Well, we've really got into the semantics on this one. Jamie is correct in his comment that Social Security is a program that almost all are required to participate in and it is similar to a 401k that becomes mandatory. However, Social Security tax is collected with other payroll taxes and it is reported on form 941 as a payroll tax. It is a tax directly on payroll which makes it a payroll tax.
In Canada we have a separate deduction of income for the Canada Pension Plan (Quebec has a separate plan for it's residents). You pay into that through payroll deductions till the max is reached. For 2011 that is $2,217.60. Low income people are exempt. Do you not have similar personal deductions in the U.S. or is it all paid by the employer?
The 2217.60 is the employees contribution, the employer has to mach it, just to clarify,,,being self employed I have to pay both, so much for encouraging entrepreneurs. :daveandmo:
Ours is substantially higher. Our total Social Security and Medicare tax rate is 15.3% which is split evenly between the employer and the employee with the self employed paying the whole shot. The cap on wages is $106,800 this year and goes up to $110,000 next year. If someone reaches the cap on wages there will be $16,830 paid into the fund. If they go over $110,000 there is still a Medicare tax of 2.9% levied on those wages. Again it is split evenly between the employer and employee. Part of the problem is that the Fund is in trouble and the idiots in Washington are proposing that the amount paid into the fund be cut in half over the next year. Pretty dumb suggestion on the part of the politicians.
