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I would take the opposite stance. My opinion is that the employer pays not only the employer portion but the employee portion too. Of course they also pay the employee's salary.
When it comes to money the government spends, be it good or bad expenses / programs, there is only one place it can come from... the people. It may trickle through any number of channels but it starts with us, and there are thousands of ways used to modify, justify, and obscure the fact.
I would take the opposite stance. My opinion is that the employer pays not only the employer portion but the employee portion too. Of course they also pay the employee's salary.
And that’s the way I see it. And the way the IRS sees it.
You can say all day that you as an employee are paying the employer portion of fica, but at the end of the day, they are paying it and they are getting the tax deduction. If Congress got rid of the employer FICA match, I guarantee many occupations couldn’t command the 7.65 raise.
Would employee's pay go up if payroll taxes were eliminated? No. Those funds would go to profits. For the last 15 years that's been the trend: as productivity and profitability increases, wages have been flat. Corporations are not sharing their success with employees.
exactly. Yes, it's a tradeoff but the idea that employers would just increase wages by the amount they pay in payroll taxes rather than keeping that money as profit is laughable.
The points are a) the gov't lies to us by perpetuating this bookkeeping fiction; b)most Americans are not aware of it/don't understand it. A third point might be that few public schools have ever taught economics. IMO that is because the gov't doesn't want people to understand things like this.
No, the points are that the only economic sleight of hand is on your part by calling a direct expense to one party an indirect expense to another party. (Anything the employer pays actually comes from the customer.) Your mistake is the assumption that the expense would have otherwise ended up in the employee's check. Do you really think if the employer didn't have to send in that other 6% SS that they would just add it onto the paycheck instead?
And that’s the way I see it. And the way the IRS sees it.
You can say all day that you as an employee are paying the employer portion of fica, but at the end of the day, they are paying it and they are getting the tax deduction. If Congress got rid of the employer FICA match, I guarantee many occupations couldn’t command the 7.65 raise.
This- but 1 change - there would be zero companies passing along the 7.65% to the employees.
Plus there is no social security trust fund.. that 15% amounts to a promise to pay you social security benefits that may or may not exist in the future, in the meantime it's basically just extra income tax on top of your base income tax rate. Social security is not sustainable with declining global birth rates and ever increasing lifespans. A point will occur when our welfare systems are simply going to go bankrupt and be unsustainable.
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.
This is a ridiculous subjects...and, yes, I was an employer who matched SS, etc. for my employees.
It's like saying "on a hot day, your employees pay you for air conditioning".
Or "your employees pay you for your sewer and water bill"
or "We all breathe air".....
Of course all payments and benefits come out of the employee, customer, supplier or your own pocket - where else would they come from?
Social security is not sustainable with declining global birth rates and ever increasing lifespans. A point will occur when our welfare systems are simply going to go bankrupt and be unsustainable.
You should know better. A "point" doesn't come. What happens is that adjustments are made, tax laws changed, payouts slightly reduced for those who have millions anyway...and other adjustments to make certain that the former promises can be kept.
It's not like one day the Gubment says "that's all folks!"....like a cartoon.
WRONG.
All taxes come out of the pocket of the consumer.
Where else does the employer get the money to pay his employees?
And you can bet that the price is bumped high enough to cover his costs and still make a profit.
Or he goes bust.
Which also means if government ceased taxing business and labor, prices would plummet.
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