FICA's our most regessive tax.

[Supposn]

FICA's our most regessive tax.

Employers’ FICA taxes are equivalent to a federal sales tax.

Currently Wage earners directly pay for FICA 7.65% of their wages. Employers also pay an equal FICA payment based upon their payrolls. Enterprises generally pass all of their expenses onto their customers. Employers’ 7.65% of their payrolls effectively behave similar to a federal sales tax.

[If labors’ portion of aggregate prices is 1/3 of aggregate prices, employers’ FICA taxes behave as a federal sales tax exceeding 2.6%; if its portion is ½, employers’ FICA behaves as a sales tax of almost 4%. (Refer to the following message entitled “Current federal sales tax rate” for further explanation).

Currently wage earning families FICA expenses are directly 7.65% of their wages and indirectly what’s effectively the federal sales tax. If they spend their entire incomes derived from wages, they are paying somewhere between 10.25% and 11.66% for FICA.

(Regardless of income sources, (due to employers’ FICA all purchasers of U.S. products pay between 2.6% to 4% for the equivalent of a federal sales tax).]

Because FICA is directly levied upon employers’ payrolls, (unlike other sales taxes), FICA levied upon enterprises increases in step with their payrolls, thus discourages hiring and is a more specific drag upon aggregate wages and the economy.

Respectfully, Supposn

 

[Supposn]

Current federal sales tax rate.

** Current federal sales tax rate **

Currently a 7.65% Based upon payroll is directly levied upon employers. Enterprises generally pass their expenses onto their customers. Employers’ FICA taxes effectively act as a federal sales tax. The rate of what’s effectively a sales tax is dependent upon the portion of aggregate prices that’s attributable to labor expenses.

If labor is 1/3 of aggregate prices:
[(0.0765/3) / 1 - (0.0765/3)] = 0.0255 / 0.9745 = 2.61% sales tax rate.

If labor is 1/2 of aggregate prices:
[(0.0765/2) / 1 - (0.0765/2)] = 0.03825 / 0.9675 = 3.97% sales tax rate.
/////////////////////////////

If a sales tax can be devised with a tax base exceeding twice USA’s aggregate payrolls, then 9.1% of payrolls, (4.55% of employers’ payrolls and employees wages could be replaced with a single 4.55% sales tax.

If labor is now attributable to 1/3 of U.S. prices, then replacing employers’ FICA contributions by 4.55% of their payrolls with a 4.55% sales tax would increase U.S. total price s by only 3.033% .
If labor is now attributable to 1/2 of U.S. prices, the total increase of U. S. prices would b e only 2.275%

Thus if wage earning families entire incomes were subject to a 4.55% sales tax and we reduced their FICA taxes by 4.55% of their incomes, and if labor is now attributable 1/3 of the prices they now pay, then their net taxes would be reduced by 1.516% of their incomes.
If labor is now attributable 1/2 of the prices they now pay, then wage earning families’ net taxes would be reduced by 2.275% of their incomes.

If any portion of the sales taxes were waived for specific items and to the extent that such items are portions of wage earning families’ purchases, their taxes would be further reduced.

Respectfully, Supposn

 

[Supposn]

Correction

Correction:

If 9.1% of payrolls, (i.e. 4.55% of both wage earners and employers’ FICA taxes) were replaced by a 4.55% sales tax:

If labor is now attributable 1/3 of the prices that everyone now pays, then wage earners’ net taxes would be reduced by about 3% of their wages. All other purchasers with fixed incomes not adjusted or reflected by additional cost of living would be paying price increases of 3.0334% .

If labor is now attributable 1/2 of the prices we now pay, then wage earners’ net taxes would be reduced by about 4.5% of their wages. All other purchasers with fixed incomes not adjusted or reflected by additional cost of living would be paying price increases of 2.275% .

If any portion of the sales taxes were waived for specific items and to the extent that such items are portions of wage earning or any other families’ purchases, those families’ taxes would be further reduced.

Respectfully, Supposn

 

[Hobo1]

 

[Supposn]

Hobo1, I appologize.

I too quickly jumped to make a correction because I was looking at figures based upon the entire 15.3%, (7.65% each for wage earners and for employers FICA taxes).

The equivalent federal sales tax due to employers’ entire 7.65% FICA tax rated is now an additional 2.61% or 3.97% of prices.

The message entitled “Current federal sales tax rate” was and is approximately correct.

If I could I would delete the 3d message entitled “Correction”.

Respectfully, Supposn

 

[TruthSeeker]

You make a great point, Supposn. This is the ultimate definition of a Ponzi scheme. Money is being extorted from working people and the companies that employ them, to pay for the care and feeding of people who are 62 years and older, and/or who are deemed to be "disabled".

I also like what I call the "layered" tax system we have in this country. Automobiles are a perfect example. From the time an automobile is new until it has reached the salvage yard, every time that automobile changed owners, sales taxes were levied and paid by the new owner, so it is very possible that one automobile could have been taxed a half-dozen times or more.