Social Security

Essay by Lekyla21A, October 2009

download word file, 3 pages 5.0

The social security act was created by President Roosevelt's committee and was passed by Congress as part of the New Deal. This was formed to help prevent modern day dangers in the American life such as poverty, and burdens of widows and fatherless children. President Roosevelt was the first president to advocate for protection of the elderly. This was originally an act that provided benefits to retirees and unemployed. This act provided money to states to assist the aged individuals, for unemployment insurance, Aid to Families with Dependent Children, Maternal and Child Welfare, public health services, and the blind.

The Federal Insurance Contributions Act is a withholding tax placed on wages of employees and employers that is six point two percent of the gross wage amount. There is a cut off limit on how much the government can tax which is of $6,324 up to a maximum wage of $102,000.

A separate payroll tax of 1.45% of an employee's income is paid directly by the employer, and an additional 1.45% deducted from the employee's paycheck, yielding a total tax rate of 2.90%. There is no maximum limit on this portion of the tax. This tax is used to fund the Medicare program, which is primarily responsible for providing health benefits to retirees. The combined tax rate is 15.30% paid by the employer and employee.

Currently there is a debate over removing the cap on the limit of tax for social security. Right now the maximum income the government taxes is $102,000 but if they remove the cap then they will tax the total amount you make a year. For instance the government removes the cap and taxes someone who makes $103,000 they will end up pay $1240 more a year in tax even though they only make a $1000...