Why are Americans double-taxed on their income?

Question

Both Federal and State take deductions from your paycheck before you even get it, then you have to pay an additional Income Tax on your gross salary and the end of the year. Isn't that double-taxing of income? Shouldn't the annual income tax be based on net pay rather than gross salary?

Answer 1

The withholding from your paycheck applies to the amount you owe when you file your return. It's all part of the same tax.

Answer 2

That's NOT "double taxation."

Income taxes are actually due when the income is earned, NOT when you file your tax return.  That's why taxes are withheld from your pay.  When you file your tax return, you settle up with the government.  If you overpaid (as most folks do) you get a refund of the overpayment.  If you underpaid then you have a bill and must pay it.

FYI, your net pay is your pay AFTER taxes.  You cannot tax net pay as it's already tax paid.  That WOULD be double taxation.

Answer 3

Not really. The per paycheck deduction is only part of what you owe. It like paying in installments. The end-of-year tax is what's left of what you owe on your gross income. You can reduce your annual taxes by having more taken out of your regular salary.

Answer 4

I agree with the answers that if you under pay you owe or over pay you get a refund.

But take that to a different level. Why are we being taxed on the same dollar over and over .

ex. I buy a car for 20,000 and pay the taxes on that full price

I sell it to you for 15,000 you pay the taxes on that full price

you sell it for 5,000 and that person pays taxes..

Total taxes paid on a 20,000 vehicle are taxes for 40,000.

This applies in many areas.. think about it.

Also start thinking through state tax, housing/property tax...

you'll find many of the same overlapping qualities :-)

Taxes ... hmmmmm