Welcome to VoteFacts.org. Today we are focusing on some of the facts surrounding payroll taxes and who bears the burden of those costs. To make our job easier, we were able to turn to the fact-checking website Politifact.com and use one of their posts on the subject to get you focused on facts. Last fall, Politifact fact-checked this statement for you -
"Every worker pays 15.3 percent payroll tax"
They rated that statement Mostly False, and they told you -
"That's not accurate. Workers only pay half that, with the exception of the self-employed... You can reach that number only by including the half of the tax that employers pay."
But in a post a month prior to that, when talking about the tax burden of a hypothetical employee, they reported a different "fact" on that subject. They said this about whether or not the employee is paying their employers share of payroll taxes -
“…combining the workers’ share of the payroll tax with the employer’s share — the usual practice among economists — would mean an extra 15 percentage points (for payroll taxes) for our hypothetical middle-class worker… The bottom line is that taxpayers in the construction-workers income range tended to pay an effective federal income tax rate of 7 percent to 8 percent. Adding these… (income and payroll percentages is a) “final” rate of 22 to 23 percent for the construction worker”
We sure do wonder how they can rate something Mostly False that they said was true in a narrative only a month earlier. It's a real head-scratcher. But to help you focus on the facts about who pays the employers share of payroll taxes, we look to the Congressional Budget Office (CBO). Perhaps this is where they got their information the first time they fact checked this subject for you, but forgot all about it the second time a month later? As always, the reports are readily available for you to verify everything and read in a wider context.
"Households also bear the burden of the taxes paid by businesses. In particular, in CBO’s judgment (and that of most economists), employers’ share of payroll taxes is passed on to employees in the form of lower wages." CBO Report
For 2010, most employers were exempt from paying the employer share of OASDI (payroll) tax on wages paid to certain qualified individuals hired after February 3. For 2011 and 2012, the OASDI tax rate is reduced by 2 percentage point for employees and for self-employed workers, resulting in a 4.2 percent effective tax rate for employees and a 10.4 percent effective tax rate for self-employed workers.
Beginning in 2013, an additional Medicare Hospital Insurance (HI) tax of 0.9 percent is assessed on earned income exceeding $200,000 for individuals and $250,000 for married couples filing jointly.
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