Some cuts and increases under the new U.S. tax code

Preliminary version

Excerpts

Here’s what taxes will look like for America’s highest-paying jobs

Julia La Roche

Reporter

Yahoo FinanceDecember 21, 2017

Some of America’s best paying jobs can expect to see higher taxes under the new Republican tax plan.

According to analysis from the Tax Policy Center, most income groups should find reduced taxes on average. In 2018, 80% of taxpayers should receive a tax cut, averaging about $2,100, the analysis found. However, the tax cuts as a percentage of after-tax income would benefit the higher-income groups the most. What’s more, about 5% of taxpayers should expect to see their taxes increase by about $2,800 in 2018. That percentage of taxpayers with an increase is expected to rise to 9% in 2025 and 53% in 2027 compared with the current law, the analysis found.

To get a picture of what American taxpayers might see next year, David Luther, the content marketing editor at career insights website Zippia, crunched data for more than 800 professions to come up with some estimates.

Many surgeons, anesthesiologists, and dentists can expect to see a tax increase.  (Photo by John Moore/Getty Images)

For this undertaking, Luther used New Jersey exemptions as a baseline because it’s a population-dense state that has fairly high state taxes. He also made the assumption that the individual is unmarried and childless and a homeowner with a house valued at three-times the median wage for the occupation.

Yahoo Finance highlighted the 20 best-paying jobs in America according to the Bureau of Labor Statistics. Some of them will see their taxes go up under the proposed plan.

1. Anesthesiologists

Annual mean wage: $269,600
Current tax: $52,972.97
New tax: $58,623
Increase: +$5,650.28
Percentage: +10.6% increase

2. Surgeons

Annual mean wage: $252,910
Current tax: $43,973.66
New tax: $46,847
Increase: +$2,873.96
Percentage: 6.5% increase

3. Obstetricians and Gynecologists

Annual mean wage: $234,310
Current tax: $44,288.88
New tax: $47,309.29
Increase: +$3,020.40
Percentage: 6.8% increase

4. Oral and maxillofacial surgeons

Annual mean wage: $232,870
Current tax: $43,973.66
New tax: $46,847.62
Increase: +$2,873.96
Percentage: 6.5% increase

5. Orthodontists

Annual mean wage: $228,780
Current tax: $43,078.34
New tax: $45,549,49
Increase: + $2,471.15
Percentage: +5.7% increase

6. Physicians and surgeons, all other

Annual mean wage: $205,560
Current tax: $37,995.39
New tax: $38,743.24
Increase: +$747.85
Percentage: 1.9% increase

7. Internists, general

Annual mean wage: $201,840
Current tax: $37,181.06
New tax: $37,652.84
Increase: +$471.77
Percentage: 1.3% increase

8. Family and general practitioners

Annual mean wage: $200,810
Current tax: $36,955.59
New tax: $37,350.92
Increase: +$395.33
Percentage: 1% increase

9. Psychiatrists

Annual mean wage: $200,220
Current tax: $36,826.44
New tax: $37,177.99
Increase: +$351.54
Percentage: 0.9% increase

10. Chief executives

Annual mean wage: $194,350
Current tax: $35,541.48
New tax: $35,457.37
Cut: $84.10
Percentage: 0.1% decrease

11. Pediatricians, general

Annual mean wage: $184,240
Current tax: $33,328.36
New tax: $32,493.93
Cut: $834.43
Percentage: 2.5% decrease

 

taxbrackets

Payroll taxes

United States (Wikipedia)

In the United States, payroll taxes are assessed by the federal government, some of the fifty states (Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming do not have state income tax; New Hampshire and Tennessee only tax income from interest and dividends), the District of Columbia, and numerous cities. These taxes are imposed on employers and employees and on various compensation bases and are collected and paid to the taxing jurisdiction by the employers. Most jurisdictions imposing payroll taxes require reporting quarterly and annually in most cases, and electronic reporting is generally required for all but small employers.[15] The Federal Insurance Contributions Act tax is a federal payroll tax imposed on both employees and employers to fund Social Security and Medicare[16] —federal programs that provide benefits for retirees, the disabled, and children of deceased workers.
Income tax withholding

Main article: Tax withholding in the United States

Federal, state, and local withholding taxes are required in those jurisdictions imposing an income tax. Employers having contact with the jurisdiction must withhold the tax from wages paid to their employees in those jurisdictions.[17] Computation of the amount of tax to withhold is performed by the employer based on representations by the employee regarding his/her tax status on IRS Form W-4.[18]

Amounts of income tax so withheld must be paid to the taxing jurisdiction, and are available as refundable tax credits to the employees. Income taxes withheld from payroll are not final taxes, merely prepayments. Employees must still file income tax returns and self assess tax, claiming amounts withheld as payments.[19]

Social Security and Medicare taxes

Main article: Federal Insurance Contributions Act tax

Federal social insurance taxes are imposed on employers[20] and employees,[21] ordinarily consisting of a tax of 12.4% of wages up to an annual wage maximum ($118,500 in wages, for a maximum contribution of $14,694 in 2016) for Social Security and a tax of 2.9% (half imposed on employer and half withheld from the employee’s pay) of all wages for Medicare.[22] The Social Security tax is divided into 6.2% that is visible to employees (the “employee contribution”) and 6.2% that is visible only to employers (the “employers contribution”). For the years 2011 and 2012, the employee’s contribution had been temporarily reduced to 4.2%, while the employer’s portion remained at 6.2%,[23] but Congress allowed the rate to return to 6.2% for the individual in 2013.[24] To the extent an employee’s portion of the 6.2% tax exceeded the maximum by reason of multiple employers, the employee is entitled to a refundable tax credit upon filing an income tax return for the year.[25]

Unemployment taxes

Main article: Federal Unemployment Tax Act

Employers are subject to unemployment taxes by the federal[26] and all state governments. The tax is a percentage of taxable wages[27] with a cap. The tax rate and cap vary by jurisdiction and by employer’s industry and experience rating. For 2009, the typical maximum tax per employee was under $1,000.[28] Some states also impose unemployment, disability insurance, or similar taxes on employees.[29]

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