Minor correction about tax rates and witholding

[tcmay@got.net (Timothy C. May)]

At 1:21 PM 1/11/96, Gary Howland wrote:
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>> you think that's a bit ridiculous?  i'm paid via an NIH grant given to my
>> adivisor by the govt.  this stipend is taxed.  it didn't used to be
>> (started to be taxed around '86  i believe).  why the hell doesn't the
>> govt just save everyone the trouble and pay me less.  i'm sure they could
>> get rid of a couple of IRS people this way.
>
>It's even sillier over here in Europe, and the paperwork is probably
..

I didn't comment when the first remark was made, several days ago, but if
others are going to elaborate on it, I will now comment.

The government cannot simply take its cut before sending the stipend/salary
for a very good reason: they don't know the final tax rates of the
taxpayers!

Some people will end up paying no taxes, for whatever reasons (low overall
wages, lots of deductions and dependents, offsetting capital losses, etc.).
Others will pay 20%, and some may even pay more (doubtful, on a stipend,
but you get the point).

Clearly the government cannot simply "withold" 15%, say, nor can it know in
advance the precise amount to withold. A flat tax rate would make this more
possible, but would still not be completely accurate.

--Tim May

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