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Illinois payroll tax hike 32%? Yikes! Can that be passed on to customer?

RayWohlfarth
RayWohlfarth Member Posts: 953
I read where the state of Illinois raised their payroll tax 32%. Thats a huge hit for a employer. Can that be passed onto the customer or is it something the contractor eats? I have tremendous empathy for the Illinois contractors.
Ray Wohlfarth
Boiler Lessons

Comments

  • kcopp
    kcopp Member Posts: 3,988
    If you want to be in business long it will have to be passed on. Classic big government not reducing costs.
    MikeIronman
  • Gordy
    Gordy Member Posts: 9,514
    edited July 2017
    Personal income tax went from 3.75 to 4.95 % corporate income tax went from 5.25 to 7 %......

    We were at 5% from 2011-2014.

    Does the employee get to pass it on to their employer? How many raises that were given got canceled out by the tax hike?........
  • Gordy
    Gordy Member Posts: 9,514
    kcopp said:

    If you want to be in business long it will have to be passed on. Classic big government not reducing costs.

    Yes sir!
  • Gordy
    Gordy Member Posts: 9,514
    edited July 2017
    My point is if the business passes it on to the consumer. The consumer gets double dipped. Once by the tax hike to their earnings. Then again by services they may use if those services hike their rates to compensate for the income tax increase.
  • EBEBRATT-Ed
    EBEBRATT-Ed Member Posts: 11,989
    I mostly work in MA, sometimes CT but not lately. But I am on the MA., CT border. I know CT has a tax on labor under certain circumstances. New construction no, repair work yes I think that's what it was. Someone down there would know more than me.

    If you don't pass it on your out of business.
  • hot_rod
    hot_rod Member Posts: 16,286
    Pretty much all price increases get passed through to the consumer. Call it tax, tariff on foreign products, fuel surcharge, remember that one.

    Several of the States are now taxing us for hours that we do training there. Something like 20 hours is free, anything over that we need to track, submit to the State and pay a tax. They are all looking for new, unique sources of revenue.
    Bob "hot rod" Rohr
    trainer for Caleffi NA
    Living the hydronic dream
  • Gordy
    Gordy Member Posts: 9,514
    It's a 1.2% increase. That's 120 dollars on 10000.00

    It's a 32% hike from 3.75 to 4.95....
  • Gordy
    Gordy Member Posts: 9,514
    Everyone goes out of their mind because there was not a budget for two consecutive years. Then they go out of their mind over a tax increase. The three biggest expenses in the state budget is pensions, education, and health care in that order. If anyone were to cut any of those everyone would go out of their mind again.

    To those about welfare programs that contains 4% of the budget. About 2.2 billion. If you completely eliminated welfare it wouldn't Touch the deficit. Which would send more people out of their minds when their link cards no longer work, and people who had nothing to lose now have nothing to lose.

  • Gordy
    Gordy Member Posts: 9,514
    Labor is still not taxable in Illinois. However they were perusing that as being taxed.
  • KC_Jones
    KC_Jones Member Posts: 5,081
    It's a never ending cycle. Let's look at it this way. The OEM manufacturer raises prices due to tax hike. The contractor raises prices due to increase in taxes and cost of OEM equipment all paid for by consumer. Now imagine this the consumer just happens to work for the OEM manufacturer. Hmmmm. We are all getting hit equally if you look at the big picture.

    Honestly I don't like tax increases because I view it as automatic double dipping. We have inflation and then they increase the tax rate. BS the inflation alone should handle cost increases. If it doesn't they are screwing up. Someone can't carry a one correctly.
    2014 Weil Mclain EG-40
    EcoSteam ES-20 Advanced Boiler Control
    Boiler pictures updated 2/21/15
  • Gordy
    Gordy Member Posts: 9,514
    edited July 2017
    How am I getting hit equally as a worker/consumer? I'm getting taxed more on income, and paying more on products, and services effected by the increase, plus inflation.
  • KC_Jones
    KC_Jones Member Posts: 5,081
    So who doesn't pay taxes and isn't a consumer?
    2014 Weil Mclain EG-40
    EcoSteam ES-20 Advanced Boiler Control
    Boiler pictures updated 2/21/15
  • JUGHNE
    JUGHNE Member Posts: 9,756
    Someone somewhere came up with the true tax paid by everyone.
    We may think we pay 30 some % of our income in taxes but this bean counter process said closer to 50%.
    Fed, state, FICA, sales, gas, "sin" tax (alcohol & tobacco), restaurant, lodging, real estate property, personal property, tire recycle tax/fee, vehicle value tax, vehicle plate tax and wheel tax for just touching the ground, cell phone 911 fees, license for trades, license fee for being a contractor of any sort, potentially ammo tax and in case I missed anything; as said in "Les Miserables": "charge you a bit extra for looking in the mirror twice". ;)
    So if any of this is considered as overhead to be in business then the customer will pay for it eventually.

    If you are self employed and pay quarterly payments to the big guy,
    you feel this hit every quarter.
    The W-2 wage earner coughs up every pay check and just adjusts to the lower paycheck, but at the end of the year might get a refund and feel like he suddenly got "free money" they never paid in (some actually do get a check for no payment made.....don't get me started on that).

    If every wage earner had to pay up at the end of the year it would be chaos. Maybe a revolt as they realize they have to come up with money they already spent somewhere. (think Cash/Paycheck Advance business).

    But still a great country!! :)
    Gordykcopp
  • RayWohlfarth
    RayWohlfarth Member Posts: 953
    Its probably only a matter of time till we see this in PA. Our state is broke and in debt even though we have the highest gas tax in the US.
    Ray Wohlfarth
    Boiler Lessons
  • Gordy
    Gordy Member Posts: 9,514
    edited July 2017
    KC_Jones said:

    So who doesn't pay taxes and isn't a consumer?



    In this scenerio. A worker gets a 1.2% raise. Mid way through the year the state raises their income tax 1.2%. Effectively cancelling out your raise that you enjoyed for 6 months. Your employer raises his cost of doing business 1.2% to cover the tax increase on his earnings. If your employer is a corporation then he raises it 1.75%.

    If I choose to buy a product my employer produces im paying 1.2-1.75% more, and my raise effectively evaporated from taxation. I'll also throw in that the employer raised his price to cover my 1.2% raise. So tell me how that equals out again. That's if I even recieved a raise...
  • hot_rod
    hot_rod Member Posts: 16,286
    In addition to a sweet health care plan.

    Bob "hot rod" Rohr
    trainer for Caleffi NA
    Living the hydronic dream
    Gordy
  • KC_Jones
    KC_Jones Member Posts: 5,081
    So you personally are the only consumer paying a higher price?
    You are the only one receiving the tax increase?
    If I work for X and buy from Y I am getting a tax increase and paying a higher price to Y.
    Like I said we are all in the same boat, I am not quite sure how we are not? You haven't explained how you personally would be unique from everyone else having their taxes raised?
    2014 Weil Mclain EG-40
    EcoSteam ES-20 Advanced Boiler Control
    Boiler pictures updated 2/21/15
  • Gordy
    Gordy Member Posts: 9,514
    I was using myself as an example of what everyone in Illinois is going through. Or for any scenario as such.

    If the owner of the business is raising his cost for the increase in tax, and even the wage increase the owner gave their employees. They are not out anything get it?

    The only repercussions would be competition. If another business is not compensating themselves for the increase in tax, and wage burden to keep their product competitive, then they either settle for less profit, or run the risk of going out of business because their margin is already low. So eventually competition weeds itself out.

  • newagedawn
    newagedawn Member Posts: 586
    edited July 2017
    big govt pigs, they need to stop getting raises, bigger pensions, free health care and start using that high priced brain capacity to do something useful. Can't any of you educated idiots think of some creative ways to generate revenue instead of blood sucking its citizens for your overpriced pay check with benefits,......just saying
    "The bitter taste of a poor install lasts far longer than the JOY of the lowest price"
  • Phil53
    Phil53 Member Posts: 70
    Don't mind paying taxes if they are used wisely. Not OK with the $800 billion spent in Afganistan over the last 16 years. 2000 dead Americans, countless Afgani's and its worse now than when we started - time to get out. Could have world class infrastructure for what it cost us, instead we're approaching 3rd world status.
    BobC
  • jumper
    jumper Member Posts: 1,831
    Low gross margin business is only possible with low employee costs. Service is employee intensive so mark up has to be large enough to absorb robbery.