'll talk about COVID19 and all the exciting graphs that can be made.