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In other countries it's the employers that pay pretty much all of your taxes. They just keep the taxes from your salary and then when they pay their own taxes t

In other countries it's the employers that pay pretty much all of your taxes. They just keep the taxes from your salary and then when they pay their own taxes they also pay yours. I do think there's a slight disadvantage in having the taxes essentially "hidden away from you". This could be somewhat alleviated if instead of 10 different taxes there are just 2 or 3 at most, to make the whole thing more understandable. However, ultimately the benefit of having the taxes automatically done for you, not having to "get into trouble with IRS" or other such issues, is a much bigger benefit than the drawback of having the taxes somewhat hidden from you.

desas 12y ago
In the UK employers usually sort out taxes for you via the Pay As You Earn system. Everytime you get paid you will be issues with a payslip which shows how much you were paid before deductions (tax, student loans), a break down of the deductions and how much you earned after tax. The only tax you don't see is Employers National Insurance - this is a tax on employing someone that is around 12% of their wage.
jakobegger 12y ago
I live in Austria, where we have such a system. The money isn't hidden away at all, you get a letter every month detailing how much you paid income tax, health insurance, unemployment insurance, retirement plans etc. The big advantage is that you never have the chacne to spend all the money you have to save for taxes; makes budgeting a lot easier. Unfortunately, this only works correctly when you have a single employer. If you have multiple employers, you need to send a form to the authorities and they will determine how much you overpaid or underpaid. And if you're self-employed, you're on your own; you have to file your taxes yourself. But in that case most people hire a tax adviser to do it for them.
rejschaap 12y ago
I'm living in one of those other countries. My employer removes tax from my salary every month. But they just follow some guidelines. Our tax system is quite complex and my employer doesn't have enough information to know how much to send to the IRS. They can't even make a decent estimate, actually. So we still need to file a tax report every year. The guidelines and the system are set up so that most people pay too much tax in general. We do get our tax reports already filled-in by the IRS though. It's getting better each year. For now most people just check everything is there and whether it is correct and just sign and send (everything is done digitally of course).
runarb 12y ago
Is it so that employers don't subtract your taxes in the US? How does that work? Do you get one big invoices in the mail for a year of tax? Here in Norway one normally pays around 45% of one's salary in tax. The employer has to subtract the money from your pay directly. Because no one sees the money before it goes to the government, many people don't really think much about it. If that on the other hand got one big bill at the end of the year I think there would have a lot more outcry on all the waste of taxpayers’ money that is going on.
- rtkwe 12y ago
  In the US there's commonly withholding on your paycheck for your state and federal income taxes and Medicare/Social Security. You can tell whatever company does your paychecks to withhold more or less depending on if you know you have a lot of deductions (married, supporting children, etc.). On my paycheck I have a break down for how much is being deducted this period then year to date.
fps 12y ago
This is the case in the US as well. But the US tax code is complicated and every year we take a form from our employer that declares how much tax they paid on our behalf and combine it with forms from our banks and receipts from tax deductable things like paying a mortgage, educational costs, retirement savings, donations to charity or random things like buying an electric car or solar panels, and come away with a total number we owe. Usually, since many people in the US get deductions that their employer doesn't compensate for when paying our taxes, this results in the government returning some of our money. Some people make more money from investments than their deductions cover that results in them having paid too little, and they have to send a check to the IRS. For example, in 2014 my overall graduated tax liability should have been 21%. However, due to deductions, it was 16%. I got the difference back as a refund.

desas 12y ago

In the UK employers usually sort out taxes for you via the Pay As You Earn system. Everytime you get paid you will be issues with a payslip which shows how much you were paid before deductions (tax, student loans), a break down of the deductions and how much you earned after tax. The only tax you don't see is Employers National Insurance - this is a tax on employing someone that is around 12% of their wage.

jakobegger 12y ago

I live in Austria, where we have such a system. The money isn't hidden away at all, you get a letter every month detailing how much you paid income tax, health insurance, unemployment insurance, retirement plans etc. The big advantage is that you never have the chacne to spend all the money you have to save for taxes; makes budgeting a lot easier. Unfortunately, this only works correctly when you have a single employer. If you have multiple employers, you need to send a form to the authorities and they will determine how much you overpaid or underpaid. And if you're self-employed, you're on your own; you have to file your taxes yourself. But in that case most people hire a tax adviser to do it for them.

rejschaap 12y ago

I'm living in one of those other countries. My employer removes tax from my salary every month. But they just follow some guidelines. Our tax system is quite complex and my employer doesn't have enough information to know how much to send to the IRS. They can't even make a decent estimate, actually. So we still need to file a tax report every year. The guidelines and the system are set up so that most people pay too much tax in general. We do get our tax reports already filled-in by the IRS though. It's getting better each year. For now most people just check everything is there and whether it is correct and just sign and send (everything is done digitally of course).

runarb 12y ago

Is it so that employers don't subtract your taxes in the US? How does that work? Do you get one big invoices in the mail for a year of tax? Here in Norway one normally pays around 45% of one's salary in tax. The employer has to subtract the money from your pay directly. Because no one sees the money before it goes to the government, many people don't really think much about it. If that on the other hand got one big bill at the end of the year I think there would have a lot more outcry on all the waste of taxpayers’ money that is going on.

rtkwe 12y ago
In the US there's commonly withholding on your paycheck for your state and federal income taxes and Medicare/Social Security. You can tell whatever company does your paychecks to withhold more or less depending on if you know you have a lot of deductions (married, supporting children, etc.). On my paycheck I have a break down for how much is being deducted this period then year to date.

fps 12y ago

This is the case in the US as well. But the US tax code is complicated and every year we take a form from our employer that declares how much tax they paid on our behalf and combine it with forms from our banks and receipts from tax deductable things like paying a mortgage, educational costs, retirement savings, donations to charity or random things like buying an electric car or solar panels, and come away with a total number we owe. Usually, since many people in the US get deductions that their employer doesn't compensate for when paying our taxes, this results in the government returning some of our money. Some people make more money from investments than their deductions cover that results in them having paid too little, and they have to send a check to the IRS. For example, in 2014 my overall graduated tax liability should have been 21%. However, due to deductions, it was 16%. I got the difference back as a refund.