- Social Security — If you are working you paid 4.2% of your gross pay in Social Security tax during 2012 because the Obama stimulus included a reduction of two percentage points in Social Security. The 6.2% rate was restored at the beginning of 2013.
- Medicare — If you are working you paid 1.45% of your gross pay in Medicare tax.
There are federal taxes that everyone pays: on gasoline, alcohol, cigarettes and so forth.
Federal Income Tax for income in 2012
- Low income people may pay no taxes — “about half of people who don’t owe income tax are off the rolls not because they take advantage of tax breaks but rather because they have low incomes. For example, a couple with two children earning less than $26,400 will pay no federal income tax this year because their $11,600 standard deduction and four exemptions of $3,700 each reduce their taxable income to zero. The basic structure of the income tax simply exempts subsistence levels of income from tax.” from “Why Do People Pay No Federal Income Tax?” by Roberton Williams
- Middle income people often pay 15% or more — After deductions and exemptions each tax unit (individual, married couple, etc.) the remainder is taxable income. Here are the tax rates that apply for 2012 income. A single filer with $40,000 taxable income would pay:
- 10% of the first $8,700 = $870
- 15% of the next $26,650 = $3,997.50
- 25% of the next $4,650 = $1,162.50
- Total federal income tax = $6030.00, which is 15% of taxable income
- It is less than that for gross income (before deductions and exemptions), but individual/family reductions in taxable income are dwarfed by corporate welfare exemptions and deductions.
Each tax unit has to figure out the result based on its situation, deductions and exemptions, etc. Nevertheless it is clear that it is common for middle class people to pay around 20%, ± a bit,of their income in federal taxes of all kinds.