Re: Bush busts Social Security with massive deficits

From: William F Hummel (wfhummel_at_comcast.net)
Date: 10/04/04 

Date: Mon, 04 Oct 2004 16:21:57 GMT

On Mon, 04 Oct 2004 15:58:11 GMT, Igor <jjweatherby@houston.rr.com>
wrote:

>No there is no cap on FICA. The cap I refer is on SS tax. Yes they are
>both payroll for the person whose only income is wages. There is a
>difference for those who receive income other than wages. FICA taxes
>interest income, dividends, payroll etc. Even gambling winnings come
>under FICA. So it is not just a payroll tax. Social Security taxes are
>pure payroll. If you only receive non-wage income you don't pay SS
>taxes. Well not the taxes labeled SS. The cap refers to the fact that
>social security taxes only tax the first $60,000 of income. Removing the
>cap does not affect anyone who makes $60,000 or less. What the proposal
>is to tax all wages regardless of the amount. The current system taxes
>100% of wages for those who make 60,000 or under. Someone who makes
>$400,000 is only taxed on 15% of income. After the first $60,000 made
>they pay no more social security tax. Removing the cap makes no change
>to what low income people pay.

Weird. You need to get a new text book.

FICA tax is a combination of a 6.2% social security tax and a 1.45%
Medicare tax. The social security tax is assessed on wages up to
$87,000. The cap is increased annually by the inflation rate. The
Medicare tax is assessed on all wages. Employers and employees are
both liable for FICA taxes.

Self-employed individuals pay a self-employment tax which is the
equivalent of FICA tax. For 2003, the rate was 12.4% OASDI tax (the
old age, survivors, and disability insurance tax) on the first $87,000
of self-employment income. A 2.9% Medicare tax is imposed on all net
self-employment income.

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