But of all the fees levied by the notorious taxman, the most unpopular are those that are hidden. We don't mean the frustrating taxes you see added to the end of your cellphone bill at the end of each month (though those can be maddening). We're talking about those that are simply not apparent to the average consumer.

The following is a partial list of the hidden (embedded) taxes.

Gasoline Tax

Fuel taxes always raise eyebrows because consumers generally have no idea what factors make up out-of-control gas prices. (Hint: refining capacity usually causes the price fluctuations.) Still, for every gallon of gas you buy, you fork over 18.4 cents in tax to Uncle Sam. When various state and local taxes and fees are applied, the total amount of the tax on gasoline is 45.8 cents per gallon, on average. That's about 15% of the current gas price, $3.06 per gallon.
Sources: American Petroleum Institute, Energy Information Administration


Payroll Tax

Employers and employees split the cost of payroll taxes--the Social Security, Medicare and miscellaneous taxes you see listed as "FICA" on your paycheck. But many economists argue that you're paid less so that your employer can compensate for tax it pays just to keep you on the payroll. If you earn $97,500 or less, this could mean a 15.3% reduction in your take-home pay. (Half in the payroll tax you pay, half in your employer's share.) According to the Tax Policy Center, about two-thirds of all wage earners fork over more to Uncle Sam in payroll taxes (including the employer's share) than in income taxes.


Social Security Tax

For your entire working life, Uncle Sam takes a chunk of your pay to help pay for Social Security. But when you start receiving a Social Security paycheck, you still may be taxed on some of this income--sometimes as much as 85% of it. If your total income plus half of your Social Security benefits exceeds $34,000 ($44,000 for couples filing jointly), you get stuck paying the 85% rate. Others, who earn less, either have 50% or 0% of their Social Security taxed. Like the AMT, these figures aren't adjusted for inflation, meaning an increasing number of people are being ensnared by the tax. Some price for retiring!
Sources: IRS, Tax Policy Center


Personal Exemption "Tax"

Individuals are entitled to claim a personal exemption for themselves and any dependents they support. The personal exemption acts just like a tax deduction: it reduces your taxable income, so you end up pay taxes on less income.
The personal exemption amount is indexed annually for inflation. For tax year 2011, the personal exemption amount is $3,700.
Sources: CCH, Internal Revenue Service


Sugar "Tax"

Technically it's not a tax, but abnormally high prices for cereal and candy are due to a complex system of price supports and import tariffs designed to help the powerful sugar-producing lobby. According to a U.S. Commerce Department study last year, the 2004 U.S. price of refined sugar was 23.5 cents/pound, compared with the world price of 10.9 cents/pound. As a result, many manufacturers of sugar-containing products have left for Canada and Mexico, where costs are significantly lower. The government says that if sugar were allowed to enter the U.S. duty-free, the result would be taxpayer savings, gains for consumers and job growth.
Source: U.S. Commerce Department


Alternative Minimum Tax

A brief overview of the alternative minimum tax (AMT).

The alternative minimum tax (or AMT) is an extra tax some people have to pay on top of the regular income tax. The original idea behind this tax was to prevent people with very high incomes from using special tax benefits to pay little or no tax. The AMT has increased its reach, however, and now applies to some people who don't have very high income or who don't claim lots of special tax benefits. Proposals to repeal or reform the AMT have languished in Congress for years, but effective action does not appear to be on the horizon. Until Congress acts, almost anyone is a potential target for this tax.

The IRS' National Taxpayer Advocate calls the AMT "the poster child for tax law complexity." And because it's not indexed to inflation, it's ensnaring more of the middle class--particularly families with lots of kids and second mortgages. The AMT affected 4 million taxpayers in 2006, but this number could balloon to 23 million this year if Congress does not fix the problem, as it has done in years past. Why don't lawmakers just eliminate the AMT? Because it's expected to bring in about $800 billion in government revenue over the next 10 years.
Sources: Tax Policy Center, Internal Revenue Service


Employer-Provided Life Insurance Tax

Does your job provide you with life insurance? If so, watch out--any amount of that life insurance policy in excess of $50,000 is considered taxable income, meaning that you pay income, Social Security and Medicare taxes on this amount. The rule applies if your employer pays for any of your life insurance policy. And if you're married? If your employer pays for more than $2,000 in life insurance on your spouse, the entire amount is taxed.
Source: Internal Revenue Service


Gambling "Phantom Winnings" Tax

Planning a trip to Las Vegas soon? You might want to brush up on tax rules as well as your poker skills. Even if you have a net loss at the table, you're still taxed on your winnings. Yes, you can list your losses as a miscellaneous itemized deduction--but you can't deduct more than the total amount of your winnings. And if you're subject to the AMT, you lose these deductions anyway. Gambling, by the way, is not just limited to casinos. It includes lotteries, racetrack betting, raffles and prizes (like a trip or a car).
Sources: CCH, Internal Revenue Service


Airline Ticket Sales

Ever wonder why the price of an airline ticket jumps by $50 or so when taxes and fees are applied? Under current law, you pay a 7.5% ticket tax, a $3.40 segment tax (which increases by about a dime every year) for every leg of your trip, and an airport fee of up to $4.50 per ticket. Fly overseas and you can be charged as much as $30.20 for an international arrival and departure tax. All money goes to fund the Federal Aviation Administration. And these amounts don't even include various Homeland Security Department taxes, such as the $2.50 per ticket "Sept. 11" fee that goes to pay for airport security.
Sources: FAA, Air Transport Association


Cigarette Tax

Like other vices, tobacco products are a popular target for excise taxes. They could also become a lot more expensive very soon. The U.S. Senate is poised to consider a bill that will raise federal taxes on cigarettes from 39 cents to $1 to help fund the Children's Health Insurance Program. State taxes on cigarettes vary dramatically, from 7 cents per pack in South Carolina to $2.575 per pack in New Jersey. Within the last year, 10 states raised their cigarette taxes, and a growing number of localities are doing the same.
Source: CCH



All good reasons to support The Fair Tax!!!!!