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Old 10-16-2008, 09:37 AM   #8 (permalink)
baldylox
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Quote:
Originally Posted by Snowolf View Post
So let me see if I understand this correctly.

Income tax: is just that the federal withholding on wages.
Correct, for the largest tax bracket ($31,850-$77,100) You pay $4,386.25 plus 25% of the amount over 31,850


Quote:
Originally Posted by Snowolf View Post
Payroll tax: the total amount of money deducted from a paycheck to include federal withholding, FICA and Medicare?
Payroll tax is SS/Medicare only. You pay half, your employer pays the other half.

I'm going to use John Doe for example. John Doe makes 50K and works in a livery in NY.

For John Doe, the federal income tax would come to about 17.8% of his salary before adjustment/credits.

Payroll tax is 15.3% of John's salary. John pays 7.65% of it and his employer pays the other half. (Effectively means the cost to have John work at Dirty Meat Livery is 7.65% more)

So here is a breakdown of what John makes.

$50,000 (+$3500 the livery pays for John towards SocSec/Medicare also known as FICA)

-$8500 (17%) Federal Income Tax
-$3000 (6%) Social Security
-$700 (1.4%) Medicare
-$2500 (5%) NYS Income Tax
-$10 (Few Cents) NYS Unemployment Insurance / Disability Insurance

So all said and done. We add that together.

$14700 (29.42%) John pays to the Man
$12200 (24.4%) Of that is going to the Federal Government alone.

No lets just look at what John is paying to the Federal Government.

$8500 - Federal Income Tax
$7400 - Payroll Tax (John pays 3700, the Livery pays the other half)

At the end of the year, if John's rebate ends up being $1200, he falls in the category of those paying more for SS/Medicare than Federal Income.
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Last edited by baldylox; 10-16-2008 at 09:58 AM.
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