Why is medicare and social security a flat tax?

Question

By which I mean - they take a certain percentage out of your check and there's no negotiating it at the end of the year as with state and fed tax. Whats the ideology behind making the rich and the poor all pay this same percent tax? (Its 6.2% for SS and 1.4% for Medicare)

Answer 1

The Social Security Tax is not exactly flat - Its flat up to an income cap - currently about $97,500 and then there is no further SS tax (only the medicare portion continues on higher incomes).

When you retire, the benefits you get are not proportional to what you paid it - High income earners - (even those who always earned less than the income cap) get back a lower percentage of what they paid in compared to people whose income was always lower. - In other words, the tax is flat when it is levied (up to the income cap) - but the benefits are progressive. You can see an example of the calculations of the initial monthly benefit here:

http://www.ssa.gov/OACT/ProgData/retirebenefit1.html and
http://www.ssa.gov/OACT/ProgData/retirebenefit2.html

In the example shown on those web pages, the worker's average earnings that were subject to the Social Security Tax over his 35 highest earning years were first
adjusted for inflation - For a worker retiring at his full retirement age his initial monthly benefit was then calculated to be 90% of the first $612; 35% of the next $3,077 dollars and 15% of any additional amount. (That is 15% of any amount of average monthly earnings over $3,689).

This is one of the reasons that many wealthy people have hated Social Security ever since the days of President Roosevelt.

There is another reason the SS tax is flat - Back in 1983, the tax rate was increased in order to build up a surplus to help pay for the retirement of the baby boom generation. As a result the Social Security trust fund has built up over a 2 trillion dollar surplus. However the surplus has been borrowed and spent by the rest of the government as fast as it comes it. This has made it easier for the government to cut income taxes for the rich. - As result, the poor and middle class who pay that flat tax have transferred some of their very limited wealth to the rich - President Bush has made it clear that he wants to maintain his income tax cuts for the rich and cut SS benefits so that the money borrowed never has to be paid back. However, President Bush has never suggested cutting the Social Security Tax -

The Medicare tax is flat like the SS tax but their is no income cap - The only reason I can give for this is that the government needs the money.

Answer 2

in fact SS and medicare are 12.4% and 2.8%. your employer has to pay the same amount that you do just for the "privelege" of having you on the payroll. this is actually a regressive tax, because people that are highly paid stop paying the SS portion each year after they reach the maximum amount--about $100,000.

Answer 3

It is the same tax for everyone because, when you retire or become disabled, the amount you receive is based on the amount you have paid into the system. The more you make, the more you pay and the more you receive.

Answer 4

likely no longer. besides the undeniable fact that, they likely don't realize, to boot as you, that an economic equipment isn't run strictly on tax coverage. we could borrow 650 billion from China only for debt service. yet another seven hundred billion only to run needed facilities authorities substances. This locks out any threat of a flat tax throughout the board from operating. a good looking good economic equipment is significant and relies upon on call for for products and facilities that the country produces. A flat tax price gained't percentage the wealth to the point the position the middle classification will spend to create sufficient call for to strengthen the commercial equipment. hence, we are going to proceed to borrow to run the authorities. Tax coverage can create the ambience for economic boost by technique of dispensing wealth to those those that create call for by technique of spending. it truly is why this u . s . and fiscal equipment experienced it truly is properly desirable enlargement even as the wealthiest persons were taxed the most. besides the undeniable fact that, because easily everyone who will pay taxes and stocks in entitlements both, flat taxes works to fund those entitlements. The tax code is a fashion of dispensing wealth throughout the commercial equipment. The economic equipment works perfect even as the wealth is shared and the labor stress can manage to pay for to spend on products produced. the project right this moment is that the settlement is broken. the middle classification won't be able to spend because wages have dropped and jobs are disappearing. hence, the flexibility to spend for products produced isn't there. So call for is lifeless and businesses gained't employ even as call for for his or her products is down.

Answer 5

They were started to provide for us when we retire from working all of our lives. They are put aside in a little Social Security account which we can draw from at around 62 years old. You can look up how much is in your acct. via Social Security Administration.

That was the initial objective of the taxes, any way.

Answer 6

There's no "negotiating" on your income taxes either. You file by the rules and your liability falls where it does.

SS and Med are flat taxes with no exemptions or deductions because that's what the law says.