The purpose of the wage base used for the Social Security tax is ______________________________.
A) To determine when to start withholding the tax from an employee's pay
B) To establish a maximum salary level for application of the tax to employee pay
C) To determine the amount of Social Security tax to withhold from an employee's pay
D) To compute the total amount of Social Security tax that a firm must pay

Question

Quizplus · Accepted Answer

The wage base is the maximum salary level that is subject to Social Security tax. Once an employee's earnings exceed the wage base, the employer no longer needs to withhold the tax from the employee's pay. Therefore, the purpose of the wage base is to establish a maximum salary level for application of the tax to employee pay.

The Purpose of the Wage Base Used for the Social