Re: [DMCForum] THE US TAX SYSTEM IS A FLAT TAX NOT A PROGRESSIVETAX SYST
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Re: [DMCForum] THE US TAX SYSTEM IS A FLAT TAX NOT A PROGRESSIVETAX SYSTEM
- From: Bob Brandys <BobB@xxxxxxxxxxxxxx>
- Date: Sun, 24 Oct 2004 20:21:15 -0500
When I was in the corporate world, I was responsible for that management
of taxation systems on employee wages. This was a very enlightening
responsibility. It taught me that the US tax systems is actually a flat
tax system. Here are the taxes and how they work.
First of all, these taxes are always present. You can't hire a person
without paying these taxes. Consequently, even if you only pay
someone minimum wage, these tax cost are still part of the total cost of
employment for that employee. Here are the taxes and how they work.
1. Federal Unemployment taxes. THis is a 1% tax on the first 9000 of
wages. This means that after you make over $9000 THIS TAX NO LONGER
APPLIES. THIS MEANS THAN LOW INCOME PEOPLE ARE ALWAYS HIT WITH THIS TAX. .
2. State Unemployment taxes. This is generally a 5% tax on the first
$7000 of wages. This means that after you make over $7000 THIS TAX NO
LONGER APPLIES. THIS MEANS THAN LOW INCOME PEOPLE ARE ALWAYS HIT WITH
THIS TAX.
3. Worker's Compensation Tax. This is a percent of total wages that is
based on the injury rate for the type of job. Low income employees have
more risky jobs that executives.
The typical tax rate on low income employees is $4 per $100 payroll.
The typical tax rate on high income employees is $0.88 per $100 payroll
(For simplicity sake I use $1 per $100 payroll)
4. Social Security tax. This is 12.4% of payroll up to the social
security maximum. The social security maximum wages is about $85,000.
This means after you make $85,000 YOU NO LONGER PAY THIS TAX. THIS
MEAN HIGH INCOME EMPLOYEES HAVE A 12.4% TAX DECREASE.
5. Medical TAX This is 1.38% of payroll up to the medical tax maximum.
The medicare tax maximum wages is about $135,000. This means after you
make $135,000 YOU NO LONGER PAY THIS TAX. THIS MEAN HIGH INCOME
EMPLOYEES HAVE ANOTHER 1.4% TAX DECREASE.
6. State Income Tax. For most states, this is a flat tax rate. It is
not progressive. There are a few states where it is slightly
progressive, but still a very small percentage. Some states have no
income tax at all. However, I use a national average of 3%.
7. Federal Income Tax. This is the tax rate most politicians that
about. They claim it is progressive. However, when you look at the
larger picture. It only makes a flat tax system. THe slight
progressiveness of this tax system was ended by Reagan.
This tax code is very complex with lots of deductions. For simplicity
sake, I use a slightly lower tax rate to adjust for all the deductions.
See estimated federal tax rate in the table below.
Hourly Wage 10
20 50 500
ANNUAL W-2 INCOME 20,000 40,000
100,000 1,000,000
Federal Unemployment tax 90
90 90 90
State Unemployment Tax 350
350 350 350
Worker's Compensation Tax 800 1600
2000 10,000
Social Security Tax 2480
4960 9920 9920
Medicare Tax 276
552 1380 13800
State Income Tax 380
780 1980 19980
Federal Income Tax 1900
5850 19800 299700
Fed tax rate 10%*
15% 20% 30%
Total Taxes 6276
14182 35520 353840
Actual Tax rate (Taxes/W2 income) 31.38 35.455
35.52 35.384
*Until last year this was 15% making an effective tax rate of 36% for
the lowest income employees.
As you can see from the above table. The US has a flat Tax system.
This model was based on an analysis $300,000,000 in payroll from a
nationwide $6,000,000,000 major cop oration.
Not right, Not Left JUST THE TRUTH.
BOB
The Asbestos Rip Off OF OUR SCHOOLS!!!
[Non-text portions of this message have been removed]
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