Payroll Taxes And Income Taxes Essay

Payroll Taxes And Income Taxes Essay

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Both payroll taxes and income taxes are based on an employee’s wage or salary. The main difference between each tax is who end up paying the tax. Employers pay most of an employee’s payroll taxes while just the employee pays the income taxes. Both taxes end up coming from employee’s salary. Typically in America, employees end up paying more payroll taxes than they do income taxes. This paper is going to look at the differences between payroll taxes and income taxes and will also explain what “wage shifting” is and when it occurs.
Payroll taxes are taxes that employers and employees pay to the federal government from an employee’s salary. The amount of payroll taxes paid comes from a percentage of the salary that employers pay to their staff. Two different categories exist for payroll taxes. The first category is the deductions that come from employee’s wages. These are taxes that employers must withhold from employee wages. This tax, also known as withholding tax and often cover things such as advance payment of income tax, social security contributions and various other governmental...

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