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Old 05-30-2018, 03:35 PM
 
Location: Aurora Denveralis
3,084 posts, read 1,040,161 times
Reputation: 3937

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I'm absolutely baffled why there's any argument about this; of course the expense of employer taxes affects the net compensation, even if it's rarely noticed or discussed or considered in that light.

Everything your employer spends money on affects compensation. Fancy fifth-floor offices? It's reducing your paycheck. Fabulous break room with free food? Ditto. Exercise room? Matching 401(k)? Drive-home company cars? All expenses that would otherwise show up in salary, albeit indirectly and with fuzzy accounting.

Treating this like it's some kind of evil capitalist/gummint conspiracy is just slack-jawed nonsense. Every employer who isn't an idiot (or VC-fueled, which is often the same thing) looks at an employee's total cost, not just a pay rate or salary amount, and offers that rate or salary with all those factors in mind. You get $50k but she knows you're actually costing the company $60-65k.
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Old 06-02-2018, 10:51 PM
 
1,037 posts, read 561,875 times
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Due to legally mandated minimum wage rates, employers cannot reduce their employees' wages beyond that legal rate. The total cost to employers of a $7.25 employees with no fringe benefits is (1.0765)(7.15) = $7.8046 per regular hour. That's the federal minimum gross cost to the enterprise.

The gross cost to employers of a $7.81 employees is (1.0765)(7.81) = $8.407 per regular hour.
Which is $7.81 + 0.5974 = gross pay + employers FICA = $8.407/Hr.

If the labor market rates permitted the employer to hire a $7.81 worker for $7.25 an hour, the enterprises' costs will be reduced by (8.407 – 7.8046) = $0.5928 Reg Hrly cost reduction.

But that requires that there is no loss of production quality, volume, or labor availability if we reduced pay from $7.81 to be $7.25/Hr.

Similarly, if we reduced $10/Hr to $9.29 Hr, or $20/Hr to $18.58/Hr., or $30/Hr to $27.87/Hr.

All of these figures are for regular hours.
Employers will still have to pay 0.03825 additional FICA tax applied to employees' reduced rates for each additional hour beyond the 40 hour week.

As I posted before, the employers cannot pay less than the minimum wage and their ability to shift their expenses onto employees or customers are subject to the constraints imposed by the suppliers' and the sales' markets that enterprises must function within. Labor markets are just another among specialized supplier markets that enterprises must deal with.

Last edited by toosie; 06-03-2018 at 06:03 AM..
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Old 06-03-2018, 09:20 AM
 
349 posts, read 414,165 times
Reputation: 467
Employers have a single budget line item for employees: Employee compensation. It's irrelevant how you divide that expense between wages, [employer] payroll taxes and benefits. If [employer] payroll taxes decrease then there is more available for wages and benefits.

The question of whether that 7.65% payroll tax decrease gets reallocated to other categories of employee compensation or to profits depends entirely on the composition of your employees. If they have skills that are difficult to find then they will get an immediate 8% raise. If a warm body can do the job then it goes to profits. Right now there are not enough skilled people for the positions needing filled.
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Old 06-03-2018, 10:52 AM
 
1,037 posts, read 561,875 times
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Quote:
Originally Posted by Cuero View Post
Employers have a single budget line item for employees: Employee compensation. It's irrelevant how you divide that expense between wages, [employer] payroll taxes and benefits. If [employer] payroll taxes decrease then there is more available for wages and benefits.

The question of whether that 7.65% payroll tax decrease gets reallocated to other categories of employee compensation or to profits depends entirely on the composition of your employees. If they have skills that are difficult to find then they will get an immediate 8% raise. If a warm body can do the job then it goes to profits. Right now there are not enough skilled people for the positions needing filled.
Cuero, thank you for providing s briefer and simpler (than my) explanation.
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Old 06-03-2018, 01:13 PM
 
Location: Raleigh NC
7,781 posts, read 6,136,961 times
Reputation: 6905
Quote:
Originally Posted by wutitiz View Post
Here is another piece I ran across on payroll taxes.
https://taxfoundation.org/what-are-p...who-pays-them/
Quote:
This means that, rather than workers and employers each paying 7.65 percent in payroll taxes, employers send their portion of the tax to the government and then decrease workers’ wages by almost 7.65 percent. Next, workers pay their 7.65 percent share on those wages. In effect, there is hardly such a thing as the “employer-side” payroll tax, because almost the entire burden of the payroll tax is passed on to employees in the form of lower wages.
In a philosophical/scientifically-studied world, of course - the employer *might* have paid the employer more.

If the world worked like the ivory tower crew posited, then ALL employment would shift where the cost of labor is lowest. There's nothing that keeps Wall Street in NYC or Microsoft in Seattle - both could move with low capital requirement anywhere they wanted for the lowest labor cost and employ nothing but WFH people.

But given the reality that the part-time employee that I "pay" $15 hour the payroll folks charge me $16.15/hr so the employer-side gets paid. Then they withhold the employees' 7.65% ... and they submit the total to the government. it doesn't sit in my account, and it doesn't ever go into the employee's account.

If we did away with MANDATORY FICA funding, and let all those employees who opted out fend for themselves come retirement age, would many employers "pay" their employees 107.65% of their former wage? Sure. And if the laborer didn't get it from this employer, then they'd weigh that against other employers' whose wages went to 107.65%.
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Old 06-03-2018, 01:14 PM
 
Location: Raleigh NC
7,781 posts, read 6,136,961 times
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in sum, the employer and employee portion are MANDATED by the US Gov't. There is no option to pay or receive it as wages instead.
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Old 06-05-2018, 10:49 PM
Status: "Career Changer" (set 7 days ago)
 
1,020 posts, read 293,745 times
Reputation: 1372
Quote:
Originally Posted by TaxPhd View Post
When tax time comes around, do you just give the government all of your money, or do you look for ways to reduce what you owe?
Ordinary people can't use the 50 million myriad ways that big corporations use to not pay taxes.

Middle class person making $100K will be paying taxes.
Corporation making $100M can use one of the 50 million loopholes and oh look, they're paying zero income tax here.

What was that about Warren Buffet saying his secretary pays more taxes?

The income tax laws are written to enrich cronies.
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Old 06-05-2018, 11:35 PM
 
Location: Olympus Mons, Mars
5,000 posts, read 8,043,790 times
Reputation: 4931
it's not fiction... if employers share of SS was not paid they wouldn't give it to you they would just pocket it for themselves. You seem to think employers are going to voluntarily hand that to you? LMAO!
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Old 06-06-2018, 06:09 AM
 
10,276 posts, read 6,519,194 times
Reputation: 10857
Quote:
Originally Posted by wutitiz View Post
I learned eons ago in econ 101 that the "employer's share" of social security contributions amounts to a bookkeeping fiction, an economic sleight of hand. Officially, the current rates are 6.2% (of income) paid by the employer, and 6.2% by the employee, for a total of 12.4%. There's also a 1.45% payment by employer and employee for Medicare.


All told, it adds up to 15.3% of every paycheck, capped currently at $128,400/yr.


The truth is that all 15.3% comes out of the employees' pockets. This is generally true of payroll taxes. The Congressional Budget Office is staffed with bunches of PhD economists who understand this. For all analysis,


https://www.cbo.gov/sites/default/fi...xRates2006.pdf



I knew a guy who owned a real estate business. When I told him the entire 15.3% comes out of employees' pockets, he looked at me in disbelief. "I write those [SS] checks," he exclaimed. I bet that not one in 100 Americans understand this, even though Social Security is not far from being 100 years old.
Your argument is silly and makes no sense. So your thought is that the employee is paid a few % less because the employer has to pay their part of the contribution, it's just not so, case in point minimum wage, they don't pay less because they have to contribute with the employers share.
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Old 06-06-2018, 08:00 AM
 
5,233 posts, read 2,384,691 times
Reputation: 5119
Quote:
Originally Posted by bobsell View Post
Ordinary people can't use the 50 million myriad ways that big corporations use to not pay taxes.
The point, that you’ve failed to understand, is that everyone, rich and poor alike, do what they can to legally reduce their tax liability. It is the height of hypocrisy for an individual to do it, while vilifying a corporation for doing the same.

Quote:
Middle class person making $100K will be paying taxes.
Corporation making $100M can use one of the 50 million loopholes and oh look, they're paying zero income tax here.
Tell us about the “loopholes” that corporations use to pay zero income tax. Be specific.

Quote:
What was that about Warren Buffet saying his secretary pays more taxes?
Buffet didn’t say that.
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