Dental Hygienist

A dental hygienist is one of the professions that is highly paid in the united states with a gross salary of 62,430 per year, this salary is the mean wage rate for the profession provided by the united state bureau of statistics, every other employee is required to pay taxes and gross salary minus the taxes give you net salary, the taxes we consider in this profession include social security and Medicare taxes, state taxes and federal taxes.

In our calculation of the net salary we will consider the federal taxes, state taxes and Medicare and social security taxes, we assume that the employee works in Arizona State and therefore his state tax will be with reference to the Arizona tax rate. For this reason this paper will first consider the calculation of individuals taxes using the gross salary and therefore we must consider the gross salary first and then search for appropriate sources of the tax rates that are required in the calculation of the net salary.

Gross salary:

The mean gross salary of a dental hygienist is 62,430 per year, this according to the united state bureau of statistics available at http://www.bls.gov/oco/ocos097.htm , because taxes are paid every month we will have to determine the mean salary per month and this will be obtained by dividing the annual mean salary by the number of months per year which is 12,

Monthly gross salary = annual gross salary / 12 month

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= 62,430/12

= 5202.5

Medicare and social security taxes:

Given the monthly gross salary we are in a position to calculate the Medicare and social security taxes, this tax level is obtained by __multiplying__ the gross profit by the tax rate which gives us the tax level.

Tax = gross salary X tax rate

The social security tax is 6.2% and the Medicare taxes is 1.45% this is according to http://www

.ssa.gov/pubs/10003.html

, we therefore consider each tax separately and this will be as follows:

Social security tax:

6.2% X 5202.5 = 322.555

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Medicare taxes:

1.45% X 5202.5 = 75.43625

State tax:

State tax is also deducted from the gross salary in order to get the net salary that a dental hygienist should receive, the state tax for the Arizona state lies between 2.59% and 4.54%, for this reason therefore we get the mean rate of the Arizona rates, these rates were retrieved from http://www.taxadmin.org/FTA/rate/ind_inc.html

, the mean rate will be achieved by adding up the two rates and then dividing the sum by two, this will be as follows:

2.59% + 4.54% = 7.13%

7.13% /2 = 3.565%

For this reason therefore we will consider the state tax as 3.565% which the mean rate of tax in Arizona. Given the rate of tax as 3.565% we can find the tax level of a dental hygienist in Arizona and this will be given by multiplying the gross monthly salary by the tax rate, therefore our tax level will be achieved as follows:

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5202.5 X 3.565% = 185.4691

Therefore our state tax per month is 185.4691.

Federal tax:

The federal taxes are determined using a tax table, our tax table was retrieved from http://ww w.irs.gov/formspubs/article/0,,id=164272,00.html

, and the table below shows the tax level at each salary range in the country: If income is over

But not over The tax rate is

0

7825

10% of the amount over $0

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7825

31850

782.50 plus 15% of the amount *over* 7,825

31850

77100

4,386.25 plus 25% of the amount over 31,850

77100

160850

15,698.75 plus 28% of the amount over 77,100

160850

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349700

39,148.75 plus 33% of the amount over 160,850

349700

to infinity

101,469.25 plus 35% of the amount over 349,700

This therefore means that our salary lies between 0 and 7825 dollars and for thi9s reason we assume that the employee is single and not married because the table above depicts tax rate for single persons in the country, given that the tax rate is 10% then we can find the federal tax which is calculated by multiplying the income level by the tax rate:

5202.5 X 10% = 520.25

Therefore our federal tax level is equal to 520.25.

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Net salary:

Having determined the tax that is included in calculating the net salary we can now determine the net salary, the net salary is achieved by subtracting the all taxes from the gross salary, in our case therefore the following will be our calculations:

Net salary = gross salary – (Medicare tax + social security tax + federal taxes + state tax)

This can therefore be simplified in the table below:

tax type

amount

federal

520.25

state

185.4691

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Medicare

75.43625

social security

322.555

total tax

1103.71035

We can therefore clearly state that the total tax is 1103.71 which includes all the taxes considered in the table above, our net salary will therefore be as follows:

gross salary

5202.5

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minus

tax

1103.71035

net salary

4098.78965

Our net salary in the dental hygiene profession for an average employee is 4098 dollars; this has been obtained by calculating total taxes and then subtracting from the gross salary.

The yearly net earnings per annum will therefore be 4,098.7 X 12 = 49,185 and the total tax paid per year will be 1,103.7 X 12 = 13,244.5

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Assumptions of this calculation are that the dental hygienist salary is 62,430 per annum and therefore to get the salary per month is given by dividing this amount by 12 months. The other assumption made during calculation is that the person in question who is a dental hygienist is a single person and not married, the other assumption made is that the taxes rates given are monthly tax rates and finally the assumptions is that only federal taxes, state taxes and Medicare and social security taxes are relevant in the calculation of net salary, this assumption also states that there are no tax refunds or compensations such as transport allowances and house allowances provided to the dentists.

Taxes:

Taxes can either be direct or indirect taxes, direct taxes include income taxes and wealth taxes while *indirect* taxes include sales taxes and value added taxes. There are various forms of taxes, taxes can either be progressive, regressive or proportional taxes, a regressive tax is that tax which will place a heavy tax burden on low income earners than higher income earners. A progressive tax is that tax which places a larger tax burden on higher income earners than lower income earners. Finally a proportional tax is the tax which places an equal tax burden on all income groups.

The state tax is a proportional tax meaning that the low income earners and the high income earners pay the same tax rate to the tax rate, in this form of tax the poor citizens are forced to sacrifice more than the wealthy citizens. The federal taxes are progressive taxes where the tax rate increases as the level of income increases, they help in establishing equality in the society through less tax burden to low income earners. However we do not have any regressive tax represented in our case.

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tax type

amount

percentage

federal

520.25

10%

state

185.4691

4%

Medicare

75.43625

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1%

social security

322.555

6%

net salary

4098.78965

79%

5202.5

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According to the percentage analysis of the gross profit the highest component of tax is federal taxes 10%, the second largest is the social security taxes and the lowest is the Medicare tax which is only 1%.

From the table above the net salary is 79% of gross earnings and therefore the tax levels amount to 21% of gross earning, in future we expect the tax levels to decline, the reason for this is an increase in the number of tax payers in future which will result into a large number of taxable individuals in the future increasing tax revenue. Taxes in the future are also expected to promote equality in the economy and therefore we expect all taxes to be progressive in nature.

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References:

State taxes (2008) Arizona state tax, retrieved on 14th February, available at http://www.taxad min.org/FTA/rate/ind_inc.html

Social security and Medicare taxes (2008) social security taxes and Medicare taxes, retrieved on 14 th February, available at http://www.ssa.gov/pubs/10003.html

BLS statistics government (2008) dental hygienist, retrieved on 14th February, available at http ://www.bls.gov/oco/ocos097.htm

IRS (2008) federal taxes, retrieved on 14th February, available at http://www.irs.gov/formspubs /article/0,,id=164272,00.html

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