Timeline
The System Today
Coverage
Payroll Taxes
Trust Funds
Payment Levels
Eligibility
Conclusion

What is Social Security?

11/29/99: Who Killed Social Security Reform?   (more)

11/5/99: Less Visible Burdens of Social Security   (more)

11/4/99: Clinton's Squandered Legacy   (more)

10/6/99: Senator Kerrey Rips Congress over Social Security   (more)

9/30/99: Your SS Check is in the Mail ... Honest!!   (more)

9/29/99: In Social Security Debate, Political Symbolism Still Rules   (more)

9/99: The Union Campaign Against Social Security Reform   (more)

9/14/99: Union Members Strongly Support IRAs Despite Union Leaders' Campaign   (more)

9/14/99: Crunch Time for Social Security   (more)

9/10/99: New Zogby Poll: Large Pluralities Support Privatization   (more)

Payroll Taxes

The Social Security system is funded by payroll taxes paid by employees and employers through the Federal Insurance Contributions Act (FICA) and the Self Employment Contributions Act (SECA). (The payroll tax is also used to fund part of the Medicare system.) Today the total employee/employer payroll tax is 15.3%, with 12.4% of that going to Social Security. This rate has been increased dramatically since 1937, when the rate was 2%.

Employers and employees each pay a 7.65% payroll tax. They pay 1.45% on all earnings for Medicare, and they pay 6.2% for Social Security up to a capped amount of $72,600. (This cap changes each year.)

Self-employed individuals pay the full 15.3% tax, but one half of the tax can be deducted as a business expense. Because the employer's portion of the payroll tax translates into lower wages for workers, it is most accurate to talk about the combined level of the payroll tax.

NEXT: Trust Funds