[artplumber]

Originally posted by Bill Verburg
Apparantly you and or your accountants don't know what a payroll tax is

Income tax + ss tax + medicare tax = payroll tax


and don't try to make the sale that ss & medicare aren't really taxes, it all goes to the same pot and is spent immediately on wonderful things like cheese museums and bridges to nowhere

your effective tax rate is what you get when the sum of your taxes is divided by your net

Dig out your tax forms from last year, don't forget that if you are not self employed your boss paid 7.65% more of your taxes on all earned income up to $94.2k, if self employed you already know and aren't likely to forget what you paid.

From the SSI website:

The OASDI tax rate for wages paid in 2007 is set by statute at 6.2 percent for employees and employers, each. Thus, an individual with wages equal to or larger than $97,500 would contribute $6,045.00 to the OASDI program in 2007, and his or her employer would contribute the same amount. The OASDI tax rate for self-employment income in 2007 is 12.4 percent. (Tax rates of 1.45 percent for employees and employers, each, and 2.90 percent for self-employed persons, are applied to all earnings—without a taxable maximum—under Medicare's Hospital Insurance program.)

Hence, all persons earning over 100K continue to pay additional taxes on higher income amounts.

Does the reduction in SSI tax result in a lower "net" tax rate? Only if you consider this simple math. You forget that the AGI can result in significant decreases in income tax rate (4% would be the start) with a resulting reduction in your "net' tax rate. You no longer have access to those deductions if you meet criteria as someone who is taxed under the AMT. I grant you, that you can (as a business owner) find a way to reduce your AGI to levels where you may not be affected by the AMT, but if you are a w2 or 1099 earner that won't be the case.