The big hoo-hah over taxes we had to suffer through last month had to do with income tax rates and some specialty items that largely attached to corporations.
As you may know if you've ever made the mistake of saying "about half of those who work pay no taxes at all" in front of a Liberal, everyone who shops pays sales taxes, everyone who drives pays gasoline taxes, and everyone who works pays … payroll taxes.
Payroll taxes, as the term is typically used, are those you pay into the Social Security system (officially known as Old-Age, Survivors, and Disability Insurance and Medicare (officially known as Medicare's Hospital Insurance program - Part A).
Taken together, these are known as "FICA" taxes for the Federal Insurance Contributions Act that authorized them.
Under current law you (and your employer if you are not self-employed) each pay 6.2 percent of your gross pay into the Social Security program up to $113,700 of income. After that you're off the hook.
You and your employer also each kick in an additional 1.45% to fund the Medicare Part A (the hospitalization part) up to … forever. There is no income cut off.
In fact, I believe, that at the $250,000 family income level you will pay an additional 0.9 percent into the Medicare program even though you will not get any better medical care for the price of it.
Note: You know better than to take tax planning advice from me. Your Mileage May Vary.
Put these two taxes together and - bibbidy-bobbidy-boo - what do you get? 15.3 percent of your income goes to the Feds. In addition to whatever income taxes you might be paying.
If you have a job on which your employer withholds taxes, you each pay half: 7.65%. But if you are self-employed, as in being a contractor rather than an employee - you pay the whole 15.3% out of your pocket.
All that as predicate to what you will find - or have found if you've received your first paycheck of 2013 - the payroll taxes have gone up and the amount in what we used to call your "pay packet" has gone down.
Part of the deal the Congress and the President reached ended what was known as the "payroll tax holiday." As part of the panic to avoid a full-blown depression, it was decided that it would be a good idea to reduce the Social Security tax by two percentage points: From 6.2 percent per payer to 4.2 percent per payer.
The loss to the Social Security fund were to be made up by transfers from the general fund.
I'll wait until you stop screaming at your computer screen. I know the general fund is about $16 trillion in debt. I'm just the messenger.
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