Employer Costs, Take-Home Pay, and Tax Wedge for an    
Average Manufacturing Wage Worker in CALIFORNIA    
  Amount Rank
Total Cost to Employer* $30,914 22
Take-Home Pay $22,928 10
Take-Home Pay, % of Employer Costs 74.2% 5
Tax Wedge* $7,986 36
Tax Wedge, % of Employer Costs 25.8% 40
Gross Earnings $27,200  
Taxes Withheld from Worker's Paycheck    
Social Security/Medicare Payroll Tax $2,081  
Federal Income Tax $2,048  
State Income Tax $144 42
Total Taxes Withheld $4,272  
Hidden Taxes Paid by Employer on Worker's Behalf    
Social Security/Medicare Payroll Tax $2,081  
Workers' Compensation Contribution $1,311 23
State Unemployment Insurance Tax $266 14
Federal Unemployment Insurance Tax $56  
Total Employer-Paid Taxes $3,714  
Employer-Paid (hidden) Share of the Tax Wedge 46.5% 12
Source: Dean Stansel, "The Hidden Burden of Taxation: How the Government Reduces    
Take-Home Pay," Cato Institute Policy Analysis No. 302, April 15, 1998.    

*Total cost to employer does not include the cost of fringe benefits
(such as employer contributions to private health insurance plans and
pensions) and tax and regulatory compliance. The tax wedge does not
include the host of other taxes--property taxes, sales taxes, gas taxes,
cigarette taxes, etc.--that workers must pay with their remaining
take-home pay.


Last Updated on 4/9/98
By Mark LaRochelle