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View Diary: Sheldon Whitehouse to introduce 'Buffett Rule' bill Wednesday (47 comments)

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  •  Incidence of FICA taxes (0+ / 0-)

    It is pretty clear that FICA taxes are incident on the employee and not the employer.  They are computed directly on wages and are paid at the same time as the employee portion, and are deductible by the employer.  In addition, the complementary nature of self-employment taxes indicate that they are incident on the employee.

    The argument that corporate income taxes are incident on shareholders is weak.  Corporate income taxes are completely unrelated to dividends.  A corporation can pay no income tax, yet pay dividends (or, it could incur income tax without paying a dividend).  The literature on the incidence of corporate income taxes is inconclusive;  in the absence of a corporate income tax, other stakeholders--employees, customers, suppliers and other taxing authorities--would presumably take some of the pie.

    But I think you're off anyway.  Assume she has gross income, all from wages, of about $125,000 and taxable income of about $100,000 (which would not be unusual) and is single.  Her regular income tax would be about $21,500 and the employee share of FICA would be about $6,200.  That is an effective tax rate of 28%.  Credit her with the employer share of FICA ($8,400) and her effective tax rate is 33% (adding the FICA tax paid on her behalf back to her taxable income).

    "Well, I'm sure I'd feel much worse if I weren't under such heavy sedation..."--David St. Hubbins

    by Old Left Good Left on Mon Jan 30, 2012 at 04:51:14 PM PST

    [ Parent ]

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