Our Federal and State taxes are advertised as being progressive taxes, that is to say, that the more money that a given person makes, the higher tiered tax brackets that person will migrate into based on their earnings, signifying that those that make more money, will pay more in taxes at a progressive rate, before eventually for those that earn a lot of money reaching a plateau. The main reason behind a progressive rate, as opposed to a flat and fixed tax rate on the money that you earn, is that a progressive rate, is a way to help even the income playing field, by taxing more heavily those that are earning a lot more, and hence can "afford" to pay more in taxes, because their net income will still be considerably more than those earning a lot less.
There is, however, one part of the tax code which isn't progressive at all, and in fact, hurts the poor and those making relatively low to middle class incomes in a manner that is both unfair and unnecessary. That tax is the social security tax or OASDI which is 6.2% for the social security portion and 1.45% for the Medicare portion for a total of 7.65%, to which this percentage is also matched by the employer. This means for every individual receiving a paycheck, over and above whatever Federal or State taxes which are withheld, the social security and Medicare taxes are taken from that person's paycheck, and no matter how high or low that individual's income is, those taxes taken at a combined rate of 7.65% will not be returned come fiscal year tax time.
However, for those that earn a considerable amount of money, the social security tax of 6.2% as well as the matching 6.2% made by the employer, is completely phased out at $118,500 in income. That is to say, once you cross over $118,500 in earnings in a given year, you will no longer be subject to the social security tax at all, signifying for those that are high earners, that their effective tax rate for social security will in total be below, perhaps well below the 6.2% threshold, as well as the fact that the employer has a perverse incentive to prefer fewer workers making higher salaries so as to fully reap the benefits of their 6.2% contribution being terminated, as well as the fact that less employees will as a matter of course, mean less expense on overhead or healthcare costs.
While, it is true that there is no cap, on the Medicare portion of the 1.45% for either the employee or employer, and further that there is after earnings have increased for an individual filing as single and earning $200,000, an additional payment to Medicare of 0.9% for earnings above that threshold, none of that is true for the much higher tax, which is the social security tax.
In point of fact, the social security tax has it all wrong, as any tax created so that high earners will pay an appreciably less percentage of this tax than low-income or middle class earners is fundamentally flawed. Therefore, the social security tax should be changed into a progressive tax, so that, for instance, the first $12,000 of income there will be no social security tax taken out for any earner, to which the social security tax is then tiered to different levels, with progressively more tax taken from earners making more money, becoming, in effect, similar in concept to the Federal income tax.
Those that make low or modest incomes aren’t necessarily looking for a free ride, what they are looking for, though, is a fair deal.