In USA you make less money every paycheck because of a "hidden" tax

a reply to: Fools

There is nothing free in this country. We have a centrally planned economy bordering on socialist

originally posted by: Phage
a reply to: Fools

Oh, I see.

Yes. Taxes are a business expense.

Should your employer tell you how much they pay for paperclips too?

I am saying that the tax rate is too high and the money the feds collect is wasted on so much nonsense that maybe they deserve the haircut instead of the citizens.

Groups with less money coming in will tend to obey the rules of finance. Then again, in the USA, maybe not.

a reply to: Fools
Your quote:

FUTA, is an employer tax that most employers pay to the federal government to provide funds for paying unemployment compensation to workers who have lost their jobs.

FUTA costs most employers about $42 per year for each employee.

originally posted by: Fools

originally posted by: sligtlyskeptical

originally posted by: Fools
For people that think we do not pay enough taxes, I am not sure if you are aware that your employer has to match (up to a certain amount) all of your federal tax deductions. So you think they are just taking 20% to 25%? Think again.

Federal Income Tax The federal income tax is a payroll tax that employers must withhold from an employee’s wages or salary. At the end of the year, the employee reports the amount of tax withheld and compares it against their actual tax liability. Employers are responsible for depositing the withheld tax money throughout the year. Most employers can make these deposits quarterly, monthly or semi-weekly, although there are instances when deposits may be made within one banking day. Social Security and Medicare Taxes Taxes for Social Security and Medicare are generally paid equally by the employer and employee in order to fund these entitlement programs. Employers must withhold a certain percentage from the first $113,700 of an employee’s salary or wages. The percentage amount in 2013 is 6.2 percent. Employers must then pay a matching rate. In general, depositing requirements for Social Security and Medicare taxes will follow those for federal income tax withholdings. Businesses can refer to several IRS forms found in IRS Publication 15 and Publication 51. Businesses must file specific federal returns in a timely manner throughout the tax year to avoid penalties and interest. Federal Unemployment Tax The Federal Unemployment Tax, or FUTA, is an employer tax that most employers pay to the federal government to provide funds for paying unemployment compensation to workers who have lost their jobs. Deposit schedules for FUTA is based on FUTA liability. Due dates can be found on IRS Form 940 instruction material. These payroll and employment taxes must be competently managed by employers, or turned over to a professional to ensure compliance with tax and payment responsibilities to the federal and state governments.

www.paychex.com...



www.irs.gov...

Employer pay 6.2% social security as does the employee. The employer pays none of the federal or state taxes, they just withhold it and submit it for you.

You also are completely WRONG

Social security and Medicare taxes, also known as FICA taxes must be withheld from your employees' wages. As an employer, you must also pay a matching amount of FICA taxes for your employees. Currently the social security tax rate is 6.2%.

www.alllaw.com/articles/tax/article5.asp

My post says exactly what your reply said, yet you call me wrong. The employer matches no federal or state taxes. On this point you are 100% wrong.

a reply to: Phage

Correct. These have pretty much always been there so when more regulations are added and fees for this and fees for that and more fees for employees it is easy to see how an economy call stall.

One of the main reasons I was glad Gillum did not win in FL was his interest in a State Tax. No thanks....

a reply to: matafuchs

Yeah. Worker's comp shouldn't be required.
Just let injured employees sue. Much cheaper for everyone.

originally posted by: sligtlyskeptical

originally posted by: Fools

originally posted by: sligtlyskeptical

originally posted by: Fools
For people that think we do not pay enough taxes, I am not sure if you are aware that your employer has to match (up to a certain amount) all of your federal tax deductions. So you think they are just taking 20% to 25%? Think again.

Federal Income Tax The federal income tax is a payroll tax that employers must withhold from an employee’s wages or salary. At the end of the year, the employee reports the amount of tax withheld and compares it against their actual tax liability. Employers are responsible for depositing the withheld tax money throughout the year. Most employers can make these deposits quarterly, monthly or semi-weekly, although there are instances when deposits may be made within one banking day. Social Security and Medicare Taxes Taxes for Social Security and Medicare are generally paid equally by the employer and employee in order to fund these entitlement programs. Employers must withhold a certain percentage from the first $113,700 of an employee’s salary or wages. The percentage amount in 2013 is 6.2 percent. Employers must then pay a matching rate. In general, depositing requirements for Social Security and Medicare taxes will follow those for federal income tax withholdings. Businesses can refer to several IRS forms found in IRS Publication 15 and Publication 51. Businesses must file specific federal returns in a timely manner throughout the tax year to avoid penalties and interest. Federal Unemployment Tax The Federal Unemployment Tax, or FUTA, is an employer tax that most employers pay to the federal government to provide funds for paying unemployment compensation to workers who have lost their jobs. Deposit schedules for FUTA is based on FUTA liability. Due dates can be found on IRS Form 940 instruction material. These payroll and employment taxes must be competently managed by employers, or turned over to a professional to ensure compliance with tax and payment responsibilities to the federal and state governments.

www.paychex.com...



www.irs.gov...

Employer pay 6.2% social security as does the employee. The employer pays none of the federal or state taxes, they just withhold it and submit it for you.

You also are completely WRONG

Social security and Medicare taxes, also known as FICA taxes must be withheld from your employees' wages. As an employer, you must also pay a matching amount of FICA taxes for your employees. Currently the social security tax rate is 6.2%.

www.alllaw.com/articles/tax/article5.asp

My post says exactly what your reply said, yet you call me wrong. The employer matches no federal or state taxes. On this point you are 100% wrong.

Social security and Medicare taxes, also known as FICA taxes must be withheld from your employees' wages. Social security and Medicare taxes, also known as FICA taxes must be withheld from your employees' wages. As an employer, you must also pay a matching amount of FICA taxes for your employees. Currently the social security tax rate is 6.2%.Currently the social security tax rate is 6.2%.

Did you read that in the bold? I am not sure what you are not getting. If you know ANYONE that owns a business that has actual employees that they do not pay cash only - ask them - they will tell you what I am saying. They have to match the taxes. They do not just take them out ahead of time. They have to match them.

a reply to: SeaWorthy

I Thought President Trump was Stopping Tax Scams like this , or is this State Related Taxes ?

originally posted by: schuyler
OP's premise is false. He is discussing unemployment insurance. This is paid by the employer not the employee. It does not reduce an employee's paycheck except insofar this is a business expense of the employer that affects the bottom line. If you are laid off through no issue of your own, you get "unemployment." Where do you think the money to pay you comes from? This is what pays for it. In my state it is collected by the state, not the Feds, and is usually about 3.5%. If your employer frequently lays off people, his "experience rating" goes up and so does the percentage. If you are a government employee, whether a library or a city, your employer is on a "reimbursable" basis and pays dollar for dollar for what it costs with zero % paid as a "tax."

Unemployment Compensation is a complex subject, and I do not want to write a thesis on it here. I once worked for the Dept. of Employment Security that administers unemployment. There's a lot to it. In times of great unemployment, you get to collect longer. When unemployment is low, the number of weeks you can collect is less.

Industrial Insurance is similar, but this time the employee contributes half. This is to pay for on-the-job accidents. A clerical employee pays very little per hour, a few cents. A construction worker or a logger pays a great deal. This pays for medical bills, replaces salary, and pays "disabled" people who can no longer work. It is actually a lot bigger than the unemployment system. I once broke my arm when I slipped on wet grass, but because I had just stepped onto company property from the sidewalk, state industrial paid for the whole thing. I never saw a bill.

The major point here about unemployment is that it is NOT A HIDDEN TAX at all and the EMPLOYEE DOES NOT PAY FOR IT. Alas, ATS is full of this stuff and simply cannot be trusted. A good example of Fake News.

Well said. If anyone, someone who has owned a small business knows very well also. So much delusion in the wind lately.

a reply to: Fools

I believe sligtlyskeptical is referring to Federal and State Income Tax.
The employer does not match Federal and State Income Tax.

originally posted by: BlueAjah
a reply to: Fools

I believe sligtlyskeptical is referring to Federal and State Income Tax.
The employer does not match Federal and State Income Tax.

I don't know what they are referring to. The employer does match Federal income taxes. I never said Federal and state.

It is not a mere withholding, as the employee is paying the withholding. It is a match. It is what an employer pays to have an employee to work for him to the Federal tax system. It is to me nothing more than double taxation. As well as taxation without representation. It basically says, "If you start a business and hire someone you have to pay us for the right to employ someone."

I am not sure how this cannot be clear to people.

All of you that say I am not accurate. Please read this below:

"What is included in mandatory federal payroll taxes?
While the withholding percentage may vary from employee to employee, all employees are subject to a minimum of federal payroll taxes. These taxes are specified in the Federal Insurance Contributions Act (FICA) and include federal income, Social Security, federal unemployment, and Medicare taxes. These tax-withholding rules apply regardless of whether employees are part-time, seasonal, or full time.

In addition to the minimum required federal payroll taxes, different states may require specific withholdings as well. Here are some additional details on federal and state payroll taxes:

Federal income tax and state income tax (where applicable) are withheld by the employer from all employees' wages, based on the information provided by employees on their Form W-4.
Social Security tax (FICA) is calculated on a percent tax for both Social Security and Medicare on all wages. Both of these taxes are split equally between employees and employers so that each pays 6.2 percent for Social Security and 1.45 percent for Medicare. Since 2013, employers have also had to withhold an additional 0.9 percent Medicare tax for annual wages paid to an employee in excess of $200,000 ($250,000 for employees who are married and file taxes jointly).
Federal Unemployment Tax Act (FUTA) is collected to help fund the nation's unemployment insurance system.
State unemployment tax rates vary by state. Except for a few states, state unemployment taxes are not deducted from employee wages. Consult your tax advisor on the specifics for your location."

In the third paragraph it states:

"Both of these taxes are split equally between employees and employers so that each pays 6.2 percent for Social Security and 1.45 percent for Medicare."

Split equally between employees and employers.

Why does that not make sense to some of you?

Taken from this link:
www.paychex.com...

a reply to: Fools

"Both of these taxes are split equally between employees and employers so that each pays 6.2 percent for Social Security and 1.45 percent for Medicare."

Do you not know the difference between income tax and payroll tax?

Payroll taxes are paid by both the employer and the employee.

Income taxes are paid by the employee and withheld by the employer. If, at the end of the year, too much income tax has been withheld you will receive a refund. If you're smart about it, that refund will be as small as possible.

Did you just enter the workforce very recently? Do you not receive a W2? Do you not file income tax returns?

I find it very odd that the deductions are not itemized on your pay stub.

originally posted by: sligtlyskeptical

originally posted by: Fools

originally posted by: sligtlyskeptical

originally posted by: Fools
For people that think we do not pay enough taxes, I am not sure if you are aware that your employer has to match (up to a certain amount) all of your federal tax deductions. So you think they are just taking 20% to 25%? Think again.

Federal Income Tax The federal income tax is a payroll tax that employers must withhold from an employee’s wages or salary. At the end of the year, the employee reports the amount of tax withheld and compares it against their actual tax liability. Employers are responsible for depositing the withheld tax money throughout the year. Most employers can make these deposits quarterly, monthly or semi-weekly, although there are instances when deposits may be made within one banking day. Social Security and Medicare Taxes Taxes for Social Security and Medicare are generally paid equally by the employer and employee in order to fund these entitlement programs. Employers must withhold a certain percentage from the first $113,700 of an employee’s salary or wages. The percentage amount in 2013 is 6.2 percent. Employers must then pay a matching rate. In general, depositing requirements for Social Security and Medicare taxes will follow those for federal income tax withholdings. Businesses can refer to several IRS forms found in IRS Publication 15 and Publication 51. Businesses must file specific federal returns in a timely manner throughout the tax year to avoid penalties and interest. Federal Unemployment Tax The Federal Unemployment Tax, or FUTA, is an employer tax that most employers pay to the federal government to provide funds for paying unemployment compensation to workers who have lost their jobs. Deposit schedules for FUTA is based on FUTA liability. Due dates can be found on IRS Form 940 instruction material. These payroll and employment taxes must be competently managed by employers, or turned over to a professional to ensure compliance with tax and payment responsibilities to the federal and state governments.

www.paychex.com...



www.irs.gov...

Employer pay 6.2% social security as does the employee. The employer pays none of the federal or state taxes, they just withhold it and submit it for you.

You also are completely WRONG

Social security and Medicare taxes, also known as FICA taxes must be withheld from your employees' wages. As an employer, you must also pay a matching amount of FICA taxes for your employees. Currently the social security tax rate is 6.2%.

www.alllaw.com/articles/tax/article5.asp

My post says exactly what your reply said, yet you call me wrong. The employer matches no federal or state taxes. On this point you are 100% wrong.

In Ca if you pay an employee $65,000 you pay 5,427.50

As of September 2018, the Federal Unemployment Tax Act (FUTA), California State Unemployment Insurance (SUI), and California Employment Training Tax (ETT) are only applied to the first $7,000 of an employee’s wages. That means that you’ll have to pay the same taxes for each employee who earns at least $7,000. The Social Security and Medicare taxes are far more significant. Employers are responsible for 6.2 percent on the first $128,400 of an employee’s wages, up to a maximum of $7,960.80. In contrast, Medicare has no ceiling at all. Employers pay 1.45 percent on all of an employee’s wages.

The main taxes employers have to pay in California as of June 2018

Social Security: Social Security is a federal insurance program that provides benefits to retired employees and the disabled. As noted above, employers must pay 6.2 percent of taxable wages on the first $128,400. In some places, you might see this referred to as “FICA” or the “Federal Insurance Contributions Act,” and that refers to the combination of Social Security and Medicare.

Which brings us to our next tax:
Medicare: Medicare is a federal system of health insurance for people over 65 and younger people with disabilities. Employers must pay 1.45 percent on all of an employee’s wages.

Federal Unemployment: The Department of Labor oversees state programs that provide unemployment benefits to workers who become unemployed because of an incident out of their control (like a location closing) and meet certain other eligibility requirements. FUTA is 6 percent on the first $7,000 of an employee’s wages. However, most California employers are expected to pay 3 percent in 2018 because they also pay state unemployment, which is worth a 3 percent credit against their FUTA.

California Unemployment: A state-sponsored insurance program, California provides benefits to unemployed workers, the disabled, and those on paid family leave. California SUTA is 1.5-8.2 percent on the first $7,000 of an employee’s wages. This rate is given to you by the state and can be influenced by how long you’ve been in business, the number of employees you have, the amount of unemployment benefits that have been charged to your account, as well as other factors. Because it varies by company, we’ve used the standard rate that’s assigned to new employers in our calculations above. Employment Training Tax: The ETT provides funds to train employees in targeted industries. Employers must pay an extra 0.1 percent on the first $7,000 of wages per year.

gusto.com...

originally posted by: BlueAjah
a reply to: Fools

I believe sligtlyskeptical is referring to Federal and State Income Tax.
The employer does not match Federal and State Income Tax.

Social security and Medicare taxes, also known as FICA taxes must be withheld from your employees' wages.

As an employer, you must also pay a matching amount of FICA taxes for your employees. Currently the social security tax rate is 6.2%. ... The employer also must pay State and Federal Unemployment Taxes (SUTA and FUTA).

Social Security tax (FICA) is calculated on a percent tax for both Social Security and Medicare on all wages.

Both of these taxes are split equally between employees and employers so that each pays 6.2 percent for Social Security and 1.45 percent for Medicare.

originally posted by: Phage
a reply to: Fools

"Both of these taxes are split equally between employees and employers so that each pays 6.2 percent for Social Security and 1.45 percent for Medicare."

Do you not know the difference between income tax and payroll tax?

Payroll taxes are paid by both the employer and the employee.

Income taxes are paid by the employee and withheld by the employer. If, at the end of the year, too much income tax has been withheld you will receive a refund. If you're smart about it, that refund will be as small as possible.

Did you just enter the workforce very recently? Do you not receive a W2? Do you not file income tax returns?

I find it very odd that the deductions are not itemized on your pay stub.

I find it very odd that you refuse to see what I am stating and what is also a fact. I do see these deductions on my payroll tax. What no one sees is that the same amount is deducted from the employers tax deductions. Seriously, are you this daft? Or is someone paying you to be the way you are?

a reply to: Fools

What no one sees is that the same amount is deducted from the employers tax deductions.

I've known that for a long time. Did you ever ask anyone what those deductions were for? They may have explained it to you.

But so what? Would you rather pay the full amount yourself?

Or maybe you think Medicare and Social Security should just stop? Come to think of it, if you're young, I could sort of understand that point of view.

a reply to: Fools

Please read this below:

I owned and ran a corporation for 10 years. There is no requirement to match income tax. None. Zero. Zip. Nada.

The FICA tax is not income tax. FICA finances Social Security and Medicaid (or is it Medicare? I get those two mixed up). The employer matches the FICA tax; they pay half and the employee pays half. Unemployment tax and Workers Comp tax are both paid completely by the employer; Unemployment tax is based on your turnover and salaries paid, while Workers Comp is based on your industry. A roofer in Alabama back then was paying almost 100% of the worker's wage, while an office worker cost their employer a tiny fraction for Workers Comp.

You're right about one thing: it's expensive as all get-out to hire someone. You have the FICA, FUTA, and SUTA taxes directly, then the cost of someone to handle the bookkeeping (even if you do it yourself, that's still time and time is money). Now add in office space, equipment and supplies (which employees seem to not care how much they waste; it's not their supplies), lost time due to illness and vacation, and time spent dealing with disciplinary issues.

I didn't include drug testing because that's intended to be less expensive than the lost time from a drug user. But we still pay for it. 401k costs too, but usually only after an employee is vested, and by then they're worth it.

Now include health insurance. That's the biggie. That can come close to matching the salary depending on what coverage you get and what state you're in. The bigger companies have a huge advantage there, as they can negotiate with the insurance companies to lower rates. They're not bringing 10 or 20 accounts; they're bringing 10,000 or more! They get a discount.

All in all, just estimating, it can cost a small employer hiring a worker at $10 an hour (~$20k/year) something along the lines of $40-$50,000/year. On that point you are partly correct: the government is making hiring people too expensive. But a lot of that is also not government... it's the people you hire. Too many take off with no notice far too often (and I know usually when they're taking a sick day just because they didn't get up in time) and then slough off as much as possible during work because they don't think they make enough. They just don't realize their actual cost to their employer.

That's not to say all employees are like I describe above, now. A good employee is worth their weight in gold. It's just that too many are like I describe in my experience.

So you're right about how expensive an employee is... wrong that it is all due to the government... and exactly wrong about income taxes.

TheRedneck

OP. You might as well have said you are making less on your paycheck because of the "hidden costs" of health insurance, fuel, toiletries, etc. You don't seem to have a good grasp on what is a business expense and what is a tax on employee dollars.

The average employee is pretty aware of how his wages are taxed (at least in dollars), and everything else is just a cost of doing business like liability insurance, bonding, safety supplies, accounting costs etc. etc. These are all relatively "hidden", and have far more impact to potential salaries than some trivial FICA match.

I guess...what is your point? What should be done differently? Should every pay-stub be required to show the cost details of running the business so you can be more happy or sad about the fairness of you wage? Where does it stop? Bottled water, water/gas/electric uitilities, internet. Most of those all have a greater impact.

originally posted by: TheRedneck
a reply to: Fools

Please read this below:

I owned and ran a corporation for 10 years. There is no requirement to match income tax. None. Zero. Zip. Nada.

The FICA tax is not income tax. FICA finances Social Security and Medicaid (or is it Medicare? I get those two mixed up). The employer matches the FICA tax; they pay half and the employee pays half. Unemployment tax and Workers Comp tax are both paid completely by the employer; Unemployment tax is based on your turnover and salaries paid, while Workers Comp is based on your industry. A roofer in Alabama back then was paying almost 100% of the worker's wage, while an office worker cost their employer a tiny fraction for Workers Comp.

You're right about one thing: it's expensive as all get-out to hire someone. You have the FICA, FUTA, and SUTA taxes directly, then the cost of someone to handle the bookkeeping (even if you do it yourself, that's still time and time is money). Now add in office space, equipment and supplies (which employees seem to not care how much they waste; it's not their supplies), lost time due to illness and vacation, and time spent dealing with disciplinary issues.

I didn't include drug testing because that's intended to be less expensive than the lost time from a drug user. But we still pay for it. 401k costs too, but usually only after an employee is vested, and by then they're worth it.

Now include health insurance. That's the biggie. That can come close to matching the salary depending on what coverage you get and what state you're in. The bigger companies have a huge advantage there, as they can negotiate with the insurance companies to lower rates. They're not bringing 10 or 20 accounts; they're bringing 10,000 or more! They get a discount.

All in all, just estimating, it can cost a small employer hiring a worker at $10 an hour (~$20k/year) something along the lines of $40-$50,000/year. On that point you are partly correct: the government is making hiring people too expensive. But a lot of that is also not government... it's the people you hire. Too many take off with no notice far too often (and I know usually when they're taking a sick day just because they didn't get up in time) and then slough off as much as possible during work because they don't think they make enough. They just don't realize their actual cost to their employer.

That's not to say all employees are like I describe above, now. A good employee is worth their weight in gold. It's just that too many are like I describe in my experience.

So you're right about how expensive an employee is... wrong that it is all due to the government... and exactly wrong about income taxes.

TheRedneck

Thank you, I am only talking about FICA. If FICA was not going to bankrupt programs then all might be well. I do believe that most people are unaware that their employee is matching them on FICA. I suppose I should have done a poll before making the initial post. To me, FICA is a tax. I know that some people for whatever reason don't look at it that way.

If I was conveying that regular federal taxes were matched. I was wrong. My apologies.

I suppose I am one of the few people that think Social Security and Medicare are total failures and it aggravates me that so much is put into them and they are out of money. Where does it all go? What is the fix? Is there a fix? I am sure eventually the fix will be a tax increase.

There are some states that make employers match various taxes as well.