You pay a LOT more tax than you think.

This article was used as a script for a youtube video. you can watch it here.

”Let them march all they want,

as long as they continue to pay their taxes.”

Alexander Haig

Recently my mother in law retired after working all her life. And she told me that she has to pay taxes on her pension payouts. And my first reaction was, ”wait what, isn’t that double income tax?” So I started to research the tax system, and down the rabbit hole I went. And let me tell you, I was shocked with what I discovered. 

Now income taxes are paid differently in different countries. In the US, for example, the percentage depends on how much you earn and other factors. But the IRS states that the average income tax is around 14%. However, this is far from the truth. 

Regarding how much you are making, the income tax is an illusion. It’s the bunny in the hat, it’s the pretty lady with the huge knockers to keep your attention as the tax magician does his sleight of hand routine. You pay A LOT more taxes than you actually think. Stick around till the end of this video where I reveal the real tax percentage you pay.

Before we get started, 2 things. 

You need to know that I am not one of those people who is against taxes. I have friends who are very much against taxes in general. Personally, I do believe taxes are a necessary evil. But there are a few problems with taxes. 

Secondly, I also want to point out that I don’t encourage anyone to not pay taxes, or commit tax fraud. There are however clever ways to reduce your taxes if you figure them out. 

However, having said so, it’s interesting that rich people manage to pay a lot less taxes than ordinary people. I also find it very interesting that big companies like Apple and Google pay less than 1% in taxes, when the ordinary worker has to pay around 14%.

Now there is tax evasion, but there is also creative tax planning. See, most people don’t know how to find loopholes in the system. For example, I actually don’t pay taxes for the earnings of my YouTube videos. There is nothing illegal being done, I just understand how the tax system in Sweden works. 

Now I’m just an amateur, but the big companies are pros. Let me give you two examples.

01 Apple has been criticized for using strategies such as transfer pricing, where profits are shifted to low-tax jurisdictions, and maintaining subsidiaries in countries with favorable tax laws. In recent years, Apple has faced scrutiny from various governments, including the European Union, over its tax practices. While Apple reports significant amounts of tax payments, the 

effective tax rate it pays can be lower than statutory rates due to these strategies.

02 Similar to Apple, Google has been accused of using various tax avoidance techniques, including shifting profits to tax havens and using complex corporate structures. Google has faced investigations and criticism from authorities in multiple countries, including the United States and European Union. Like Apple, Google reports significant tax payments, but the effective tax rate it pays may be lower than statutory rates due to these practices.

These are big companies, that get chased by governments all the time. And sometimes they get to pay huge fines. But when a person doesn’t pay taxes, he or she could go to jail. I find that interesting.

The hidden taxes you don’t think about

You are probably smart enough to know that income tax is not the only tax you pay, but it’s the big one right? And sure, income tax grabs a chunk, but there’s a whole lot more to the tax story.

Ever heard of payroll taxes? These sneaky deductions take a bite out of your paycheck before you even see it. They include things like Social Security and Medicare taxes, eating up around 7.65% of your hard-earned money.

Now, let’s talk about sales taxes. Every time you buy something, you’re paying a little extra in sales tax. It might not seem like much, but it adds up over time. That goes into everything you buy. Your food, your car, your smartphone services, your lego. Basically everything with a price tag, comes with a tax fee. 

If you own a home, there are property taxes. These can eat into your budget, whether you realize it or not. They’re often included in your mortgage payment, making them easy to overlook.

Maybe you invest your hard-earned money. Don’t forget about investment taxes. When you cash out those gains, the taxman wants his share, typically around 15% of your profits.

But wait, there’s more! Taxes lurk in unexpected places like groceries, internet bills, and even your morning coffee. They may seem small, but they add up quickly.

When you add up all these taxes on your income, purchases, and investments, you realize the truth: you’re paying a lot more than you think. It’s not just 12% income tax—it’s a whole web of taxes nibbling away at your paycheck.

SO HOW MUCH TAXES DO YOU ACTUALLY PAY?

When you add all those percentages, you might be thinking that you pay a bit more than 12 or 14%, but the truth is that it’s more like 40-50% of every earned dollar you make. Let that sink in, of every earned dollar you make, the government takes 50%.

One of my favorite philosophers, Alan Watts, once talked about this, that taxes are unnecessarily complicated. It would be far easier if all taxes were deducted before payouts. By simplifying the tax process and reducing the need for individuals to file complex tax returns, such a system would potentially make taxation more transparent and less burdensome for taxpayers. It could also help ensure that taxes are collected efficiently and accurately, minimizing the likelihood of errors and reducing administrative costs for both taxpayers and government agencies.

My theory on why we have this complex system is that if most people would realize that they pay 50% taxes they would not accept it. That’s why we have this illusionary sleight of hand tax system.

People are okay with the idea that their taxes go to social security, healthcare, education, and defense. It’s the backbone of their society, their country. But when you read it as 50%, something feels a bit off. Especially since most of that tax comes from the working class, and not the rich, or the companies.

As always, thank you for reading. Do me a favor and tap that like button to show your support. Subscribe if you are interested in more content like it. Until next time, stay hungry, relentless, and strong in your journey of escaping the wage slavery. Bye.