A:

The Social Security tax rate is 12.4% as of 2015. Of that amount, the employee is responsible for half, or 6.2%, and the employer pays the other half. The Social Security tax, along with the Medicare tax, is classified as a payroll tax. The government deducts these taxes directly from an employee's paycheck. The employee cannot claim deductions or credits against payroll taxes.

Social Security Tax Rates Over the Years

The Social Security tax began in 1937. At that time, the employee rate was 1%. It has steadily risen over the years, reaching 3% in 1960 and 5% in 1978. In 1990, the employee portion increased from 6.06 to 6.2%, but has held steady ever since.

In the 21st century, a common worry is that Social Security could become insolvent due to longer life expectancies. Analysts sometimes list raising the Social Security tax as a potential weapon to keep the program adequately funded. Most politicians, however, hesitate to endorse this position on account of overwhelming public sentiment against it.

A Regressive Tax

Another common complaint with the Social Security tax is that it is regressive; if a person makes less money, a higher percentage of his income goes to this tax. It is a regressive tax because it only applies to income up to a certain amount – as of 2015, that amount is $118,500.

Anyone who earns under $118,500 has an effective Social Security tax rate of 6.2%. Someone who earns $1 million per year, by contrast, pays a much smaller percentage of his total income toward the Social Security tax.

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