Out of Sight, Out of Mind?

Click for audio Out of Sight, Out of Mind?

Retail businesses always clearly mark the prices of their goods so consumers know how much they cost. But when it comes to the cost of keeping their jobs, Michigan workers aren’t seeing the entire price tag.

Hidden taxes, including the company-paid parts of workers’ compensation, unemployment insurance, and the Medicare and Social Security, take a big bite out of Michiganians’ paychecks.

How big is this hidden tax bite? The average full-time Michigan industrial worker earns an annual gross income of over $27,000. But his employer must spend, after all taxes, more than $31,000 to employ him.

The difference is $4,200 the worker never sees: every penny goes straight to the government. After income taxes and his portion of Medicare and Social Security are withheld, that worker gets only $22,200, making Michigan twelfth from the bottom nationwide in take-home pay.

Workers deserve to know how much government takes from their paychecks. That’s why Michigan Congressman Pete Hoekstra has introduced legislation requiring all taxes to appear on federal employees’ pay stubs.

Private employers should also itemize these hidden taxes, so the full costs of government are visible to their workers.

For the Mackinac Center, this is Catherine Martin.