Final answer:
Federal income taxes are not considered employer payroll taxes, which typically include Federal unemployment taxes, FICA taxes, and state unemployment taxes. Federal income taxes are deducted from employee's wages. The Social Security tax of 6.2% is a proportional tax.
Step-by-step explanation:
The correct answer to the question 'Employer payroll taxes include all of the following except' is option 2) Federal income taxes. Employer payroll taxes typically include Federal unemployment taxes, FICA taxes (which fund Social Security and Medicare), and state unemployment taxes. However, Federal income taxes are withheld from the employee's wages and are not considered an employer payroll tax.
An individual who owns a corporation and is the only employee will need to pay various types of federal tax, including employer payroll taxes like Social Security and Medicare taxes, as well as any applicable unemployment taxes. If the business is not incorporated and the individual is self-employed, they will need to pay Self-Employment Tax, which includes both the employee and employer portions of Social Security and Medicare taxes.
The Social Security tax under FICA is a flat rate of 6.2% for income earned below a certain threshold (such as $113,000), which does not change with the income level. Therefore, this tax is considered to be a proportional tax, as the percentage remains the same regardless of the income level, up to the cap.
Therefore the correct answer is 2) Federal income taxes.