In “The Taxing Part of the Summer Job,” Wall Street Journal, May 14-15, 2022 print edition, Laura Saunders tells young people what to expect from their first summer job.
Saunders does it well by pointing out that the big amount taken will be from the Social Security (12.4%) and Medicare (2.9%), and that for employees half of this is taken out of the employee’s check. She writes:
Because payroll taxes are flat taxes, lower earners often owe far more in payroll taxes than income taxes, says Mark Luscombe, principal tax analyst for Wolters Kluwer Tax & Accounting.
She doesn’t mention that the Social Security tax is listed as FICA and the Medicare tax is listed as HI. I wish she had because many young people will see that Social Security deduction not listed as Social Security and will say some version of (I’m being polite here), “What the FICA?” I don’t blame them. Social Security is a chain letter, as the Social Security Administration explains here.
Of course, the SSA doesn’t use that term but it states this:
The money you pay in taxes is not held in a personal account for you to use when you get benefits. Today’s workers help pay for current retirees’ and other beneficiaries’ benefits. Any unused money goes to the Social Security trust funds to help secure today and tomorrow for you and your family.
READER COMMENTS
Thomas Lee Hutcheson
Jun 8 2022 at 7:04am
Switching from a capped wage tax to a VAT as a way to finance safety net expenditures (and a more generous unemployment insurance scheme) would make a lot of sense. For one it would probably be easier to adjust up and down as demographics evolve, would be more progressive and would be more transparent.
Ditto switching from employer “provided” health insurance to having each individual buy their own as with ACA.
Thomas Strenge
Jun 9 2022 at 10:30am
VAT makes a lot of sense except for the fact that we have the income tax, which was supposed to only tax the rich. We can’t trust our government with a VAT.
Thomas Lee Hutcheson
Jun 10 2022 at 10:18am
Well the income tax does tax “the rich,” not enough more in my opinion, but it does. I don’t know what “only” “the rich” means and who is doing the supposing.
Progressives might well fear that a VAT would be used to replace revenue from reduced taxes on “the rich” or to reduce deficits instead of taxing “the rich.”
Thomas Strenge
Jun 10 2022 at 2:53pm
The income tax does not tax the rich, but those who work. When it was first passed only Rockefeller paid it. VAT hides it’s true cost, unlike a straight sales tax. That’s probably why progressives live it.
Jose Pablo
Jun 10 2022 at 9:11pm
Why should any optimal tax system tax (mainly/mostly/only) the rich?
That is a normative position. Normative positions are like abs: deep inside everybody has their own but in very few cases they deserve attention .
Thomas Strenge
Jun 12 2022 at 4:09pm
Why rob banks? That is where the money is.
Thomas Strenge
Jun 9 2022 at 10:36am
Apparently the FICA trust fund will now run out one year later. Covid-19 kills mostly elderly, ie FICA recipients. Is this evidence that Covid-19 mostly killed people who would have died anyway? Otherwise, I would have expected a larger change.
Comments are closed.