How many articles have you read about prepping on a budget? This website and many others have explored the topic in depth. Grow your own food, buy in bulk, cut unnecessary expenses, learn to improvise, and get out of debt. The old saying is “use it up, wear it out, make do, or do without”. We should all be following this advice. At the same time, we should ask the obvious question, ‘Wwhy are so many of us on such a tight budget these days?”
One reason may be that your income has decreased, stagnated, or disappeared. If you are unemployed, under employed, retired, or disabled, it will be harder to make ends meet. Even if you are still working, your paycheck may not be keeping up with inflation. Despite the government statistics, the basic necessities cost more than they used to. Think of all your expenses: housing, food, fuel, clothing, transportation, education, entertainment, and communication. Modern life isn’t cheap.
There is one expense that we often take for granted– taxes. Have you ever sat down and thought about how much of your monthly budget goes directly or indirectly to pay taxes? Typical state and federal income tax can cost you 20-30% of your entire salary. Then there is the cost of sales tax and property tax. Don’t forget about social security and payroll taxes. How about licensing and governmental fees/tariffs that are just disguised taxes?
Gather up all your bills and take a close look at how much of each bill involves a direct tax. You probably pay tax on your cell phone service, cable bill, fuel bill, and shopping bills. Next time you fill-up your gas tank, check the receipt for how much tax you paid to the state and federal government.
In addition, think of the indirect taxes you pay for that tank of gas. What percentage of the price of gas comes from taxes the oil company had to pay and pass on to the consumer? The companies themselves often pay property tax, payroll tax, income tax, and other taxes. What does gasoline really cost, minus all the added expense of indirect taxes passed on to you? What would a loaf of bread cost, or how much less would your rent be if we weren’t subject to all these taxes?
Lowering or eliminating taxes to free up money in your budget is not a ground breaking idea. However, taking the time to actually add up how much you pay in taxes every month could turn the most devout socialist to a Tea Party conservative pretty quickly. You are not paying $400 per month for gas, but really $340 for gas and $60 towards direct taxes. Of that $340 for gas, perhaps another $20 is for indirect taxes passed on to the consumer. For your convenience, the gas station collects the government’s direct tax. You never miss this money because the tax is included as part of the price per gallon.
We need to think about taxes differently, and start asking new questions. Why do we allow private companies to collect taxes for the government? How long do these companies get to hold on to our money before they send it to the government? Why can’t I opt out of this scheme?
When I fill up my tank, I want to pay for gas. Unless I agree to it, I don’t want the gas station collecting taxes from me. At the end of the year, I can send the government a check for all the taxes I owed for the privilege of buying gas and other taxed goods and services. In the meantime, all that tax money is my money and earning interest or available for investment.
More importantly, writing this tax check would not be easy for many people. They would realize how much money they are throwing away to a wasteful government to support endless wars, special interests, and entitlements. Some people wouldn’t even write the check, knowing the government could never prove how many taxable items they bought with cash. Think of all the extra cans of food they could buy then.