surelockhomes: >>>WTF are you talking about? Employers deduct wages and their share of the FICA tax plus UI taxes. FIT is not retained nor deducted by employers.
You are wrong. It does not. The only thing they can deduct is employee wages and benefits they pay on behalf of the employee.<<<
The employee wages CONTAIN all the taxes withheld from his/her paychecks. By deducting the wages as a Business expense from PROFITS, a corporation in the 35% bracket CANCELS the individual FIT/FICA income taxes by that SAME amount. The taxes get REPORTED, but the CASH collections by the IRS are REDUCED. That is WHY corporate assets are GROWING at the same time GOVERNMENT DEBT (fiscal exposures)is SOARING. Documentation and more complete explanations may be found in my E-Book "Getting Ready for Hard Times"
debtism.com
(Brief extract)
Business Expense Deduction of employee FICA and FIT Taxes as Wages:
IRS Publication 535 (2004), Business Expenses
irs.gov
IRS QUOTE: 6. Taxes... Employment Taxes:
If you have employees, you must withhold various taxes from your employees' pay. Most employers must withhold their employees' share of social security and Medicare taxes along with state and federal income taxes. You may also need to pay certain employment taxes from your own funds. These include your share of social security and Medicare taxes as an employer, along with unemployment taxes.
You should treat the taxes you withhold from your employees' pay as wages on your tax return. You can deduct the employment taxes you must pay from your own funds as taxes. You pay your employee $18,000 a year. However, after you withhold various taxes, your employee receives $14,500. You also pay an additional $1,500 in employment taxes. You should deduct the full $18,000 as wages. You can deduct the $1,500 you pay from your own funds as taxes. UNQUOTE
US Treasury Secretary Utilizes "Reverse Accounting"
To reconcile the Gross Amounts of FICA taxes reported to the Social Security Administration (SSA) with the Net Amounts of FIT & FICA tax collections the US Treasury Secretary has resorted to “Reverse Accounting”!
This is footnote (5) to Table 1, discovered on page 41 of the Internal Revenue Service (IRS) 2003 Data Book.
Quote: “(5). Collections of individual income tax are not reported separately from Old Age, Survivors, Disability, and Hospital Insurance (OASDHI) taxes on salaries and wages (under the Federal Insurance Contributions Act or FICA, and on self-employment income under the Self-Employment Insurance Contributions Act or SECA). The OASDHI tax collections and refunds shown in Table 1 are based on estimates made by the Secretary of the Treasury pursuant to the provisions of Section 201(a) of the Social Security Act as amended and include all OASDHI taxes. Amounts shown for the two categories of individual income tax were derived by subtracting the OASDHI tax estimates from the combined total collections for the two taxes (refund estimates were not made for these two categories).” Unquote
The IRS 2005 Data Book irs.gov provides the most current annual tax data, (fiscal year, ending September 30, 2005). This is a brief summary of Table 1 that focuses on key elements.
Gross Amount Net Amount
$2,268,895,122 $1,998,850,893 United States Total
307,094,837 272,762,788 Corporate Income Tax
1,107,500,994 879,927,524 Individual Income Tax
786,612,462 766,315,297 Individual Income Tax WH
759,955,617 754,951,225 Employment Tax OASDI-HI total (5)
Note: In footnote 5, the IRS has confirmed that the FICA (OASDHI) tax is just another “income tax”, even though the IRS and the SSA continue to label the FICA income tax as a “Contribution”. Even more interesting is the revelation of how the US Treasury reconciles ($100s of billions) of differences between gross FICA taxes reported to the SSA; but not collected by the IRS (due to EMPLOYER Business Expensing of Wages & Employment taxes, withheld from workers paychecks) on government balance sheets.
To reconcile the shortage of net IRS FICA collections with the gross contributions reported by the Social Security Administration, the US Treasury simply totals up FIT & FICA collections, subtracts the estimated FICA taxes from the total, and calls the remainder “Individual Income Tax.” This dubious technique of “reverse accounting” provides a convenient, but highly questionable means of complying with the law that states: “Social security (OASDHI) (FICA-contributions) income taxes can only be spent on Social Security and Medicare.
This interpretation (reverse accounting) of IRS Footnote 5 is further supported by the US Treasury “Budget Results for fiscal year 2005”:
“Social insurance and retirement receipts were $795 billion, $2 billion higher than the MSR estimate. This increase was primarily attributable to the reallocation of withheld tax receipts from individual taxes to the Social Security and Medicare Trust Funds. The adjustment offsets the adjustment to individual income taxes described, above; there is no impact on total receipts.”
Good luck,
SargeK
P.S. Slider thanks for your indulgence. The dugout is a source of good information and I do not wish to deflect from its intended purposes. Unless "invited" this will be my last post on this subject. Thanks again! |
