income taxes pound the rich; FICA taxes on income pound the working poor and middle class
If we cut "income taxes", then we're probably going to "benefit the rich", since they pay the vast bulk of those taxes.
It's a shame that we can't get DC to cut FICA taxes on income-- or eliminate them for the working poor. Compared to "income taxes", FICA taxes on income impose a larger burden on 80% of wage-earners-- e.g., about $3,000 for households at the poverty line and $10,000 for households around the 60th percentile.
Maybe the GOP would not be interested. But we'll never know, because Dems like to demagogue and score cheap political points on anything related to SS. If Dems were really champions of the WP&MC, they would have taken the lead on reforming FICA's brutal impact on the WP&MC. The good news: their silence and complicity on this topic is the easiest of many ways to identify them as posers.
posted by Eric Schansberg @ 7:34 AM
3 Comments
3 Comments:
I read this on FB but couldn't comment there. What most people don't understand about federal tax is that the rich are already getting a huge tax break. Federal tax is only paid on the first $127,400 ( I believe that is the max for 2017). Anything earned above that the individual is receiving a 6.2% tax break. If the individual is self employed, they're essentially receiving a 12.4% break on anything over the max. Reducing fica tax on wage earners making less than a certain dollar would definitely help the poorer while not making the rich richer. But, that will never happen given who is in Congress currently.
I wonder why you couldn't comment. Are we not (yet) friends there?
Yes, FICA (the SS part) is capped-- an important feature to know about. Two things:
1.) SS is sold as a retirement plan not a redistributive effort. So, it's set up to be (more or less) proportional to what's put in. Bill Gates puts as much in as someone who earns $130K, but he'll get the same amount out.
2.) Those who earn more than the cap are getting really pounded by the "income taxes"-- with marginal rates approaching 40%. So, Bill's first $100K is hit by FICA but far-lower marginal tax rates for income taxes (ranging from 0-25%). So, overall, Bill's last $100K is still taxed much more heavily than his first $100K.
Wow. I totally screwed up which taxes have limits! It has not been my day on multiple levels.
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