FICA and Double Taxation
Taxation is the number one factor facing entrepreneurs and their for-profit organizations. ... Taxation reduces the amount of earnings after taxes the entrepreneur is able to reinvest. ... “Taxation affects not only each business individually but also the relationships between businesses, giving some firms advantages over others” (Dollinger 58). ... In this paper, we will explore a couple of what I see to be unfair tax practices, such as double taxation, which will require some basic income tax discussion, as well as the Federal Insurance Contribution Act, also known as the Social Security act of 1935. ... FICA may provide an unappetizing theory disputing this notion. ... Double taxation could create an argument against this opinion. ... This organization is not subject to double taxation. ... No type of partnership is subject to double taxation (Dollinger 279). ... S Corporation is not subject to double taxation. ... The C Corporation is subject to double taxation. ... Double Taxation Double taxation is when the government requires money to be taxed more than once before it is redistributed into the cash flow of the United States. The only organization in America subject to double taxation is the C Corporation, also called a regular corporation. ... The disadvantage is being subject to double taxation. ... However, the practice of double taxation is extremely harmful for small corporations. ... Federal Insurance Contribution Act How many of us looked at our paychecks early in our careers and wondered, “Who the heck is FICA, and why is he taking so much of my money?” Well, honestly, I knew it was some sort of federal tax, but it was only last year when I was researching the probability of success in opening my own business did I learn that FICA was the Federal Insurance Contribution Act. There are two parts to FICA: 1)Social Security benefits, which consist of retirement, disability and survivorship, and 2) Medicare taxes, which cover medical expenses. ... 2% of the first $76,200 an employee earns for the purpose of the Social Security portion, also called OASDI (old age, survivors and disability insurance) of FICA taxes (Larson 490).