Part of the reason for limiting taxation above
$87,900 is that there is - theoretically - a
retirement income benefit tied to SS, and
this benefit is capped.
I also consider $87,000 upper middle income. The data I've found makes the breakpoint for the upper 20% at $83,500.
There is no tax break being given here. The numbers in my response include income tax and FICA. The SS rate may not remain the same, but 43% of the total Social Security tax revenue was paid by those in the top 20% ( >$83,500 for 2001). 65% of all federal tax revenue was paid by the top 20%.
If you actually read the data for 2001, you'll find that about 93% of all federal tax revenue is
paid by the top 50% of workers. This breaks down to 77% of all FICA and 97% of federal income tax revenue. It is interesting that 40% of all federal revenue is FICA, but that does not mean that the lower 50% of workers are paying a disproportionate amount of federal revenue. As with all taxes, the upper 50% are paying the vast percentage of the total.
You seem to miss the point that the higher income
workers are also paying FICA. You state that
working-class people are paying a higher amount of federal tax than is their fair share, without really defining what that is. The facts state that
FICA does not unduly skew the federal tax burden to lower income workers.
I don't see how FICA is more of a drag on
middle and lower income workers rather than
upper income workers.
It's the same percentage of income at $35K vs
$85K, and the same overhead effort per worker for employers.
A quick look says that about 69% of FICA and 96%
of federal income tax is paid by the 4th + 5th quintiles of income (>$53K for 2001). Again,
for 2001, this works out to more than 83% of
the total federal revenue burden placed on people
making at least $53K. Based upon these numbers,
the original statements about the top 20% paying 80% of total tax burden, is a little off. The top 20% pay 65% of the total tax burden, not 80%. However, the statement about the top 50% paying 99% of the total tax revenue is roughly true.
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Part of the reason for limiting taxation above $87,900 is that there is - theoretically - a retirement income benefit tied to SS, and this benefit is capped.
I also consider $87,000 upper middle income. The data I've found makes the breakpoint for the upper 20% at $83,500.
There is no tax break being given here. The numbers in my response include income tax and FICA. The SS rate may not remain the same, but 43% of the total Social Security tax revenue was paid by those in the top 20% ( >$83,500 for 2001). 65% of all federal tax revenue was paid by the top 20%.
If you actually read the data for 2001, you'll find that about 93% of all federal tax revenue is paid by the top 50% of workers. This breaks down to 77% of all FICA and 97% of federal income tax revenue. It is interesting that 40% of all federal revenue is FICA, but that does not mean that the lower 50% of workers are paying a disproportionate amount of federal revenue. As with all taxes, the upper 50% are paying the vast percentage of the total.
You seem to miss the point that the higher income workers are also paying FICA. You state that working-class people are paying a higher amount of federal tax than is their fair share, without really defining what that is. The facts state that FICA does not unduly skew the federal tax burden to lower income workers.
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I don't see how FICA is more of a drag on middle and lower income workers rather than upper income workers. It's the same percentage of income at $35K vs $85K, and the same overhead effort per worker for employers.
A quick look says that about 69% of FICA and 96% of federal income tax is paid by the 4th + 5th quintiles of income (>$53K for 2001). Again, for 2001, this works out to more than 83% of the total federal revenue burden placed on people making at least $53K. Based upon these numbers, the original statements about the top 20% paying 80% of total tax burden, is a little off. The top 20% pay 65% of the total tax burden, not 80%. However, the statement about the top 50% paying 99% of the total tax revenue is roughly true.
Link to tax liability based upon quintile: http://taxpolicycenter.org/TaxFacts/TFDB/TFTempla
Quintile definitions: http://taxpolicycenter.org/TaxFacts/TFDB/TFTempla
FICA rates are 7.65% for the first $87,900 of income, 1.45% above $87,900.
Social Security - 6.20%/capped at $87,900. Medicare - 1.45%/no limit
These rates are for employees, with employers matching these taxes dollar for dollar.
Self-employed people pay 12.40% FICA.