Payroll taxes are levied against employee wages and salaries to fund social insurance schemes. The majority of taxpayers will be familiar with payroll taxes by looking at their paystubs at the conclusion of each pay period, where it is plainly stated how much payroll tax was deducted from their income by their employer.
The largest payroll taxes in the United States are 12.4 percent for Social Security and 2.9 percent for Medicare, for a combined rate of 15.3 percent. Employers remit half of the payroll taxes (7.65%), while the other half is withheld from employees’ paychecks.
Despite the fact that employers pay nearly half of payroll taxes, the economic burden of payroll taxes is carried primarily by workers in the form of lower earnings.
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