Initially, let’s give definition to term “hidden taxes.” A hidden tax is one that is not visible to the taxpayer. That’s it. Hidden taxes are alive, will decrease the purchasing power and lifestyle of individuals significantly; they are just not visible.
Hidden taxes are assessed upon consumer goods and services without the consumer’s knowledge. We, the taxpayers, purchase goods or services, we just do not know what they cost. Hidden taxes are levied upon the goods/services at some point during the production process and raise the cost of the product or service. If we want the product or service, we pay what is required or we do without it.
This tax is never revealed directly to the consumer, who pays a higher price for the goods/service purchased not knowing that part of that price is due to this tax. Here are a few examples.
Alternative minimum tax aka (AMT) is a flat tax with two brackets, 26 and 28 percent. The AMT now ensnares not only the wealthiest Americans but 4 to 5 million taxpayers with annual incomes between $200,000 and $1 million. The AMT is currently reaching deeply into the middle class.
Sin tax is generally levied against alcohol, tobacco, gambling, with marijuana soon to be included. Tax added on to the purchase price is generally 15 to 22 percent to the products cost. These are hidden but manageable.
With travel taxes, business travelers pay more hidden taxes in car rental, hotel and meal taxes. Global Business Travel Association Foundations study found that the 2013 taxes for travel increased by 58 percent. Business travel in Chicago sports the highest price, and 58 percent is difficult to hide.
In employment taxes, employer’s must pay a portion of the employee’s Social Security, Medicare, unemployment insurance, workers’ compensation, city payroll tax expense, and the cost of managing these funds – before they issue a paycheck. This may be the cause of stagnant wages. Also, if not paid timely these taxes are associated with heavy and aggressive penalties.
ObamaCare or the Affordable Care Act imposes another tax that is not well hidden. Blue Cross- Blue Shield, a pacesetter in the health insurance industry, has notified customers it’s raising premiums by as much as 10 percent in January 2014 because of new levies and fees (hidden tax) in the Affordable Care Act.
Gasoline taxes cost approximately 49.5 cents on each gallon. That makes carpooling look better.
Electricity or natural gas taxes are based on consumption. They are shown on your bill but impossible to evade.
A cable TV tax is hidden but you could eliminate the service so this is optional. Generally you can only watch one channel at a time.
Cell phone taxes are imposed by federal, state and local authorities. They are posted on the billing summary, but often require interpretation.
Until our tax burden is made more visible, federal, state and local municipalities will continue to take a larger and larger bites of our income. Watch for invisible taxes that are sharper than a two-edged sword, and speak up.
Alma M Scarborough: taxhitlady@sbcglobal.net; www.taxhitlady.com.
