Can someone explain Income Tax vs. Payroll Tax?

[smirkymonkey]

What are the implication of lower income tax, but no change in payroll tax?

Is this more of a burden on the lower & middle classes (wage slaves - those without accumulated wealth)?

[NMDemDist2]

1. yes. payroll taxes are your Soc. Sec. and unemployment

u quit paying those altogether above $75,000 (or maybe $85,000)

as a self employed person my "payroll" taxes are 5 times what my income taxes are.

[MikeG]

4. Ain't it the truth. I have one employee.

Every 15th of the month I write a check to the Bank with an FTD coupon for the payroll taxes. Then I pay self-employment taxes for myself. Income taxes are the smallest part.

[Warpy]

5. Payroll taxes were originally designed

...to be a pay as you go old age insurance program. However, rich right wingers hate this program because they don't feel they get the maximum benefit from it, and have been hitting the panic button about its going insolvent since it was instituted in the 1930s.

Reagan doubled the payroll tax supposedly to shore up this very unstable program <sarcasm>, and then used the double payment to fudge the books on his tax cuts for the rich. Half your FICA tax, plus half the contribution from your employer, became a back door income tax, going into the general fund, again to fudge the books on more tax cuts for the rich with the jerk in the WH now.

Both parties have approved raiding social security for pork projects, corporate tax breaks, and giveaways to the wealthy.

Income tax has deductions, and the more you earn, the more deductions you can claim. FICA is paid on the first penny earned, with no deductions at all, and taxable income is capped at a laughably low $87,900. Thus doubling FICA hit the poorest workers the hardest, and continues to do so, as the government piles up worthless IOUs for their pet projects and giveaways to fat cats who don't need the money. It was the most regressive way possible to raise taxes on those least able to pay, so of course the Repuglicans loved it.

For those of you who think you're young and immortal and will never need social security, better think again. At the very least, it's the program that will prevent your mother in law from moving in with you when her husband's pension dies with him. It's always been more a program for elderly widows than for the young-old married couples in their early golden years. And yes, you will hit 50 some day and you won't be rich yet, and you will need it, too.

What to do? Well, obviously the earnings cap needs to be raised. I'd like to see it removed completely, give the rich that nice, simple flat tax they've always claimed to want, make it apply to all income and not just that earned by the sweat of one's brow. Make them pay back what they've looted over the past 40 years, because that's how long it's been going on.

I hope this clears things up a bit. The reich wing never mentions FICA when they talk about tax burdens and tax rates, do they? Yet 40% of your FICA is going to their tax cuts and Bush's wars, just as if it had been collected as income tax.

Be angry. Be very angry.

[smirkymonkey]

9. I am very angry....

I am completely pissed about having to pay taxes at all, knowing where the bulk of my tax dollars are going. It's funny, I didn't mind much when I thought it was going toward social programs, infrastructure, education and healthcare. Now I am incensed about it!

And, to think that I will probably never see what I put in infuriates me even more.

Also, why do people stop paying them when they reach a certain income level? Isn't everyone allowed to collect social security when they retire, even the greedy, filthy rich? The least these bastards could do would be to continue to pay in if they are going to cash in on it someday.

Thanks everyone for your explainations!

[MikeG]

2. Payroll Tax is 7.65% until you get to around $80,000.00

Then its just the Medicare Tax of 1.45%. It is a burden on the middle and lower class to leave the Payroll Tax the same and lower the Income Tax which is graduated and hits the rich more.

The same things have to be paid for. Lowering the Income Tax and leaving the Payroll Tax the same puts the burden on the middle class and poor. What will happen is that once the deficit gets bigger the Repubs will cut services and hold up any increase in the Income Tax.

[BillZBubb]

3. OK, here's a quick review

The payroll tax is essentially Social Security (FICA). It has a cap. After a certain maximum amount is taken annually, no more is taken that year. Even people who owe no income tax (because their income is too low) pay some payroll taxes.

The income tax is a tax on income with some degree of progressivity. It has no cap. The more income you make, the more taxes you are supposed to pay. Those making very low incomes generally pay no income tax.

So, the payroll tax is more a burden on the lower wage earners. High earners barely feel it.

The income tax could be lowered in many ways, so, there is no single answer. It's more complicated, but there are ways to modify the income tax to help either the well off or the poor.

You could take the Bush*/Reagan approach and simply lower the rate paid by very high wage earners. That has no effect on the lower earners, but is a great boon to the well to do.

Or, you could raise the minimum income required before taxes are taken, which would do more for the lower income group.

[DAGDA56]

6. I distinctly remember my FICA taking a big jump...

...during the Regan years...does that mean I got a tax increase in the midst of St. Ronnie's much talked-about tax cuts?

[BillZBubb]

7. Absolutely Correct! Good memory.

The Greenspan commission recommended a steep increase in FICA. Bob Dole got the Repug controlled Senate to pass the increase and Raygun signed it in 1983. At the time it was the second largest tax increase in history. The Repugs don't talk about that or the 1982 Raygun tax hike. It kind of shoots a big hole in their myth.

[DAGDA56]

8. Thank you for the affirmation...I thought I was just a crazy lib...

...when I told people that Reagan screwed me over...bastard. I guess it just takes a long time to prepare that special place in Hell.

[smirkymonkey]

10. Thanks - why couldn't the

government (obviously, not this one) increase the payroll tax with income (since it's not a large percentage at all) to alleviate the burden on the poor and middle class? Are we really that f-ing greedy? Don't people realize the social costs in the long run?

I am sickened all over again each day with every new revealation.

[BillZBubb]

11. Dems tried to get a payroll tax cut instead of Chimp's cut

Unfortunately, the public didn't understand the issue and the Repugs won with their income tax cut. The Repug cut primarily helped those with high incomes.

Cutting the payroll tax for low wage earners, removing the cap, and making the tax progressive with income would help secure SSs long term viability, spur the economy (because the poorer people would have more cash for immediate spending), and be much fairer. That's probably why it will never happen!

[patchdickens]

12. judge for yourself

taxes, and with the FairTax rebate, spending up to the poverty level is tax free. The ...
taxes, and with the FairTax rebate, spending up to the poverty level is tax free. The ...
www.fairtax.org

THIS ONLY AFFECTS FEDERAL TAXES ...NOT STATE!!!!!!!!!!!

[nothingshocksmeanymore]

13. Right wing propaganda

http://www.pfaw.org/pfaw/general/default.aspx?oid=14125

http://www.pfaw.org/pfaw/general/default.aspx?oid=14117

http://www.libreopinion.com/mathaba/www/conservative/