GOP just released their tax plan and here are the main points:
An economic lesson is playing out in California.
New data out showing a national breakdown of people who get paid minimum wage in each state. Continue reading →
Several states and cities took on new minimum wage hikes in 2015 and the beginning of 2016. Now a new report out shows it is affecting hiring Continue reading →
The federal government collects revenue from a variety of sources. The largest source is taxes on individuals’ income and payroll taxes, which together make up four-fifths of federal revenue. Individual income taxes are assessed against wage income and are progressive: that is, the tax rate someone pays increases as their income increases. Payroll taxes are a flat percentage of wage income. They are used to fund Social Security and portions of Medicare. Taxes on corporate profits, estate and gift taxes, excise taxes (a tax levied on a good or service), customs duties, and numerous other taxes comprise the remainder.
Tuesday, five states voted to hike minimum wage for workers. The common theme is that government really cares for the people. Not exactly. Government likes minimum wage increases because it means more taxes collected. Here is example:
“The minimum wage increase is not just the dollar an hour, but it’s also a raise in our taxes,” said Jason Lerner of Little Learner Academy. His family owns five child care centers in New Jersey, where the minimum wage rose from $7.25 to $8.25 on Jan. 1.
In total, these taxes add an extra 10.5% to Little Learner Academy’s payroll expenses.
Take Social Security. Employees have 6.2% of their wages withheld from each paycheck for Social Security. But what they don’t see is that their employer also chips in, matching the 6.2%. For Medicare, both the employer and the employee pay 1.45% of the wage.
Payroll taxes are a big concern when running a business. This tax is also regressive when managing a business. On top of this tax, business owners must also pay to the state disability/unemployment taxes based upon amount of employees they have.
Many years ago I had a boss tell me that payroll is the #1 controllable expense. When payroll goes up and sales don’t, payroll gets slashed.