Issodhos @aol.com wrote:


>   Oh my.  You are basically saying that taxes withheld from a paycheck and
>paid by an employer is really not money being taken from the employee.  It
>is in fact the employer's money and it is the employer alone who is paying
>this tax.

Clearly this is the case. Convoluted book-keeping entries aside.

> Lets see how this 'theory' holds up in the real world. After having
>ordered my employer to deduct from my paycheck state and federal taxes
>for a year, the government informs me that I still owe $1040 dollars (yeah,
>I realize the irony of the amount.  The tax form we file is a form 1040).
>Notice that they did not say to my employer, "Ms. Employer, you must pay us
>an additional $1040 dollars of your money," but, instead, they said
>"Issodhos, mah man, you still owe us $1040 big ones!  Pay up!".

The system is carefully designed to avoid that situation, because in
practical term it is very hard to get the worker to actually repay any
taxes they are mistakenly paid.  If your employer pays you money rightfully
owed to your government it is presumably motivated by a wish to con you
into thinking you are earning more money than you really are.

> Apparently they see it as money that comes from my labor.

They see it as money that should rightfully have been paid to them in the
first place. Usually of course employers are required to pay slightly more
than the legislated tax, the extra is used to pay you for your services in
lodging a tax return to double-check the figures the employer has
submitted.

Being over-paid by one's employer is fairly uncommon in my experience.

>  Now, lets say the federal or
>state legislature, in its infinite wisdom, decides to increase my taxes --
>does the employer pay the additional tax, leaving my paycheck at its prior
>amount?  No. My paycheck is reduced.

Sorry to burst your bubble. Wages are determined by supply and demand, all
things being equal you will demand the same amount of payment for your
labour and the employer will be forced to pay up.

>  And if they actually reduce my tax rate, does the employer get to pocket
>the savings

Yes. But your employer is unlikely to make as big a fuss about it as he
does when your tax is increased. One way or another he'll pocket your
nominal savings though, because an employer is subject to market forces
cannot possibly pay wages higher than that dictated by the market. He knows
that if he does, his competitor won't.

> or does it show up as an
>additional amount in my paycheck.  Yes, it does.

In your dreams maybe.

Bill Bartlett
Bracknell Tas