3 ms·

Does the US have significant employer tax? A data point from Norway: Employer tax of 14% of pre-tax salary is paid by employer. Employer also has to pay 2-13%

by marvin 6y ago

Does the US have significant employer tax? A data point from Norway: Employer tax of 14% of pre-tax salary is paid by employer. Employer also has to pay 2-13% (dependent on individual negotiation) of pre-tax salary for retirement savings. These are both part of the cost to the employer, and are rarely considered part of "total compensation". So employers have to pay an extra 16-27% of each person's salary in addition to what the employee gets. An 8% tax for compulsory retirement savings is then taken from the employee's pre-tax salary, along with other individual taxes, that will usually sum up to around 33%. This is not part of the cost to the employer. The number before these taxes are subtracted is usually quoted as the person's salary. Although for a US comparison, few employers in Norway have significant expenses for health insurance. And the cost of US health insurance, a considerable percentage, is rarely considered part of your "total compensation".

eptcyka 6y ago
I've never understood why there's a split between what taxes get paid by your employer and what taxes get paid by the employee - in the end, the employer pays all of them anyway. I'd like to know exactly how much money an employer would have to pay for a given amount of money landing in my bank account in a given time period.
- pnutjam 6y ago
  As long as there is a hidden "benefits tax" that varies wildly from company to company, it doesn't matter. It's crazy to try to compare offers in the US.
- brianwawok 6y ago
  You can figure it out with a basic Algebra calculation. Not that hard. But I doubt any employee is comparing your offer on that. They are going on the top line number.
- benhurmarcel 6y ago
  The reason is politics. It's easier to raise taxes that are invisible to voters.
  - belval 6y ago
    It's also a very strong lever that is not very well understood by the general public and can be used to stimulate growth in a particular area without sounding like the government is subsidizing the industry directly. For example in Quebec the government waves a sizable chunk of taxes if the employee works on "research". With research being voluntarily defined very loosely so video game development falls into that category. The goal was to draw Ubisoft, EA, Unity, etc... in Montreal.
- rags2riches 6y ago
  If you just look at the present state of things, the split doesn't make much sense. Instead, consider the choice of legislators that are about to change taxes on already existing employment agreements. There are two sides to each employment and affecting one is not the same as affecting the other.
Majromax 6y ago
No, the United States does not have high employer-paid payroll taxes. The employer is responsible for about 8% for social security (pension) and medicare (old-age health care) taxes, but only income up to $150k/yr is subject to this tax. States also assess a payroll tax to pay for unemployment benefits; this varies by state and industry. It is also subject to relatively low income caps, especially compared to tech-sector salaries.
cletus 6y ago
OMG I hate this kind of dishonesty by governments (and companies). There should be no "employer taxes". That's money that otherwise could be going to the employer so all taxes and the like should be reported coming out of the employee's salary. Example: the US has 6.2% Social Security taxes levied on both the employer and employee. This should be reported as 12.4/106.2 = 11.7% of the employee's income. BTW companies do this too. Airlines charge fuel surcharges (there's no such thing; the fares are just more expensive). US ISPs are famous for things like "Infrastructure Surcharges" and other charges you can't avoid. The FTC/FCC should step in and make it illegal to underreport true costs with mandatory charges like these. Another beef with the US government I have in particular is the "standard deduction". This is actually a way of hiding a regressive tax on lower income people. Think about it: you're eroding the value of itemized deductions but lower income people are disproportionately affected.
- marvin 6y ago
  Agreed. Try to make an argument up here that our tax burden is debilitating, and all you get in return is «our taxes are the same as every other country, 30% on average». Can be refuted in a debate, but of course the dishonest rhetoric reflects what people actually believe and vote.
- sgerenser 6y ago
  Agreed up until the last part. The standard deduction is progressive, it provides a much bigger benefit to lower income earners than it does to mid/high income earners.
  - cletus 6y ago
    Consider a simplified tax system: - 10% of the first $100,000 - 20% of the remaining - The standard deduction is $20,000 Now consider three incomes: $40,000, $80,000 and $200,000. 1. $40,000 is $4,000 (10%) tax to $2,000 (5%) 2. $80,000 is $8,000 (10%) tax to $6,000 (7.5%) 3. $200,000 is $30,000 (15%) tax to $26,000 (13%) So on the face of it it seems progressive and would be if it wasn't for the fact that it offsets itemized deductions. Imagine each person above could deduct 25% of their income: 1. No change. 2. No change. 3. $50,000 deduction, which is an additional $30,000 of $6,000 in savings. So the highest income earners still get itemized deductions and both the standard and itemized deductions are offsetting a marginal higher tax rate. The point is that the "standard deduction" is (IMHO) dishonest. You can achieve a progressive tax system by... just having a progressive tax system.

by marvin 6y ago

eptcyka 6y ago

I've never understood why there's a split between what taxes get paid by your employer and what taxes get paid by the employee - in the end, the employer pays all of them anyway. I'd like to know exactly how much money an employer would have to pay for a given amount of money landing in my bank account in a given time period.

pnutjam 6y ago
As long as there is a hidden "benefits tax" that varies wildly from company to company, it doesn't matter. It's crazy to try to compare offers in the US.
brianwawok 6y ago
You can figure it out with a basic Algebra calculation. Not that hard. But I doubt any employee is comparing your offer on that. They are going on the top line number.
benhurmarcel 6y ago
The reason is politics. It's easier to raise taxes that are invisible to voters.
- belval 6y ago
  It's also a very strong lever that is not very well understood by the general public and can be used to stimulate growth in a particular area without sounding like the government is subsidizing the industry directly. For example in Quebec the government waves a sizable chunk of taxes if the employee works on "research". With research being voluntarily defined very loosely so video game development falls into that category. The goal was to draw Ubisoft, EA, Unity, etc... in Montreal.
rags2riches 6y ago
If you just look at the present state of things, the split doesn't make much sense. Instead, consider the choice of legislators that are about to change taxes on already existing employment agreements. There are two sides to each employment and affecting one is not the same as affecting the other.

Majromax 6y ago

No, the United States does not have high employer-paid payroll taxes. The employer is responsible for about 8% for social security (pension) and medicare (old-age health care) taxes, but only income up to $150k/yr is subject to this tax. States also assess a payroll tax to pay for unemployment benefits; this varies by state and industry. It is also subject to relatively low income caps, especially compared to tech-sector salaries.

cletus 6y ago

OMG I hate this kind of dishonesty by governments (and companies). There should be no "employer taxes". That's money that otherwise could be going to the employer so all taxes and the like should be reported coming out of the employee's salary. Example: the US has 6.2% Social Security taxes levied on both the employer and employee. This should be reported as 12.4/106.2 = 11.7% of the employee's income. BTW companies do this too. Airlines charge fuel surcharges (there's no such thing; the fares are just more expensive). US ISPs are famous for things like "Infrastructure Surcharges" and other charges you can't avoid. The FTC/FCC should step in and make it illegal to underreport true costs with mandatory charges like these. Another beef with the US government I have in particular is the "standard deduction". This is actually a way of hiding a regressive tax on lower income people. Think about it: you're eroding the value of itemized deductions but lower income people are disproportionately affected.

marvin 6y ago
Agreed. Try to make an argument up here that our tax burden is debilitating, and all you get in return is «our taxes are the same as every other country, 30% on average». Can be refuted in a debate, but of course the dishonest rhetoric reflects what people actually believe and vote.
sgerenser 6y ago
Agreed up until the last part. The standard deduction is progressive, it provides a much bigger benefit to lower income earners than it does to mid/high income earners.
- cletus 6y ago
  Consider a simplified tax system: - 10% of the first $100,000 - 20% of the remaining - The standard deduction is $20,000 Now consider three incomes: $40,000, $80,000 and $200,000. 1. $40,000 is $4,000 (10%) tax to $2,000 (5%) 2. $80,000 is $8,000 (10%) tax to $6,000 (7.5%) 3. $200,000 is $30,000 (15%) tax to $26,000 (13%) So on the face of it it seems progressive and would be if it wasn't for the fact that it offsets itemized deductions. Imagine each person above could deduct 25% of their income: 1. No change. 2. No change. 3. $50,000 deduction, which is an additional $30,000 of $6,000 in savings. So the highest income earners still get itemized deductions and both the standard and itemized deductions are offsetting a marginal higher tax rate. The point is that the "standard deduction" is (IMHO) dishonest. You can achieve a progressive tax system by... just having a progressive tax system.