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What is fica limit for 2009

what is fica limit for 2009

US tax code question: why does FICA cap out?

The Straight DopeGo BackReload this PageReplyOldglowacks is offline

My mother has worked a good quality white-collar job most of her life, and when we discuss taxes she often mentions that as her salary has increased, it constantly remains just under the "cap" of FICA contributions. That is, there is a limit to how much people pay each year in social security payroll taxes, currently reached at around $100k gross annual income.

Why does this cap exist? While a sales tax through which the wealthier spend more of their money on untaxed services and less on goods covered by the sales tax is regressive, it at least in theory applies to everyone in the same way. But the payroll tax system is the only inherently regressive tax system

I have ever seen: there are two brackets, the bottom of which is some non-zero percentage and the top of which is zero.

I have found a ton of information about the existence of the cap and how it increases, but no one seems to ever explain why it exists, as though it is intuitively obvious and needs no discussion. An explanation I've come up with off the top of my head is that one can only collect so much in SS and thus it would be "unfair" to contribute beyond the point in which higher income would yield no more in future benefits. And that Medicare contributions are not capped because while they are also a payroll tax, they are a completely different animal since the benefits apply to everyone equally (something I have no proof of either).

edit: Probably should be in GQ, I was in the wrong forum when I realized I had this nagging question.

Category: Insurance

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