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Possible Payroll Tax Changes in US Cities: What Companies Need to Know

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Possible Payroll Tax Changes in US Cities: What Companies Need to Know

Posted by Payroll Data Processing in Blog Jun 29 2016

Payroll taxes are taxes that are calculated as a percentage of the salaries that employers pay their employees. As am example, an article recently from CNET says that San Francisco has been having a homeless problem. The city wants to challenge that problem by changing the city’s payroll taxes to combat homeless living on the streets. So what does that have to do with the price of tea in china? Well, it could affect the payroll taxes of twitter employees and the usage of everyone’s go-to one hundred and forty-character social media site, Twitter.

As it stands, there are payroll taxes that are mandatory per state and can range as high or as low per local city. So even though the state of California has an employment payroll tax of 1.2% in 2015, it could be much higher in different cities like San Francisco or Los Angeles. The same goes with states all over the North American and Pacific regions. However, there are a few states that do not impose forms of personal income taxes like Florida and Alaska and there are states that do impose personal taxes in different ways like New Hampshire and Tennessee.

While payroll tax doesn’t change in the entire state, cities can opt to raise taxes on payroll, salary, or even tax revenue to help with funding for education, infrastructure and roadways, and even how much goes back into our pocket. The CNET article states that San Francisco wants to reintroduce the payroll levy that Twitter fought to remove. But as a way to bring back revenue to the city, that might be the one thing that has to be reintroduced for the good of the city and its inhabitants. The reason why this information is so important for businesses to know is that if they live in a city with payroll levies or payroll tax cuts and want to bring them back to help with falling bridges or building new roadways, it can affect the people who work under the company or the employer.

So while the tax in question is up for a vote, there are other cities trying to bring in revenue and more money into their system so that people have better access to public places. But while this is only a hot debate issue in San Francisco, who knows maybe some other cities around the states would want to find ways to bring back such taxes implemented on the payroll. So while you work on paying your employees the right amount of money, there could be some backlash from cities who might want to find new ways to tax their citizens and some ways to bring more money back into the economy.

Payroll taxes don’t have to frustrating to do, but they are easy to understand. If some cities want to bring in more revenue, it shouldn’t mean that business have to lay off employees and companies have to shut their offers down, it just means you have to work with that the city or state wants and negotiate some deals with your employees and company workers on good terms.