Example
A common example, the Federal Unemployment Tax Act (FUTA) tax in the United States had, in 2004, a taxable wage limit of $7,000. As described on the form which records information for this tax paid by employers, U.S. Internal Revenue Service form 940, only the first $7,000 of wages earned by each employee can be considered for the FUTA tax.
| Name | Wages | Taxable Wages |
| Joe Spittle | 8,500 | 7,000 |
| Jeff Wrench | 4,000 | 4,000 |
| Jane Lip | 500 | 500 |
| Erica Derg | 4,500 | 4,500 |
| Total Taxable Wages: | 16,000 | |
In this example, Joe Spittle earns $8500. Since this is higher than the limit of FUTA for taxable wages, which is $7,000, the FUTA tax calculated for Joe cannot be calculated against any more than the limit of $7,000.
Read more about this topic: Taxable Wages
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“Our intellect is not the most subtle, the most powerful, the most appropriate, instrument for revealing the truth. It is life that, little by little, example by example, permits us to see that what is most important to our heart, or to our mind, is learned not by reasoning but through other agencies. Then it is that the intellect, observing their superiority, abdicates its control to them upon reasoned grounds and agrees to become their collaborator and lackey.”
—Marcel Proust (1871–1922)