Our friends at the Tax Revolution Institute (TRI) are daily about the hard work of fighting for tax reform at the local, state, and national levels. It’s a thankless job because it often must seem as though they are fighting against the ocean tide. Governments at every level are constantly passing new and devious methods of taxation in an ever-growing effort to consume the hard-earned money of America’s producers. Whether a local sales tax to pay for a school bond, or a state “fee” to help pay for the cost of building new roads, or a federal healthcare mandate that only survives a Supreme Court challenge because it’s called a “tax,” the government is constantly scheming of new ways to get your money.
Thankfully, the Tax Revolution Institute is here to educate you on a few of the underhanded methods the government is currently using to pick your pocket. Writer Choloe Anagnos recently penned a brilliant piece on “5 Hidden Taxes you Didn’t Know you Were Paying.”
In 2012, the federal government collected almost $10 billion in taxes from the purchase of wine, beer, and other spirits. According to the Tax Foundation, Washington has the highest spirit excise-tax rate at $33.54 per gallon. Followed closely in rates are Oregon, Virginia, and Alabama. The lowest are found in Wyoming and New Hampshire where government-run stores don’t typically rely on taxes and impose markups instead.
Listed in the “Options for Reducing the Deficit: 2015 to 2024” from the Congressional Budget Office, increasing all taxes on alcoholic beverages to $16 per proof gallon would increase the tax on a six-pack of beer from 33 cents to 81 cents. The tax on a bottle of wine would increase from about 21 cents to 70 cents.
(2) Cell phones
Have you ever looked at the taxes listed on your cell phone bill? According to a study from the Tax Foundation, the average customer pays more than 18 percent in taxes and fees on their wireless bill, which is several times more than state sales-tax rates. In fact, American consumers pay around $17 billion in wireless taxes, fees, and other surcharges combined.
The states with the highest cell phone taxes and fees are Washington, Nebraska, and New York while Oregon, Nevada, and Idaho have the lowest, respectively.
Cigarettes are taxed similarly to alcohol. Signed in 2009, the Children’s Health Insurance Program Reauthorization Act raised the federal tax rate for cigarettes from 39 cents per pack to $1.01. This tax was used to increase insurance coverage under the State Children’s Health Insurance Program. Currently, cigarettes are the most expensive in Chicago. The city tax, plus Cook County’s tax, plus Illinois’ state tax comes out to $6.16. (And that doesn’t even include the actual cost of a pack!)
Typically, gas taxes are used to provide revenue for road construction, maintenance, repair, and other improvements. However, in 2013, gas taxes and license fees paid for only 41.4 percent of state and local road spending. That percentage is falling over time as state gas rates don’t keep up with inflation.
As of January 2016, Pennsylvania imposes the highest state gas tax at 50.4 cents per gallon with Washington and New York closely behind. Alaskans pay the lowest rate at only 12.25 cents per gallon.
In the United States, license taxes are paid to the government for the privilege of being “certified” to do something (like cutting hair, scrapping metal, or practicing medicine). Since the 1950s, the number of jobs where workers are required to be licensed now encompasses more than a quarter of the working population. According to a report from the Treasury, the White House Council of Economic Advisers, and the Department of Labor, occupational licensing, “creates substantial costs, and often the requirements for obtaining a license are not in sync with the skills needed for the job.”
Occupational licensing laws raise consumer prices; they don’t increase the overall quality of goods and services, but they do raise costs. For example, imposing more licensing requirements on dental hygienists increases the price of a dental visit by 7 to 11 percent.