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Old 10-12-2017, 10:02 AM
 
6,089 posts, read 2,817,970 times
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Quote:
Originally Posted by Supposn View Post
SuiteLiving, you're refering to
[USC10] 26 USC Subtitle C, CHAPTER 21, Subchapter A: Tax on Employees .
The taxes you're referring to are based upon payrolls and authorized by the Federal Insurance Contributions Act (aka, FICA).

<<SNIP>>
Given that you appear to understand the highlighted portion above, why do you insist on including total income in the numerator of the calculation, instead of SS wages? This is really quite baffling.
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Old 10-12-2017, 10:18 AM
 
1,148 posts, read 523,448 times
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Quote:
Originally Posted by Supposn View Post
SuiteLiving, you're refering to
[USC10] 26 USC Subtitle C, CHAPTER 21, Subchapter A: Tax on Employees .
The taxes you're referring to are based upon payrolls and authorized by the Federal Insurance Contributions Act (aka, FICA).

(Although the word “insurance” appears in FICA's title, a significant portion of the purposes which the taxes were were intended for and do fund, are for other than insurance purposes).

In many instances the tax behaves as a regressive tax. This is certainly true when the tax is considered as defined in the description provided by 17thAndK, “A tax that takes a larger percentage of income from low-income groups than from high-income groups”.
No I'm referring to specific taxes that are levied. One tax is levied under IRC Section 3101(a) and one tax is levied under IRC Section 3101(b).

The fact that they are both taxes under the same subchapter of Chapter 21 does not change the fact that they are separate taxes.
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Old 10-12-2017, 10:18 AM
 
Location: Fairfax County, VA
1,387 posts, read 688,948 times
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Quote:
Originally Posted by TaxPhd View Post
Given that you appear to understand the highlighted portion above, why do you insist on including total income in the numerator of the calculation, instead of SS wages? This is really quite baffling.
He commits the same gaffe as the IRS did.
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Old 10-12-2017, 10:22 AM
 
1,286 posts, read 686,065 times
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Quote:
Originally Posted by TaxPhd View Post
Supposn,

A simple question. . .

When calculating the effective rate of an income tax, which of the following formulas would you use ...
TaxPhd, the manner of calculating income taxes is not germanne to FICA taxes in many instances behaving as regressive taxes. In such instances it certainly does, as 17thAndK described, “takes a larger percentage of income from low-income groups than from high-income groups”.
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Old 10-12-2017, 12:36 PM
 
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Quote:
Originally Posted by Supposn View Post
TaxPhd, the manner of calculating income taxes is not germanne to FICA taxes in many instances behaving as regressive taxes. In such instances it certainly does, as 17thAndK described, “takes a larger percentage of income from low-income groups than from high-income groups”.
It is perfectly germane to the discussion, as it gets to how taxes and rates are calculated.

Why don't you answer the question?
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Old 10-12-2017, 12:38 PM
 
33,046 posts, read 22,034,672 times
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Quote:
Originally Posted by Supposn View Post
TaxPhd, the only definition of a regressive tax you accept is “one in which the tax rate increases as the base to which it applies decreases”?

(A) When a taxpayer's annual wage exceeds the existing legally determined “cap”, which is currently $127,200, the FICA tax rate applied to that taxpayer's reduced, (7.65 – 6.2)% = 1.45%). TaxPhd, the only definition of a regressive tax you accept is “one in which the tax rate increases as the base to which it applies decreases”. You do not accept this described instance as being regressive, because the tax rate was reduced at some point where the tax base increased?

(B) FICA taxes are only levied upon wages and not levied upon incomes derived from sources other than employment. You argue that although the effective FICA tax rate for incomes not derived from employment is zero, FICA's levied upon a tax base of wages rather than all incomes or taxable incomes; thus this attribute is not a regressive characteristic.

17thAndK's provided definition of a regressive tax is “A tax that takes a larger percentage of income from low-income groups than from high-income groups”. When applied to all instances of conditions (A) and many instances of condition (B), this definition determines that FICA is a regressive tax.

TaxPhd, I don't doubt your understanding of the language and the words, but you're not overly careful as to how you read and write them. The difference between the definition provided by you and that provided by 17thAndK is the difference between our and your determination of FICA's attributes.


This one has me scratching my head - and it's NOT the heartbreak of psoriasis. I look forward to imminently reading TaxPhd's response.
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Old 10-12-2017, 12:43 PM
 
33,046 posts, read 22,034,672 times
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Quote:
Originally Posted by TaxPhd View Post
FICA is comprised of two components - SS and Medicare. Attempting to co-mingle them as you have done does not allow for a meaningful analysis, and it will lead to erroneous conclusions (such as those that you have drawn).

The SS portion of FICA is not an income tax, it is a wage tax. More specifically, it is a tax assessed on SS wages, which range from $0 - $127,200, not on total income. Regardless of the SS wage earned, the assessed tax is 6.2% That rate DOESN'T change, regardless of how much SS wages are earned. Given this fact, it is easy to see that the SS tax isn't regressive. Attempting to include total income in the numerator of the calculation is a classic "combining apples and oranges" problem. Since SS tax is only assessed on SS wages, including total income in the denominator is meaningless.

The medicare tax (which is separate from the SS tax) has no limit. It is assessed on Medicare wages, not on total income. The rate is 1.45% on Medicare wages up to $200,000. Above $200,000, there is an additional Medicare tax of .9% As with the SS tax, including total income in the denominator of the calculation is the same "apples and oranges" problem, because it is a tax that is not assessed on total income. So, not only is the Medicare tax NOT regressive, the inclusion of the additional Medicare tax on Medicare wages above $200,000 makes it clearly PROGRESSIVE.

QED



As I said before, my definition, and that provided by 17thAndK are exactly the same. They were then, and they still are now. And you still don't understand that.

I am beyond overly careful. Everything that I have posted on this topic is 100% true, accurate, and correct. As I said before, I am truly sorry that you aren't understanding it, but I don't believe it is possible to make it any more clear. Your quest of trying to find regressive taxes where they don't exist is nothing more than tilting at windmills, and you will find similar success as that found by Don Quixote.

Fascinating reasoning; I shall consult professional tax fora to see what professionals say about this.
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Old 10-12-2017, 12:44 PM
 
6,089 posts, read 2,817,970 times
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Quote:
Originally Posted by freemkt View Post
This one has me scratching my head - and it's NOT the heartbreak of psoriasis. I look forward to imminently reading TaxPhd's response.
Answered in post #39.

The Reader's Digest version: Supposn includes items in the base that aren't appropriately included, in order to bolster his argument that certain taxes are regressive.

See posts #49 & #51 for more information.
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Old 10-12-2017, 07:51 PM
 
1,286 posts, read 686,065 times
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Quote:
Originally Posted by Supposn View Post
SuiteLiving, you're referring to
[USC10] 26 USC Subtitle C, CHAPTER 21, Subchapter A: Tax on Employees .
The taxes you're referring to are based upon payrolls and authorized by the Federal Insurance Contributions Act (aka, FICA). …
… In many instances the tax behaves as a regressive tax. This is certainly true when the tax, [i.e. the FICA tax] is considered as defined in the description provided by 17thAndK, “A tax that takes a larger percentage of income from low-income groups than from high-income groups”.
Quote:
Originally Posted by TaxPhd View Post
Given that you appear to understand the highlighted portion above, why do you insist on including total income in the numerator of the calculation, instead of SS wages? This is really quite baffling.
TaxPhd, no, you pretend not to understand and deliberately excluded the last sentence from the post you quoted from, (i.e. post #50). I regret that I didn't explicitly state the tax we were discussing was the FICA tax.

FICA often behaves as a regressive tax.
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Old 10-12-2017, 08:17 PM
 
1,148 posts, read 523,448 times
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Quote:
Originally Posted by Supposn View Post
SuiteLiving, you're refering to
[USC10] 26 USC Subtitle C, CHAPTER 21, Subchapter A: Tax on Employees .
The taxes you're referring to are based upon payrolls and authorized by the Federal Insurance Contributions Act (aka, FICA).
Yes, the act known as the Federal Insurance Contributions Act authorizes various taxes (plural). One is the OASDI, which is found in IRC Section 3101(a). This tax is 6.2% of certain wages. Another tax is HI which is found in IRC Section 3101(b). This tax is 1.45% of all wages.

Separate taxes, neither of which is regressive under the strict definition of regressive, as it is the same rate for all wages subject to the tax.
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