FICA's the most regressive federal tax.

The huge plurality of USA's poorest income earners are wage earners.
We all pay the taxesembedded within the prices we pay; but wage earners are the onlyindividual persons upon which the FICA tax based upon payrolls islevied. Additionally individual's annual FICA taxes are capped;higher wage earners are taxed upon a lesser portion of their grosswages. FICA is in effect the most regressive of our federal taxes.


[FICA taxes are 15.3% ofpayrolls, equally paid by enterprises and their employees; 12.4% ofpayroll is earmarked for Social Security retirement, the remaindercontributes to Medicare funding].


I'm a proponent ofreducing the total FICA tax to effectively 6.2% and enacting afederal general sales tax of effectively 4.55%.


Due to sales transactionsbeing a greater than payroll tax base, this would increase taxrevenues for funding Social Security retirement and Medicare funding;it will net increase the purchasing power of wages spent by employeesand their dependents; a 4.55% reduction of employers payroll taxeseffectively reduce corporate taxes and would enable USA's exports tobe more price competitive.


Social Security andMedicare are net reducers of poverty; they're net beneficial to oureconomy. All individuals rather than only employees should morefully contribute to funding those programs.


Respectfully, Supposn

FICA is different than other taxes because it pays for specific programs - Social Security and Medicare, that benefit specific groups - the elderly and disabled.

So while the tax could be argued to be regressive, the program benefits are very progressive.

SouthernDemocrat said:

FICA is different than other taxes because it pays for specific programs - Social Security and Medicare, that benefit specific groups - the elderly and disabled.

So while the tax could be argued to be regressive, the program benefits are very progressive.

Click to expand...

SouthernDemocrat, as you posted, the program's benefits are progressive. Lesser wage earners and their families benefits in proportion to their tax contributions are greater.
All other wage earners and their families benefits in proportion to their tax contributions are less.
Due to more expensive medical technology, and increased life spans due to that technology, our present funding of Social Security retirement and Medicare by taxes upon wages and payrolls is no longer adequate. This thread addresses that funding.

A 4.55% general sales could more than replace revenue lost due to reduction of our 15.3% taxes upon wages and payrolls shared by employees and employers to 6.2% .

This proposal would net increase tax revenues for funding Social Security, Medicare, net purchasing powers of USA employees and their dependents; it would to some extents reduce net effective federal taxes upon USA's enterprises and to greater than a proportionally similar reduction of USA's corporate taxes, reduce their products price disadvantages to foreign competing products both within and beyond USA borders.

Respectfully, Supposn