Talk:Federal Insurance Contributions Act tax

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[edit] Second person to third person

I'm not a tax expert, so I can't expand this article very much. But I changed it from a cozy second person to a much more formal (and encyclopediatic) third person. And I added a bunch of WikiLinks. Now somebody else can come through and expand it however you see fit. Joe 01:07, 28 September 2005 (UTC)

[edit] Rate change in the 1980s

This article could benefit from some references to the history of the tax rates. Also, it might benefit from a clear statement that when people are talking about "Federal income taxes", they are almost always excluding this tax, although both are Federal and both affect after-tax income. I'll dig up the rate history. Boris B 23:41, 25 August 2006 (UTC)

True - I agree Morphh 00:08, 26 August 2006 (UTC)
I'm getting cold feet about those external links I added. Neither mentions "FICA". I am starting to wonder if I am confusing different taxes. If the links I added do not refer to FICA, by all means delete them. Boris B 00:36, 26 August 2006 (UTC)

Dear editor Boris B: Both of your links are relevant. Regarding the first one, the one that links to the chart of tax rates: the tax rates under the columns for employer and employee are indeed imposed by the Federal Insurance Contributions Act (FICA). The columns for the self-employed individual relate to a separate Act of Congress, but the chart as a whole is certainly relevant to this Wikipedia article. Likewise, the second link, the one that lists various developments in the law, includes discussion of changes to the Social Security Act as well as the Federal Insurance Contributions Act, so it's relevant as well. I don't see anything wrong with the links. Yours, Famspear 01:31, 26 August 2006 (UTC)

PS: I know you're right about people usually forgetting about the FICA (Social Security and Medicare) taxes. Yes, they're technically not "income taxes," but obviously the wage earner (as well as the employer) is bitten by these payroll taxes (they're actually called "employment taxes") every time the wage earner gets a paycheck. Yours, Famspear 01:37, 26 August 2006 (UTC)

[edit] Unencyclopedic Tone

The "Advocacy and criticism" section of this article reads like a blog entry or a column in a newspaper and lacks the formal tone of an encyclopedia. Someone who is knowledgeable enough and has some time should consider reworking this section. 71.231.3.11 03:53, 18 March 2007 (UTC)

I agree. I'll add a "tag" to it. If you'd like to, why don't you start fixing it? — Malik Shabazz | Talk 04:10, 18 March 2007 (UTC)

Dear fellow editors: I made a stab at it, but it's just a beginning. It definitely needs work in my opinion. Yours, Famspear 04:27, 18 March 2007 (UTC)

I took a shot at it too. I think I cleaned it up enough to remove the banner but it needs sources. I also think we need another sub-section on the growth and insolvency of the programs and the aspect that the taxes collected under FICA do not raise enough revenue to cover the cost of the programs. Morphh (talk) 13:19, 18 March 2007 (UTC)
Actually, FICA taxes currently raise far more than the cost of the programs, because of the 1983 increases imposed to prepare the system for the baby boomers' retirement. At the time when expenses begin to exceed tax receipts, there will be an accumulated surplus of trillions of dollars. Under a pessimistic projection of future trends, the surplus will nevertheless be insufficient to cover all expenses, beginning a few decades from now.
These subjects are better addressed in Social Security (United States) and Social Security debate (United States). They don't relate specifically to the FICA tax, but to the overall program. JamesMLane t c 22:53, 19 March 2007 (UTC)

[edit] Criticism Section (and Overall Tone) are Grossly Biased

The overall tone of the article (perhaps from prior edits) and of course most specifically the Criticism section are quite biased and one-sided, forming a polemic against the hugely popular and fundamentally critical federal social welfare safety net (that almost exclusively benefits WORKING Americans and quite equitably is funded by their contributions through this tax). While not voluntary, it is about the only retirement security that many Americans can expect or will have. Someone needs to provide a more realistic perspective and some balance to this for it to be a full discussion and eludication of the topic. One might wonder whether a page explaning the tax is really a suitable place to post unbalanced opinion about its merits. —Preceding unsigned comment added by 72.164.177.58 (talk) 17:00, April 20, 2007

I think your too closely tying the tax to the program. Such programs could be funded in many different ways, so criticism of the tax does not necessarily mean criticism of the program. In addition, criticism of program aspects does not mean complete removal of such a program or said benefits. The programs themselves have their own article that can better discuss the your thoughts. Morphh (talk) 0:08, 21 April 2007 (UTC)
It's true that really most of the debate belongs in articles about the programs themselves rather than in this article about the tax that pays for them. However, I don't want to be the one to delete the criticism section here, because I think that it at least briefly points a reader toward what the issues are—then the reader can go explore them further in other articles.
     But I really agree about the biased tone that eventually gets re-inserted when anyone tones it down. People who grew up long after the Great Depression became history often can't even wrap their heads around the idea of what life would in fact be like if Social Security and Medicare didn't exist. For example, this sentence from the article: "The lack of insurance and retirement money arguably leads to poverty" (emphasis mine). (An earlier version even tried to euphemize "poverty" to "financial stress".) The idea of it being "arguable" is strange. For many to most working-class people in the U.S. (we are talking millions, not thousands), the only long-term disability insurance that they have is Social Security. For many of those same people (we are talking millions, not thousands), Social Security is somewhere between most and all of their monthly income after they retire. Of those populations, consider (1) the ones who become disabled through injury (e.g. bad car accident) or illness (e.g. intracranial AVM that goes bad) while young or middle-aged and (2) the ones who don't die soon after retiring, but rather keep living for a decade, or two, or even three. Now add retarded adults whose parents (being older, of course) die before they do. How would any of the above people not be impoverished without Social Security? Who would be paying for their rent/mortgage, electricity, telephone, transportation, food, clothing—let alone healthcare? Seriously, a lot of the "arguable" crowd live in posh suburbs where they seldom even see an elderly poor person or a retarded adult, and they literally forget that such people even exist (except as abstract ideas on television). Thus they find the need for social insurance "arguable". — Lumbercutter 21:16, 9 June 2007 (UTC)

Dear Lumbercutter: Actually, I think I'm the one who added the word "arguably" -- in an effort to make the sentence more correct. I'm in favor of Social Security. I changed the sentence because I assumed (incorrectly) that it would be obvious that the mere lack of insurance and retirement money does not necessarily lead to poverty. Indeed, as you pointed out there are lots of rich people. That supports the statement that it is "arguable" that the lack of retirement money and insurance leads to poverty. Billionaires don't need "retirement money" or a retirement plan of any kind, much less "insurance," in order to have a comfortable retirement. Also, I don't consider the investment portfolio of a billionaire, or the wealth with which the child of a billionaire is born, to be "retirement money" -- although that billionaire or his child probably will have lots of it to spend at the time of retirement. I think of "retirement money" more narrowly -- in the sense of money or other investments that are actually in a retirement plan, such as an IRA or a 401(k).

Anyway, I see what you mean. The language is still problematic, even after my editorial attempt to clarify it. Stay tuned. Yours, Famspear 21:49, 9 June 2007 (UTC)

Ah, I see your point there—of course it is true that the lack of, for example, disability insurance doesn't lead to poverty for a wealthy person who becomes disabled. And that's also true for non-wealthy people who are simply lucky and never need to make a claim. More precisely, a lack of insurance would lead to poverty only in those people who were non-wealthy and suffered disability. But within that group, the poverty would be predictable and deep. (This would be in a hypothetical world without Social Security). I thought that various editors during the last round of revisions were denying the predictability involved with that latter group or downplaying the depth of the poverty. Maybe that's not in fact what they were trying to say. — Lumbercutter 03:22, 10 June 2007 (UTC)

[edit] Do you need sourcing for a negative statement?

Dear readers: An anonymous editor has removed this verbiage:

Strangely, they do not seem to be explained anywhere in the IRS's online help

The deletion was made with the statement that one would need to support the claim.

I agree that the text should be deleted, but not for the reason given. Now, for a little hair splitting.

The above statement is a negative statement. In certain cases, I would argue that you do not need a citation to support a negative statement.

For example, suppose I say: "There is no report on page 1 of the May 1, 2007 New York Times stating that little green men from the Planet Mongo landed at second base at Yankee Stadium in New York City and began dancing the Twist to the music of Chubby Checker."

That's a silly example, but I would argue that I do not need "sourcing" or a citation for that statement. All anyone needs to do to refute the statement is to obtain the relevant copy of the New York Times and check page 1. If there is such a report on page 1 of the Times, then my statement is incorrect. If there isn't such a report, then my statement is correct.

There is probably no way to "source" or obtain a citation for the statement that "Strangely, they do not seem to be explained anywhere in the IRS's online help". Either "they" are explained in the online help, or "they" are not.

I would argue that the reason the statement should be deleted is that it seems POVish and (in my opinion) detracts from the article more than it adds to the article. Yours, Famspear 21:56, 2 May 2007 (UTC)

Post-script: Also, I agree with the anonymous editor that it is not "strange" that the matters in question are not explained on the IRS web site. There are gazillions of important things about U.S. Federal tax law that are not explained on the IRS web site. Famspear 22:00, 2 May 2007 (UTC)

In fact, it is explained on the IRS website, and I just added a reference to it. (By coincidence, I had added the IRS reference to Social Security (United States) last week.) — Malik Shabazz | Talk 22:10, 2 May 2007 (UTC)
Wait a minute -- that means the statement really should have been deleted because it was just plain incorrect! How boring! Seriously, thanks to editor Malik Shabazz. Famspear 22:22, 2 May 2007 (UTC)

[edit] Tone

I normally stick to science/fact articles precisely because politics on Wikipedia is a fruitless endeavour. But this article does have that 'neo-con'/'supply-side'/'reaganite' feel to it. Namely no hard fact that supports the FICA tax/Social Security is left uncountered, even when the counter is a unencyclopedic, weasly worded, mealy mouthed, conservative talking point.

One that that stuck out is that the tax is most definitely regressive. A person with an income over the maximum amount pays the same amount (not percent) if they make 100k, 500k, or 10 billion. One can argue weather the Social Security payouts are progressive, but the tax itself is absolutely regressive.

A few of the conservative talking points are actually correct, namely that if one were free to invest one's own money privately then on average one would receive more interest.

  • But even that statement is misleading, England (and Brazil or Argentina, can't remember which) both had mandatory savings accounts, but because neither was well regulated millions of people lost vast amounts of their retirement savings to unscrupulous private companies.
  • Despite the comparisons to mandated insurance / retirement savings, it is really just a welfare program. This artificial linking of working and paying in, to benefits received was just one of the selling points at it's inception because Americans have such a aversion to 'welfare'.
  • Because it is 'wellfare' and no true insurance / retirement savings plan, it moderately redistributes from the higher income brackets to the lower brackets, but because it is so regressive it is barely bourne (percent wise) by the very rich, and instead is almost totally funded (percent wise) by the lower and middle classes.
Tiki God 17:03, 27 July 2007 (UTC)

I with some of Tiki God's points, especially about weasel words and the confusion of the tax side and the benefit said. I have added some citation tags. Famspear 23:36, 27 July 2007 (UTC)

I agree with Tiki God's points about the tone of the article, but...
    • Social Security is an income redistribution program, not a welfare program. The difference is that benefits aren't distributed on the basis of need.
    • Social Security is also a social insurance program. Ask a worker collecting disability benefits, or the family of a deceased worker who are collecting survivors benefits.
    • The concept of "interest" applied to Social Security is a red herring because one cannot calculate the "interest" on a social insurance program.
    • You may be thinking of Chile, which has had an individual account system for many years. It has been (and still is) touted as the be-all and end-all by free-marketeers for the past two decades, but as Chileans have begun to retire under the new system they are learning that their accounts have been eroded by high fees and "misplaced" deposits. In the last presidential election, Michelle Bachelet beat Sebastián Piñera, the brother of José Piñera — the architect of the Chilean social security system. I can't help but wonder if Piñera's brother was a factor in the election.
    • Overall, considering both the payroll tax and the benefit structure — which replaces 90% of the lowest earners' pre-retirement income — Social Security has been shown to be a progressive program. 'll try to dig up some links that make that argument for the article. — Malik Shabazz (Talk | contribs) 04:02, 28 July 2007 (UTC)

I guess I am a mealy mouthed conservative and agree with almost all of the article. In fact I believe that this program is one of the absolute worst in terms of generating long term fairness for Americans. However, I find this article's tone to be a bit much. It does not read like an encyclopedia entry at all. It does read like a (bad) professor's first year criticism of Social Security (if such a course were offered). Certainly we can do better. DannyJohansson 13:49, 13 August 2007 (UTC)

Both this article and the article on Social Security make a big point of airing a criticism that the tax is "regressive" while not giving equal play to the point that the benefits are "progressive" and in fact the net outcome is highly "progressive" (so if anything the "progressive" argument should be more prominent). Social Security payouts reduce as income increases such that someone who earns twice the income and pays twice the tax gets far less than twice the benefit. Furthermore, the criticism of the tax cap ($102,000 in income for 2008) is ludicrous because payouts are only calculated based on taxed income. That is, someone who makes $102,000 in 2008 and whatever the number is every other year pays the same dollar amount in taxes as someone who makes $1 billion per year, but these two also get exactly the same payout. Pay the same; get the same - doesn't sound regressive to me. The fact that no additional benefit is earned based on income over the cap AND income below the cap is taxed at a flat rate and benefitted at a highly progressive rate should be noted as an effective counter-argument to the "regressive" allegations.

Finally, the risk of dying before getting benefits applies to everyone and is not regressive.

If the "regressive" criticism is worthy of its own headline, then the "progressive" counter deserves equal play as its own section. Shamanix (talk) 04:45, 8 April 2008 (UTC)

Good points Morphh (talk) 19:49, 08 April 2008 (UTC)

[edit] Self Employment tax and FICA

I made some corrections to the article. The Self-Employment tax consists of Social Security tax and Medicare tax. The FICA tax also consists of Social Security and Medicare tax.

However, the Self-Employment tax is NOT an FICA tax.

The Self-Employment tax is imposed under the Self-Employment Contributions Act of 1954, which is codified as Chapter 2 of Subtitle A of the Internal Revenue Code. The FICA tax is imposed under the Federal Insurance Contributions Act, which is codified as Chapter 21 of Subtitle C of the Internal Revenue Code. It can be confusing, because BOTH Acts impose the Social Security tax and BOTH Acts impose the Medicare tax. The "SE" Act imposes those taxes on self-employed individuals (independent contractor individuals) while the "FICA" imposes those same taxes on employees.

The SE tax is NOT an FICA tax. But the SE tax and the FICA tax both have both Social Security tax and Medicare tax components. Yours, Famspear 19:26, 17 August 2007 (UTC)

[edit] Section 218 Agreement

This article could be improved by some discussion of Section 218 Agreements. Thanks Morphh (talk) 14:06, 30 March 2008 (UTC)