[randunel]

> 38% to the Government: $.93 (of the remaining $2.45)

If the invoice you give your customer says "$5.00", isn't the tax taken from that? That's how things work in Europe, the gross income is taxed.

[gamblor956]

No, because the shares of the transaction that go to Apple and Facebook were never your income to begin with.

Alternatively, those costs are simply deductible from taxable business income, for the same result, even on individual returns. (In the US business income is taxed on a net basis.)

[deelowe]

The US taxes sales twice. You get taxed on the sale itself, which is the scenario you describe. Then you get taxed on your income at the end of the year, which is the "38% marginal" rate being described here.