Talk:Hidden tax
From Wikipedia, the free encyclopedia
 |
This article is within the scope of WikiProject Taxation, an effort to create, expand, organize, and improve tax-related articles to a feature-quality standard. |
| Assessment ratings and other indicators given below are used by the Project in prioritizing and managing its workload. | |
| Stub | This article has been rated as stub-Class on the Project's quality scale. |
| Low | This article has been rated as low-priority on the Project's priority scale. |
 |
After rating the article, please provide a short summary on the article's comments page to explain your ratings and/or identify the strengths and weaknesses. |
[edit] Merge
This content should likely be merged and redirect into Effect of taxes and subsidies on price. Morphh (talk) 20:32, 26 April 2008 (UTC)
[edit] Table
What does the table have to do with embedded cost of taxation? Morphh (talk) 20:35, 26 April 2008 (UTC)
The chart is from the source: [1]. It means what percentage of income quintiles are taxed. (including hidden taxes) So a person earning in the middle quintile would have to pay 60% in taxes (including hidden).
You can calculate the total hidden taxes of an individual by this function: (excluding excise taxes, tarrifs, inflation, corruption, etc.)
RealTaxRate(income, stateIncome, sales, corporate, county) := 1 - (1 - (0.062*2 + 0.0145*2 + income + stateIncome + county))(1/(sales + 1))(1 - corporate*.55);
note that 0.062 is the social security rate and 0.0145 is the medicare rate. Also according to [2] corporate taxes contribute to 55% of an individual's income.
So if you see an individual earining $40,000 yearly, the tax would be: RealTaxRate(.25, 0.04, 0.04, 0.25, 0.04) = 0.571238
or 57% of his income is taxed. (note that this rate excludes excise, tariffs, etc.; you can improve this function by using excise and tarrifs)
The .25 is from the tax rate [3]. The other .25 is assumed that he works in a corporation that has to pay 25% of its income in corporate income tax.
This function is based on this source: [4]
