Examples of payroll tax in the following topics:
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- Two examples of these are corporate and payroll taxes.
- Corporations are also subject to a variety of other taxes including: property tax, payroll tax, excise tax, customs tax and value-added tax along with other common taxes, generally in the same manner as other taxpayers.
- Payroll taxes are taxes that employers are required to pay when they pay salaries to their staff.
- Payroll taxes generally fall into two categories: deductions from an employee's wages, and taxes paid by the employer based on the employee's wages.
- Corporations, such as CBS, whose headquarters are pictured above, are subject to multiple forms of tax, from corporate income tax to payroll taxes.
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- Social Security is funded through payroll taxes called Federal Insurance Contributions Act tax (FICA) and/or Self Employed Contributions Act Tax (SECA).
- Medicare is funded through revenue from FICA and SECA payroll taxes, as well as through premiums paid by Medicare enrollees and general fund revenue from the federal government.
- Benefits are generally paid by state governments, and are funded in large part by state and federal payroll taxes levied against employers.
- These payroll taxes were established by the Federal Unemployment Tax Act (FUTA), and allow the IRS to collect federal employer taxes used to fund state workforce agencies.
- It provides benefits to retirees, surviving family members, and disabled workers who have contributed to the Social Security Trust Fund through payroll taxes.
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- Although the program is run by a federal agency, the Social Security Administration, its funds come from employers and employees through payroll taxes.
- Moreover, with the post-war baby-boom generation due to retire early in the 21st century, politicians grew concerned in the 1990s that the government would not be able to pay all of its Social Security obligations without either reducing benefits or raising payroll taxes.
- Employers pay taxes into a special fund based on the unemployment and benefits-payment experience of their own work force.
- The federal government also assesses an unemployment insurance tax of its own on employers.
- Whether to extend jobless-pay benefits frequently becomes a political issue since any extension boosts federal spending and may lead to tax increases.
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- Each has its own authority to tax.
- For example, states can set their own sales and payroll taxes that apply only within the state.
- Similarly, local governments can impose a variety of taxes, such as property taxes.
- Federal taxes are created by the US Congress, which passes laws mandating what is taxed and the amount of the tax.
- Disputes over tax rules are generally heard in the United States Tax Court before the tax is paid, or in a United States District Court or United States Court of Federal Claims after the tax is paid.
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- Payroll taxes, which finance the Social Security and Medicare programs, have become increasingly important as those programs have grown.
- In 1998, payroll taxes accounted for one-third of all federal revenues; employers and workers each had to pay an amount equal to 7.65 percent of their wages up to $68,400 a year.
- (Local governments, in contrast, generally collect most of their tax revenues from property taxes.
- The Tax Reform Act of 1986, perhaps the most substantial reform of the U.S. tax system since the beginning of the income tax, reduced income tax rates while cutting back many popular income tax deductions (the home mortgage deduction and IRA deductions were preserved, however).
- The Tax Reform Act replaced the previous law's 15 tax brackets, which had a top tax rate of 50 percent, with a system that had only two tax brackets -- 15 percent and 28 percent.
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- Tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare.
- In economics, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare.
- Tax incidence is said to "fall" upon the group that ultimately bears the burden of, or ultimately has to pay, the tax.
- For example, United States Social Security payroll taxes are paid half by the employee and half by the employer.
- In this example, consumers bear the entire burden of the tax; the tax incidence falls on consumers.
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- In a few cases, American companies reacted by simply shutting down and moving their factories elsewhere -- an option that became increasingly easy as trade and tax laws changed in the 1980s and 1990s.
- Temporary-help firms supplied 417,000 employees, or 0.5 percent of non-farm payroll employment, in 1982; by 1998, they provided 2.8 million workers, or 2.1 percent of the non-farm work force.
- Workers sometimes sought shorter work weeks, but often companies set out to reduce hours worked in order to cut both payroll and benefits costs.
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- An average tax rate is the ratio of the total amount of taxes paid, T, to the total tax base, P, (taxable income or spending), expressed as a percentage.
- Broadly, the marginal tax rate equals the change in taxes, divided by the change in tax base, expressed as a percentage.
- A progressive tax is a tax in which the tax rate increases as the taxable base amount increases .
- A regressive tax is a tax imposed in such a manner that the average tax rate decreases as the amount subject to taxation increases .
- A proportional tax is a tax imposed so that the tax rate is fixed, with no change as the taxable base amount increases or decreases.
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- Examples of an indirect tax include sales tax and VAT (value added tax).
- Progressive Tax: The more a person earns, the higher the tax rate.
- Regressive Tax:In a regressive tax system, poorer families pay a higher tax rate.
- Although a regressive tax system is never explicitly used, some claim a sales tax is a type of regressive tax.
- Categorize types of taxes into ad valorem taxes and excise taxes
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- Taxes are the primary source of revenue for state and local governments; income, property, and sales taxes are common examples of state and local taxes.
- State taxes are generally treated as a deductible expense for federal tax computation.
- Sales tax is collected by the seller at the time of sale, or remitted as use tax by buyers of taxable items who did not pay sales tax.
- Property tax is generally imposed only on real estate, though some jurisdictions tax some forms of business property.
- Property tax rules and rates vary widely.