Governments are clever. They rarely collect taxes directly—that would draw too much attention from voters. Instead, they deputize others to do the collecting for them: employers to withhold income taxes from paychecks, stores to add sales taxes on receipts, banks to escrow property taxes from mortgage payments, and utilities to include city surcharges in monthly bills.
Because private surrogates so often collect the money, it’s easy to overlook the scheming taxman behind the curtain. This is classic misdirection—the pickpocket’s favorite tactic. Someone bumps into you on the bus and the next thing you know your wallet’s gone.
So let’s get these hidden taxes out in the open where they belong.
In order to expose the wizards of tax, I’ve dug deep into our 2016 records. I’ve scrutinized thermal paper receipts, examined online statements, and thumbed through weathered check registers.
After much bean counting, I’ve compiled what I believe is a complete list of the taxes and fees we paid last year, an amount which exceeds $10,400. Frankly, I’m amazed the dollars are so YUGE—to use a popular term—but that’s how everything adds up.
In the chart below, I link to spreadsheets that show my calculations. More importantly, I link to checklists that will not only help cut your taxes, but will help you cut the outlays that trigger those taxes in the first place (thereby saving you thousands each year).
2016 Taxes and Governmental Fees
|#||Type of||Amount||Supporting||Checklist or|
|Taxes or Fees||Paid||Spreadsheet||Blog Post|
|1||Real Estate Taxes||$8,403.39||Click Here|
|2||Sales Taxes||$1,153.58||Click Here||Click Here|
|3||Use Taxes||$32.00||Click Here|
|4||Auto Ownership Taxes||$106.00||Click Here|
|5||Auto License Fees||$140.17||Click Here|
|6||Gasoline Taxes||$168.05||Click Here||Click Here|
|7||Utility Taxes and Fees||$60.04||Click Here||Click Here|
|8||Cell Phone Taxes and Fees||$23.55||Click Here||Click Here|
|9||Landline/Internet Taxes and Fees||$125.72||Click Here||Click Here|
|10||Lodging Taxes||$104.21||Click Here||Click Here|
|12||Trash Removal Tax||$42.00||Click Here|
|13||Dog Tag Fee||$15.00||Click Here|
|14||Admissions Taxes||$1.10||Click Here|
|15||Federal Income Taxes||$0.00||Click Here|
|16||State Income Taxes||$0.00||Click Here|
|19||Sugared Beverage Taxes||$0.00|
|21||2016 Deductions for lines 1-4 above||-$1,418.37|
|22||Net Total Taxes and Fees||$8,986.44|
Line 1: Real Estate Taxes. We own 1½ houses. A house in Colorado is owned 50-50 by my wife with her brother (and that’s the way they split real estate taxes). I own 100 percent of a house in Maine. Before you dock me frugality points for the Maine place, know this: since I bought it in 1999 its appreciation has outpaced its cumulative carrying costs. That said, if we sold it now we’d save about $5,800 per year in taxes.
Line 2: Sales Taxes. I kept all our receipts last year—no easy task but well worth it for many reasons. The supporting spreadsheet contains 362 entries—so in 2016 we averaged almost one payment of sales tax per day.
Line 3: Use Taxes. In most states, whenever a seller doesn’t collect sales tax the buyer must pay a “use tax,” which is something the state charges to recover its lost revenue on untaxed sales. Colorado includes a line on income tax forms that requires taxpayers to report transactions subject to the use tax. In 2016, this line snared us for $32.00.
Line 4: Auto Ownership Tax. We own a 2006 Toyota RAV4 (tax = $3.00) and a 2010 Toyota Prius (tax = $103.00). Savings tip: buy used cars. In most states, the older the auto the less you pay in tax.
Line 5: Auto License Fees. In Colorado, this charge is based upon the age and weight of the vehicle. We pay less than average because our cars are older and lighter.
Line 6: Gasoline Taxes. For 2016, the federal gas tax was $0.184 per gallon. Colorado charged $0.22 per gallon. For a comprehensive list of state gas taxes, click here.
Line 7: Utility Taxes and Fees. The utility charged us for occupation taxes, climate action plan taxes, and sales taxes (see line 2 above). As discussed in a prior post, we limited these surcharges by limiting our use of gas and electricity.
Line 8: Cell Phone Taxes and Fees. We own two cell phones. One is a flip phone that uses an AT&T pay-as-you-go plan. The other is an iPhone that uses a no-contract plan from Ting.com.
Line 9: Landline/Internet Taxes and Fees. In Colorado, CenturyLink provides internet and a landline. Each month, we’re charged ten different types of taxes and fees: (1) federal excise at 3 percent; (2) state sales at 2.9 percent; (3) county sales at .985 percent; (4) city sales at 3.86 percent; (5) special district sales at 1.1 percent; (6) local 911 at $0.75 per line; (7) Colorado universal service charge; (8) federal universal service fund at 16.7 percent; (9) Colorado Relay Service Fun at $0.05 per line; and (10) city occupation tax at 4.094 percent. For television, we use an indoor antenna that pulls in 45+ channels for FREE. In Maine, where TV reception is lacking, we buy internet/phone/TV from Time Warner for three months. We pay charges similar to Colorado.
Line 10: Lodging Taxes. Last year we paid for seven nights of hotel stays. I’m surprised these taxes weren’t higher.
Line 11: Alcohol Taxes. Last year we spent $608.92 on wine and some beer, much of which we shared with others. The receipts don’t break out the taxes for alcohol so this line reflects an estimate based upon the prevailing tax rates for wine: the feds charge $1.07 per gallon, Colorado charges $0.32 per gallon, and Maine charges $0.60 per gallon. For a complete list of state wine taxes, click here.
Line 12: Trash Removal Tax. The garbage haulers passed along our city’s trash tax: $10.50 per quarter.
Line 13: Dog Tag Fee. This charge is modest so I can’t bark about it too much.
Line 14: Admissions Taxes. Amazingly, our city charges a five percent tax on all movie and event tickets. For us, these taxes were limited because we attended only two movies in 2016 (both were matinees). Maybe we should get out more.
Lines 15-16: Federal and State Income Taxes. These taxes are zero for 2015 and 2016, which reflects rock solid tax planning. For a post that discusses how to legally avoid paying income taxes in early retirement, click here.
Lines 17-18: Tobacco and Marijuana Taxes. We don’t smoke.
Line 19: Sugared Beverage Taxes. Our city adopted this tax last November, but it won’t take effect until later this year. Fortunately, it doesn’t apply to diet beverages, which in caloric terms are the only ones I can afford to drink.
Lines 20-22: Offset Deductions. Our tax story is not all gloom and doom. The first four lines of the chart report taxes which are deductible for those who itemize. In 2016, this saved us federal and state taxes of $1,418.38.
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What obscure taxes do you pay? Share your pain by leaving a YUGE comment below.
Photo by Paul Stumpr