Author: Joseph Nacmias (CPA)
McGladrey & Pullen, LLP., Certified Public Accountants 
750 3rd Avenue, New York, NY 10017 

Telephone: (212) 297-4888 / Fax:  (212) 972-9088
E-Mail: Joseph_Nacmias@rsmi.com / http://www.mcgladrey.com

7.2 Employment Taxes

Social Security taxes (generally indexed to inflation) have been increasing and are imposed on both employer and employee. Currently, the employer and employee are each subject to social security tax at a rate of 6.2% on wages up to about $80 000 (maximum about $5 000 a year) and a medicare tax at a rate of 1,45% on all wages.

These taxes are payable by a foreign employer with U.S employees, regardless of whether it has a permanent establishment in the US.

Income taxes are collected under the employment and withholding tax system at the Federal, state and city levels, at varying rates based on each jurisdiction’s statutes. All withholding taxes are deducted by employers from gross wages and remitted to the appropriate agencies.

All the States tax payrolls at rates ranging from 1% to 7% (on the first $5,000 to $20,000) to fund unemployment or disability benefits; the federal government also collects an unemployment tax, of generally $56 per employee.