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Tax Treatment Legislation on Employee Disposable Income

Explain the impact of tax treatment legislation on employee disposable income and employer profits.

Your response should be at least 300 words in length. You are required to use at least your textbook as source material for your response.( MUST BE APA FORMATTED) APA rules for formatting, quoting, paraphrasing, citing, and listing of sources are to be followed.

Reference:
Henderson, R. I. (2006). Compensation management in a knowledge-based world (10th ed.). Upper Saddle River, NJ: Prentice Hall.

Solution Preview

Tax legislation and its effect on disposable income have been discussed extensively in the media since the beginning of the year. The reason is because effective January 1, 2012, the employee portion of social security tax went back up to 6.2%. For the past few years, the rate had dropped to 4.2%, while the employer-matched portion remained at 6.2%. Starting this year, the rate was again increased back to where it was, which means that the disposable income for each employee is 2% less than in previous years. The employee portion of the Medicare tax remained ...

Solution Summary

This solution provides a thorough discussion on the impact of tax treatment legislation on employee disposable income and employer profits.

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