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For all those moaning about FICA being a "regressive tax" (it isn't any such thing), and or otherwise complaining how the *poor* get such a raw deal via those payroll taxes, go out and price an annuity/healthcare coverage that provides same or greater benefits of SS and Medicare to a spouse, surviving widow/widower, and or minor children including disability, then get back to us.
SS does what it was designed to do; provide workers with some sort of basic old age benefit and healthcare coverage at comparatively low rates.
Yes, often low to moderate income households who do not owe federal income taxes do pay FICA. Equally yes obviously the less one earns every penny paid out in taxes or whatever matters, but there you are then.
FICA payroll taxes do what most low/moderate income Americans for much of recent history cannot or will not; provide for their old age via savings, starting an annuity plan or whatever.
If FICA were removed tomorrow and or tax burden lowered on the "poor", do you think even one-quarter or one-third would take those "savings" and plow them into some sort of retirement vehicle? No they won't; it will go way the rest of their money currently does; to things they *want*.
FICA ensures the past behavior of spending every GD cent that they get, then ending up impoverished at old age, and or dying and leaving a surviving spouse and minor children doesn't totally happen.
But go ahead; keep trotting out these old canards and untruths. It just gives aid to the GOP when they want to gut or otherwise destroy SS. I mean after all if it is a "regressive" tax lifting that burden off the shoulders of those poor low income workers should be seen as a blessing.
For all those moaning about FICA being a "regressive tax" (it isn't any such thing), and or otherwise complaining how the *poor* get such a raw deal via those payroll taxes, go out and price an annuity/healthcare coverage that provides same or greater benefits of SS and Medicare to a spouse, surviving widow/widower, and or minor children including disability, then get back to us.
SS does what it was designed to do; provide workers with some sort of basic old age benefit and healthcare coverage at comparatively low rates.
Yes, often low to moderate income households who do not owe federal income taxes do pay FICA. Equally yes obviously the less one earns every penny paid out in taxes or whatever matters, but there you are then.
FICA payroll taxes do what most low/moderate income Americans for much of recent history cannot or will not; provide for their old age via savings, starting an annuity plan or whatever.
If FICA were removed tomorrow and or tax burden lowered on the "poor", do you think even one-quarter or one-third would take those "savings" and plow them into some sort of retirement vehicle? No they won't; it will go way the rest of their money currently does; to things they *want*.
FICA ensures the past behavior of spending every GD cent that they get, then ending up impoverished at old age, and or dying and leaving a surviving spouse and minor children doesn't totally happen.
But go ahead; keep trotting out these old canards and untruths. It just gives aid to the GOP when they want to gut or otherwise destroy SS. I mean after all if it is a "regressive" tax lifting that burden off the shoulders of those poor low income workers should be seen as a blessing.
you know the deal ...when you have little understanding of what a system is designed to do or what it actually does it is easy to find fault in it or think it it is something it isn't ....
in the mean time the lower the income you have the more you get from that dollar ...it is like your home insurer or auto insurer paying you based on your income .. some will see as much as 6 times the payment per dollar paid in and that is a very good deal for them . likely the best deal they will see in their life with their limited income they have .
today the odds greatly favor living to collect and that is what is draining ss along with 11 million less workers, population wise , and ss disability being gotten fraudulently
Jim1921 and TaxPhd, thank you, I now get it. You correctly point out FICA tax rate is “flat” upon individual's wages but have a “disparate impact” upon lower-income employees.
That's a “distinction without a difference”. The consequences of FICA payroll taxes upon employees are, (rather than taxes levied upon general sales or net incomes), effectively more regressive.
Excerpted from: https://en.wikipedia.org/wiki/Disparate_impact
“Disparate impact in United States labor law refers to practices in employment, housing, and other areas that adversely affect one group of people of a protected characteristic more than another, even though rules applied by employers or landlords are formally neutral”.
Originally Posted by Supposn: FICA taxes upon individuals' earnings are the most regressive of all federal taxes.
RationalExpectations, you prefer we tax a greater portion of greater earners rather than lesser earners' annual incomes?
FICA is an insurance premium. Two people similarly situated should pay the price (premium) for the same insurance policy.
Two people who walk into a grocery store to purchase a gallon of milk should see the same price. You don't support the idea of an affluent person being charged more for a gallon of milk than a middle-class person, do you? After all, look at how well such pricing schemes have worked for, say, college tuition and health insurance.
FICA is an insurance premium. Two people similarly situated should pay the price (premium) for the same insurance policy.
Two people who walk into a grocery store to purchase a gallon of milk should see the same price. You don't support the idea of an affluent person being charged more for a gallon of milk than a middle-class person, do you?
But fica does not work like that ... a dollar paid in does not all buy the same percentage benefit ...lower incomes get as much as 6x out per dollar paid in
FICA is an insurance premium. Two people similarly situated should pay the price (premium) for the same insurance policy.
Two people who walk into a grocery store to purchase a gallon of milk should see the same price. You don't support the idea of an affluent person being charged more for a gallon of milk than a middle-class person, do you? After all, look at how well such pricing schemes have worked for, say, college tuition and health insurance.
Actually it isn't really.
Everyone pays the exact same FICA rates based upon income regardless of marital and or familial status. However those who are married and or have children receive far more in terms of benefits than singles.
Also as pointed out low income persons have their contributions massaged so to enhance their benefit payout.
Two persons purchase milk; one earns $500k per year, the other $50k. Yes, both pay the same, but we're talking about goods in that case, not an annuity or insurance.
But fica does not work like that ... a dollar paid in does not all buy the same percentage benefit ...lower incomes get as much as 6x out per dollar paid in
Yes of course -- and that is one of its problems. A dollar paid in SHOULD buy the same in benefits regardless of the income of the recipient.
But fica does not work like that ... a dollar paid in does not all buy the same percentage benefit ...lower incomes get as much as 6x out per dollar paid in
No , not at all , it has nothing to do with medicare ..that is how the ss system proportions the dollars paid in vs the benefit you get ...the lowest incomes get 6x the benefit for every dollar contributed vs the highest income level
Yes of course -- and that is one of its problems. A dollar paid in SHOULD buy the same in benefits regardless of the income of the recipient.
The lowest incomes could starve if that was the case ,their checks would be very very small...
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