by Brian Dooley

Created on: February 25, 2007   Last Updated: February 05, 2010

Have you ever wondered why you just can't ever seem to make enough? No matter what you do, finding a job that pays enough or even provides livable raises, is as elusive as Big Foot or Loch Ness?

The real reason is more complicated than it seems; Taxes. And no, not just filling out the 1040 long form.

Before I give you some tips to KEEP more of your money, let's look at why the difference between "Gross" and "Net", really is gross. As an employee, it's a common misconception that your salary or wages is all that the employer is paying for your services. It's not. You've seen on your own pay stubs, that what you earn, isn't all that you get to keep. More specifically, your Gross and Net. That difference is of course, taxes.

But here's what's going on behind the scene. Your employer matches those taxes, dollar for dollar to the government, in addition to Unemployment and other requirements, as mandated by state and federal law, to boot. So while you might be thinking, I only make $40,000 a year, your employer is really thinking you're costing them $50,000.

It's no wonder your pay raises are so small! The last thing any business wants is more red ink. But that's not the worst of it. You and I take what's left, spend our money on all the things in our "expenses" column in the budget, on taxable goods and services! So we take after-tax dollars, to buy things that have further taxes on them, ie sales tax.

In a recent study "Does it Pay, at the Margin, to Work and Save?" by Laurence J. Kotlikoff and David Rapson. These two economists from Boston University pegged our marginal tax rate at a whopping 40%, give or take a few percentage points. So on average, for every dollar that you earn, that means only $.60 cents of that can you use to buy all your "stuff". Now, I don't want to argue the tax system, I like and use many of the benefits that my $.40 cents buys every day. From road construction to national security, I think pennies on the dollar is pretty cheap, for what it would cost me to provide those things, if I did it myself.

But how do you KEEP more of what you make.

First, go 1099. Obviously, this doesn't mean quit what you're doing, but start looking for ways to own your own side business. Just the tax savings alone justifies a few hours of your time to be involved in a legitimate, income earning business that allows you to take extra deductions on your taxes. From work at home to freelance writing, you could literally save yourself thousands depending on what

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