Join Date: Apr 2012
Thanked 129 Times in 74 Posts
Unless I'm missing something(which i could be), an increase of 13% in taxes, would not mean your margin would be cut in half. Your taxable would be based on your net, not your gross.
Example with 25% gross margin
Before: $100 gross, $25 net - 15% taxes = $21.25
After: $100 gross, $25 net - 28% taxes = $18.25
Therefore an increase of taxes by 13% would equal about a 15% reduction in take home, not a reduction of more than half.
While it sucks either way, it probably wouldn't be business ending.
I don't believe you are including enough employer side taxes in your example. I don't have my rate off hand but seem to be paying a lot more than 3% in employer side "extra taxes" such as social security, medicare, unemployment, etc.