Businesses do not deliberately throw away money – yet that is effectively what 90% of businesses do ...

when they ignore examining economic rationality in structuring wage packages.

Now After the Storm – can you see clearly what has previously escaped you?

As an example consider a well-paid worker whose nominal income is $100,000 a year.

In States such as Florida where there is no state income tax the worker would receive $76,104 after tax.

However in New York where State Income Tax is at its highest in the US the worker would only receive $66,912 net on his total wage of $100,000

It is not only State Income Tax that should be a concern

There is the absolute level of Federal Income Tax and also Payroll Tax. Such that the Total Federal Tax Liability in a No-Tax State for 2019 on $100,000 would be $30,546.50.

Although down from $33,122.50 after the Tax Cuts and Jobs Act – that still is quite a savage impost on a worker’s earnings.

Payroll Tax (FICA) and Medicare combine to slice off 7.65% of earned income – with the biggest slice being the Federal Income Tax Take.

The Icing on the Cake is the Employer paying the worker a wage of $100,000 must on top of that also pay FICA at the same rate as their employee – which means it costs a New York Employer $107,650 to give a worker $66,912 after tax.

As a thinking Human Animal/ Business Owner/ Manager – have you ever digested the numbers which eat in to a worker’s wage, the costs of labor and impact of taxes your business currently bears?

How would you feel about cutting the wage bill by $10,000 per employee while helping them improve their take home money and annual retirement contributions by close to $20,000 a year?

Some Elementary Tax Planning utilizing 401k can produce some tax savings – although the level of sophistication of most Retirement Plans hardly makes a dent in the Tax Burden felt by most workers in the USA.

While employers contributions to a worker’s 401k is exempt from FICA – what is disgraceful is the requirement for Workers’ own 401k contributions to be levied with FICA!

The above outline is how the standard wage packages work out with tax when employers lack the instinct needed to improve wage cost economics for both themselves and employees.

With a little initiative it is not difficult to give workers more take home money, a bigger retirement nest egg and cash reserve for cases such as the Covid-19 Economic Impact – AND in the process significantly lower wage costs for employers.

If you seriously want to improve profits, lower wages costs and substantially improve worker’s financial position with better wage packages …

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