Skip to comments.Taxing U.S. Businesses
Posted on 01/13/2014 11:30:29 AM PST by Kaslin
If you do business in the United States, how much can you expect to have to pay in federal businesses taxes?
That's the question we'll help you answer today, which is really surprising in that it's taken us over nine years to get around to answering it! Especially since we've focused on the employee-side of that tax math from almost the very beginning!
But we're going to correct that today, applying the tax rate schedule we found published in the IRS' instructions for compleing Form 1120, which is the equivalent of Form 1040 for many U.S. businesses. And that's where we found the following tax rate schedule for corporate income, which is really the business' pretax earnings, or what's left of its total revenues after deducting all its operating expenses.
But that's not the only taxes that businesses pay to the federal government! Assuming that the business has employees, it is also subject to the employer portion of the U.S. federal payroll taxes for both Social Security and Medicare.
Here, a U.S. business has to pay an amount equal to 6.2% of the amount of each of its employees' wages or salaries (up to a maximum of $7,254 each in 2014) for the employer portion of Social Security taxes, as well an additional amount equal to 1.45% of each of its employees' pay, with no maximum amount per employee, for the employer portion of Medicare's payroll taxes.
For the sake of keeping things as simple as possible, that's as complicated as we're going to make it. Our default data is consistent with values that might be typical for a small business, but there's nothing to stop you from changing it to suit your needs to estimate your potential federal business tax burden. If you're reading this article on a site that republishes our RSS news feed, click here to access a working version of this tool!
And that's just at the federal level. The state and local governments in all the places where you do business will likely also want to put their greedy hands into your till!
Every dollar taken from a business by the government to hire another Democrat for the Department Of Cat Grooming is a dollar that can’t be used to keep that company competitive with businesses from overseas.
Probably as a consequence of a shallow understanding of the federal government's constitutionally limited powers, townhall.com writers are evidently functionally clueless that Justice John Marshall had officially clarified limits to Congress's power to lay taxes.
More specifically, as mentioned elsewhere on this message board, Justice Marshall had indicated that Congress is prohibited from laying taxes in the name of state power issues, essentially any issue which Congress cannot justify under its constitutional Article I, Section 8-limited powers.
Congress is not empowered to tax for those purposes which are within the exclusive province of the States. Justice John Marshall, Gibbons v. Ogden, 1824.
The key question to ask concerning the federal government's budget is how much does it cost to operate the armed forces and deliver mail?
The bottom line concerning constitutionally indefensible federal taxes is the following imo. I'm inclined to blame tyrannically high federal taxes on business taxpayers themselves, as opposed to on corrupt federal lawmakers. This is because business owners are evidently not taking the responsibility to research Congress's limited power to lay taxes; constitutionally ignorant taxpayers can lay in the bed that they've made for themselves.