Aero, Chris,
When companies claim X% total taxes paid, how easy is it, whether by accident or not, to include the taxes withheld from employee paychecks? If an employer makes a statement that his company pays, say 45% in taxes, what in reality does it actually include?
Also - I've noticed that whenever the comparison comes up between the high wage earners and the middle class, they include a payroll tax in the high wage tax total, presumable since they have people working for them. Middle class blue collar workers don't pay a payroll tax. They aren't making an honest comparison. In other words, part of that high wage tax total they continually publish appears to include employer type taxes, not just personal taxes. The 29.1% tax for millionaires includes the payroll tax. My tax rate is in the 20's and I'm not paying a payroll tax. So what's the true comparison here?
This may answer some of your questions:
Steve Forbes: Flat Tax is Best Economic Fix
Best way to answer is:
- the US has a federal tax rate, which is graduated, the more you earn, the more you pay. Top rate is 35 or 40% (can't remember because its close to the UK).
- most US states have state income tax. Illinois is one of the highest taxed states.
- there is corporate income tax, and this is broken into two levels:
= corporate taxes which pay up to 35% plus the state's corporate income tax rate.
= Chapter S companies which are taxed on the owners 1040. As the Forbes article says, small companies up to say 50 employees use this system. This avoids the company paying the owner a wage, and then taxing the company itself, and effectively paying tax twice.
Note I am not an accountant, and this is what I know.
When companies claim X% total taxes paid, how easy is it, whether by accident or not, to include the taxes withheld from employee paychecks? If an employer makes a statement that his company pays, say 45% in taxes, what in reality does it actually include?
Also - I've noticed that whenever the comparison comes up between the high wage earners and the middle class, they include a payroll tax in the high wage tax total, presumable since they have people working for them. Middle class blue collar workers don't pay a payroll tax. They aren't making an honest comparison. In other words, part of that high wage tax total they continually publish appears to include employer type taxes, not just personal taxes. The 29.1% tax for millionaires includes the payroll tax. My tax rate is in the 20's and I'm not paying a payroll tax. So what's the true comparison here?
This may answer some of your questions:
Steve Forbes: Flat Tax is Best Economic Fix
Best way to answer is:
- the US has a federal tax rate, which is graduated, the more you earn, the more you pay. Top rate is 35 or 40% (can't remember because its close to the UK).
- most US states have state income tax. Illinois is one of the highest taxed states.
- there is corporate income tax, and this is broken into two levels:
= corporate taxes which pay up to 35% plus the state's corporate income tax rate.
= Chapter S companies which are taxed on the owners 1040. As the Forbes article says, small companies up to say 50 employees use this system. This avoids the company paying the owner a wage, and then taxing the company itself, and effectively paying tax twice.
Note I am not an accountant, and this is what I know.