Taxes Jobs

The Multiple Job Tax Trap

Executive Summary About The Multiple Job Tax Trap By Terry Mitchel

Last year, I worked at two different jobs, but that fact is not likely to cause me any tax headaches when I file my 2008 taxes. That’s because I worked those jobs consecutively, not concurrently. I left one employer to go to work for another. No doubt this scenario was played out by many Americans last year.

However, what about those who worked more than one job at a time? Those people, at least the ones who didn’t plan ahead, might face an unpleasant surprise between now and April 15th.

When one has multiple employers at a given time, each employer might be withholding taxes as if they are that employee’s only employer. That could easily result in not enough taxes being withheld, leading to the employee having to write a check – possibly a fat one – to the IRS at tax time.

I’ll compare two hypothetical employees as an illustration. Let’s say that Mark and Susan both made $80,000 in 2008 and that each of them held two jobs. However, let’s say that Mark worked his jobs concurrently during the entire year, whereas Susan quit one job before taking the other.

In Susan’s case – with no action required on her part – her federal withholding taxes were based on a projected annual salary of $80,000, which matched what she ultimately made. However, in Mark’s case – unless he directed his employers otherwise – his federal withholding taxes were based on a projected annual salary of $40,000, even though he actually made twice that much.

This is problematic because those who make $80,000 are in a higher overall federal tax bracket than those who make only $40,000. Nearly half of the salary of someone making $80,00o is in the 25% tax bracket.

Now compare that to an individual making only $40,000, who only sees about a fifth of his or her salary taxed at 25% and none of it taxed at 28%. The above illustration was based on the assumption that neither taxpayer had any minor children and that each was either single or had a spouse who also worked and could not be claimed on his or her tax returns.

How to Increase Job Opportunities and Tax Revenues

Executive Summary About How to Increase Job Opportunities and Tax Revenues By Robert E Cannon

The news media would have you think the jobs we have lost to China, India and other countries are the result of lower cost labor. They tend to blame greedy capitalists on moving production off shore to save a few pennies on the production of products sold in our markets.

The unspoken truth of the matter is that domestic producers are moving production offshore because of overhead costs. Overhead costs that are the direct result of our government. So if you want to blame someone for the jobs that are moving off shore, blame your favorite politician.

There are lots of things I can point to including OSHA, EPA, Workers Compensation, Employer Paid Pensions, Employer Paid Health Insurance, MSDS, EEOC and a raft of other government imposed programs.

Jim Meyers in an article entitled “U.S. Leads World…In Corporate Taxes” in the September issue of “NewsMax” pointed out that the U.S. “now bears the dubious distinction of having the highest corporate tax rate in the developed world.”

Why in heavens name would a manufacturer want to produce products and make a profit in this country? Instead, manufacturers make products and profits offshore while selling products at a loss in this country.

Treasury Secretary Henry Paulson in a Wall Street Journal opinion piece wrote that, “The current tax code distorts capital flows, hurting productivity, job creation and our global competitiveness.”

He suggests that countries with a 1 percentage point lower tax rate will attract 3 percent more capital. Other countries have figured this out and are lowering taxes.

The Wall Street Journal reports that at least 25 developing countries have cut corporate tax rates since 2001. Ireland on the other hand has a corporate tax rate of 12.5 percent and collects 3.6 percent of its GDP in corporate revenues.

If you want to keep and grow the job market in this country, write to your Congressmen and tell them you want to see job opportunities in this country increase as well as tax revenues increase just as they have in Ireland through Corporate Tax reductions.

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