CTyankee
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Mon Aug-27-07 07:54 AM
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Dumb question (I think) on the Social Security wage cap |
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Recently an acquaintance of mine, a strong Democrat and I think smart person, challenged me when I said that the SS tax cap at about $87,000 halted an increase on the tax levied. He said that it was eliminated for earners above $87,000.
I think that's crazy, but I need some backup, if any DUer has a good link. I don't want to flame the guy because he's great on just about everything else and I don't want him to be embarrassed by some right wingnut who challenges him.
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many a good man
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Mon Aug-27-07 08:02 AM
Response to Original message |
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Not clear on your question. SS tax is on the first $90K of wages. SS benefits are defined based on how much you put into the system. SS never pays out more than the equivalent of what you would get if you put in $70K every year, so it is seen as a fairness issue. Everyone pays the same rate.
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CTyankee
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Mon Aug-27-07 08:32 AM
Response to Reply #1 |
4. Sorry about my phrasing. What I meant was |
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Is the Social Security tax on wages above $87,000 frozen at that level and goes no higher if the wage earner makes more than that; OR
Is the Social Security tax on wages above $87,000 eliminated altogether? In other words NO SS tax whatsoever as long as the wage earner makes over the $87,000 limit?
I say it is frozen, not eliminated. My friend says just the opposite.
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bleedingheart
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Mon Aug-27-07 08:37 AM
Response to Reply #4 |
5. the social security tax is eliminated after income goes above $97k |
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however according to a friend of mine...other taxes kick in due to the income level??? however those taxes are fed taxes and not fica related... but I would need to verify that...
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CTyankee
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Mon Aug-27-07 08:53 AM
Response to Reply #5 |
7. No, I don't believe it does. See the next post. |
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The first link is pretty clear as to what the wage earner pays at the $97,500 level and above. It goes no higher; it just remains at that level no matter how much more you earn. But you still have to continue to pay.
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Starbucks Anarchist
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Mon Aug-27-07 08:58 AM
Response to Reply #4 |
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The first 87K (though I think it's a bit higher now) of anybody's income is subject to SS tax, and every dollar after that 87K (or whatever the current amount is) is not taxed for Social Security.
So Bill Gates and a janitor will both be taxed up to that amount for SS taxes, basically, but no further.
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GR
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Mon Aug-27-07 08:06 AM
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happyslug
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Mon Aug-27-07 08:07 AM
Response to Original message |
3. Here is the SSA web-page on Income limitation, since 2007 the limit is $97,500 |
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Edited on Mon Aug-27-07 08:26 AM by happyslug
http://www.ssa.gov/OACT/COLA/cbb.html#SeriesPlease note, the 1.45% tax for Medicare Coverage Applies to ALL INCOME (no limit). The limit applies only to the tax for Social Security (The tax rate is 6.2% for employees and Employers, 12.4% for the self-employed). For the tax rates over the years: http://www.ssa.gov/OACT/ProgData/taxRates.html
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CTyankee
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Mon Aug-27-07 08:49 AM
Response to Reply #3 |
6. Thank you! I've emailed my friend your first link which does bear me out. |
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Great having DU as my googling didn't get to the question. Thanks so much for the trouble of finding this. Are you a tax attorney or CPA?
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happyslug
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Tue Aug-28-07 11:31 AM
Response to Reply #6 |
9. I have an undergraduate Degree in Accounting And I am an Attorney |
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Edited on Tue Aug-28-07 11:33 AM by happyslug
But I work for Legal Aid, so I rarely use my Accounting background (Thus CPA for me). I just knew to look at the SSA/IRS website and looked for it when I typed in "Social Security Withholding". My background gave me an edge looking at the websites to see which one were valid, but that is all. Most people could do it, once they realize the best place for such information is the SSA or IRS. Took me less then five minutes (and closer to two) to find the websites and the sites. Knowledge and practice are the key more than my accounting or legal background.
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